Gambia Monthly Economic Bulletin March 2010

The Gambia Monthly Economic Bulletin- March 2010
THE GAMBIA MONTHLY ECONOMIC BULLETIN1

March 2010
Institutional Support Project for Economic and Financial Governance (ISPEFG) Ministry of Finance (MOF) The Republic of Gambia The Quadrangle, Banjul, the Gambia
The Gambia Monthly Economic Bulletin provides an update on the recent economic developments and policies in the Republic of the Gambia. This Bulletin has been prepared, under the overall guidance of the Honorable Permanent Secretary Mr. Serign Cham, by a research team comprising Tarun Das, Macroeconomic Adviser (ISPEFG), Momodou Taal, Principal Economist; and Ms. Ceesay Chiel, Economist in the Statistics and Special Studies Unit, Ministry of Finance; with key inputs from the Ministry of Finance (MOF), the Central Bank of Gambia (CBG), the Gambian Bureau of Statistics (GBOS), and the Gambian Revenue Authority (GRA). It is needless to point out that the views expressed in this Bulletin solely indicate the views of the Research Team, which need not necessarily imply the views of the MOF, the other budgetary agencies or the organizations they are associated with. Any questions and feedback can be addressed to: Tarun Das (das.tarun@hotmail.com) 1
Political and Administrative Structure The Gambia is divided into seven regions comprising two Municipalities namely, Banjul City Council (BCC) and the Kanifing Municipal Council (KMC) and five provincial administrative regions namely, Western Region (WR), North Bank Region (NBR), Lower River Region (LRR), Central River Region (CRR) and Upper River Region (URR). Politically, the relevant units are Local Government Areas (urban), Districts, Wards and Villages. The Gambia has 35 districts and about 1870 villages with an average of 13 compounds. Basic Facts about Gambia: Fiscal year: 1st January to 31st December Items (Year) Units Value Rank in the World from top in descending order Area (2009) Sq. km. 11,300 171 out of 248 countries Population (2008) Million 1.735 148 out of 241 countries GDP PPP (2006) Million US$ 2061 184 out of 229 countries GDP Nominal (2006) Million US$ 511 199 out of 229 countries GDP PPP per capita (2006) US$ 1921 140 out of 169 countries GDP per capita (2006) US$ 329 192 out of 207 countries Poverty Ratio (% of people Percent 59 7 out of 95 countries below One-US$ per day) (2004) 2
The Gambia Monthly Economic Bulletin- March 2010 Source: http://www.nationmaster.com
Concluding Paragraphs of The Budget 2010 Speech by Honorable Abdou Kolley, Minister of Finance, The Republic of the Gambia
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The zero-rating of sales tax on rice in 2008 to minimize the impact of the food crisis on the poor people and the implicit subsidy on the price of oil by leaving the pump price unchanged, when international oil prices were rising, were policy measures that resulted in revenue losses equivalent to 2 percent of GDP. These developments, coupled with the financial and economic crises that ensued, have made 2008 a very difficult year. In 2009, however, the Gambian economy performed better than expected because of strong growth in agriculture. In spite of the positive growth registered in 2009, the Gambia still faces a heavy debt burden. Interest on government debt is expected to consume nearly 20% of government revenues in 2009, mostly in interests on domestic debt. This is why in the 2010 budget, Government intends to lower the domestic debt, ease pressure on Treasury bill yields, generate savings from lower interest payments and strengthen public financial management. Achieving these goals call for strict discipline in budget execution. This is a challenge that we face as a country with limited resources but together, with our dynamic leaders guidance, Sheikh Professor Dr. Alhaji Yahya A.J.J. Jammeh, we will thrive and demonstrate that we have the people, the will and commitment, and with Allahs Blessing, to navigate through difficult times. As we confront these formidable challenges, I call on our development partners, bilateral and multilateral, whose efforts in support of our development we so cherish, to continue to accompany us with renewed vigour and a common sense of purpose.
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Contents Items
Basic Facts about the Gambia Concluding paragraphs of the Budget 2010 Speech by Honorable Abdou Kolley, Minister for Finance and Economic Affairs Contents ISPEFG Project/ Research Team and Document History Highlights At a Glance 1. Global Economic Outlook 1.1 Global recovery is uneven, weak, slow and painful 1.2 Global Commodity Prices and Inflation 2. Current State of the Gambian Economy 2.1 Overall and Sectoral GDP Growth Rates 2.2 Consumer Price Index (CPI) and Inflation 2.3 Projection of CPI inflation for the year 2010
Page
2 3 4 5 6-7 8 9-15 9 14 16-36 16 18 20 21 23 25 26 27 28 29 30 31 32 36 37-40 37 38 39 40
2.4
2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14
Government Fiscal Performance in January 2010 Projections of Fiscal Outturn for 2010 Domestic Debt and Outstanding Treasury Bills Treasury Bills Yields Money Supply Performance of Commercial Banks Commercial Banks Assets Commercial Banks Liabilities Interest Rates and Central Banks Policy Rates BOP, Foreign Exchange Reserves and Exchange Rates Exchange Rates
3. Recent Policy Developments and Development Issues 3.1 Highlights of the 2010 Budget 3.2 Tax Measures announced in the 2010 Budget 3.3 IMF Executive Board Completes Sixth Review of PRGF 3.4 Assessment of Quantitative Targets agreed with IMF under PRGF
ISPEFG Project and Monthly Economic Bulletin Research Team
Project Supervisor Project Coordinator Macroeconomic Adviser Principal Economist Economist
Honorable Mr. Serign Cham, Permanent Secretary Mr. Momodou Cham Dr. Tarun Das Momodou Taal Ms. Ceesay Chilel
Document History: This report is an update of the following reports prepared by the Research Team: The Gambia Quarterly Economic Bulletin, pp.1-30, 31 March 2009. The Gambia Monthly Economic Abstract, pp.1-16, 31 March 2009. The Gambia Monthly Economic Bulletin, pp.1-40, 30 April 2009. The Gambia Monthly Economic Abstract, pp.1-16, 30 April 2009. The Gambia Monthly Economic Bulletin, pp.1-39, 31 May 2009. The Gambia Monthly Economic Abstract, pp.1-15, 31 May 2009. The Gambia Monthly Economic Bulletin, Part-1, pp.01-22, June 2009. The Gambia Monthly Economic Bulletin, Part-2, pp.23-46, June 2009. 9. The Gambia Monthly Economic Abstract, pp.1-16, June 2009. 10. The Gambia Monthly Economic Bulletin, Part-1, pp.01-22, July 2009. 11. The Gambia Monthly Economic Bulletin, Part-2, pp.23-46, July 2009. 12. The Gambia Monthly Economic Abstract, pp.1-16, July 2009. 13. The Gambia Monthly Economic Abstract, pp.1-16, August 2009. 14. The Gambia Monthly Economic Abstract, pp.1-16, September 2009. 15. The Gambia Monthly Economic Bulletin, pp.1-25, October 2009. 16. The Gambia Monthly Economic Bulletin, pp.1-37, November 2009. 17. The Gambia Monthly Economic Bulletin, pp.1-37, December 2009. 18. The Gambia Monthly Economic Bulletin, pp.1-36, January 2010. 19. The Gambia Monthly Economic Bulletin, pp.1-40, February 2010.
1. 2. 3. 4. 5. 6. 7. 8.

HIGHLIGHTS Impact of Global Financial Crisis and Economic Slowdown
As per the IMF projections made in the WEO Update Jan 2010, global output is expected to contract by (-) 0.8% in 2009 followed by a positive growth of 3.9% in 2010. IMF concludes that although the global economy has started to pull out of the unprecedented recession witnessed since the World War-II, recovery is uneven, slow, and jobless. In African developing economies, growth is projected to slow down significantly from 5.2% in 2008 to 1.9% in 2009. Global Food and Oil Prices Due to sluggish demand and economic slowdown, there were significant decline of world commodity prices including food and petroleum since August 2008. However, since March 2009 commodity prices have started rising again in response to some increase in global demand, . Average Brent crude oil prices declined to $74.31 per barrel in Feb 2010 from $76.37 per barrel in Jan 2010. IMFs baseline petroleum price projection is unchanged at US$76 a barrel for 2010 and revised up to $82 a barrel in 2011. Looking ahead, commodity prices are expected to rise due to increasing global demand, especially from emerging economies. Impact on the Gambian Economy
A global crisis of this magnitude is bound to have adverse impact on any country. The Gambian economy was not an exception and witnessed a decline in exports, remittances, foreign investment, tourist arrivals, manufacturing production and wholesale and retail trade in 2008. However, thanks to bumper crops and very good performance by electricity, telecom and financial sectors, the real GDP growth at constant market prices improved from 6% in 2007 to 6.3% in 2008, supported by a spectacular growth of 26.6% in agriculture GDP and a growth of 4.2% in services GDP despite decline by 1.2% in industrial GDP. Due to fall in tourists income and foreign investment and deceleration of agricultural growth, real GDP growth rate in 2009 is estimated to decelerate to 5%, aided by a growth of 5.5% in agriculture production, 3.5% in industry and 5.7% in services production.
CPI Inflation
Annual point-to-point CPI inflation declined significantly from 7% (food 8.8% and non-food 4.8%) in Feb 2009 to 3.8% (food 4.6% and non-food 2.6%) in Feb 2010. The 12-month average inflation rate also declined from 4.8% in Feb 2009 to 4.1% in Feb 2010. Among other groups, transport recorded an inflation of 2.4%, utilities 2.3%, restaurants and hotels 4% and miscellaneous goods and services 8.2% in Feb 2010.
Government Fiscal Performance
Governments fiscal performance in Jan-Feb 2010 was not satisfactory compared with Jan-Feb 2009. Tax revenues declined by 7.5% in Jan-Feb 2010 over Jan-Feb 2009 compared with a growth of 17.1% in Jan-Feb 2009 over Jan-Feb 2008. However, there was better performance of non-tax revenues in Jan-Feb 2010 than in Jan-Feb 2009. Basic surplus at 0.2% of GDP in Jan-Feb 2010 was significantly lower than 0.8% of GDP in Jan-Feb 2009.

Domestic Debt and Treasury Bills Yields At the end of February 2010, outstanding domestic debt stood at D6.1 billion (amounting to 21.7% of GDP), compared to the outstanding domestic debt at D5.9 billion (amounting to 23.4% of GDP) a year ago. Including CBG support, the total outstanding domestic debt increased to D7.1 billion at end-Feb 2010, from D6.6 billion a year ago. The share of Treasury bills increased from 79.4% at end-Feb 2009 to 84.2% at end-Feb 2010, that of Sukuk Al-Salam from 1.6% to 2.3% and that of Govt. bonds from 4.2% to 4.5%, while the share of NIB treasury bills declined from 14.8% to 9% over the same period. Yields on treasury bills fluctuated widely in recent months. As expected, the higher the maturity of treasury bills, the higher is the yield. However, despite stability in deposit rates and significant decline of annual point-to-point CPI inflation rate from 7% in Jan 2009 to 2.8% in Dec 2009, average yields on the 91-day bills increased from 10.5% in Jan 2009 to 11% in Dec 2009 and yield on 182-day bills from 12.1% in Jan 2009 to 12.9% in Dec 2009. In view of the declining trend of inflation rates, the Monetary Policy Committee reduced the policy rate by 2 percentage points to 14% with effect from December 2009. As a result, average yields of the 91-day, 182-day and 364-day bills fell from 11%, 12.9% and 14.3% respectively in December 2009 to 10.3%, 12% and 13.6% respectively in Jan 2010 and to 10.7%, 11.7% and 13.2% respectively in February 2010.
Money Supply and Bank Credits Broad money supply (M2) recorded an annual growth of 17.9% in Jan 2010, compared to 19.3% a year ago. While quasi money increased by a faster pace of 27.3%, narrow money increased by 8.8 percent. On the supply side, 17.9% growth of broad money in January 2010 was supported by 7.7% growth in currency in circulation outside banks, 9.5% growth in demand deposits, 20.1% growth in savings deposits and 37% growth in time deposits. On the demand side, growth was due to 13.3% growth in net foreign assets and 19.3% growth in net domestic assets over a year. Domestic credit increased by 8.9% from D6.7 billion in Jan 2009 to D7.3 billion in Jan 2010, supported by 6.1% growth in government borrowing, 44.2% growth in credits to public entities and 14.7% growth in credits to the private sector, over a year.
Balance of Payments, Foreign Exchange Reserves and Exchange Rate
The overall BOP outcome in 2009 was not as bad as it was anticipated earlier. Preliminary BOP estimates by the CBG for 2009 indicate an overall deficit of D144 million compared to a deficit of D767 million in 2008. Current account balance including transfers showed a surplus of D1.54 billion compared to a deficit of D1.11 billion in 2008, but the capital and financial account balance worsened to a deficit of D1.68 billion compared to a surplus of D342 million in 2008. As at end-January 2010, gross international reserves totaled US$183.3 million, equivalent to 7.2 months of import cover. In Jan-Feb 2010, the Dalasi started appreciating against the UK, CHF and Euro and remained unchanged against US$ compared with the exchange rates in Dec 2009. However, over one year period, in February 2010, Dalasi depreciated against UK by 13.2%, against US$ by 3.2%, CHF by 14.6%, CFA by 10.3% and Euro by 16.1%.
At a Glance- March 2010

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Economic Indicators Real GDP (MP) Growth rate (%) CPI inflation (%) Brent crude oil price (US$/ brl)
Growth rate (%) of Revenue & grants Growth rate (%) of Exp & Net Lending Revenue & grants as % of GDP Exp & Net Lending as % of GDP Overall fiscal bal. as % of GDP Basic balance as % of GDP Basic Primary bal. as % of GDP
Latest Reference Period 2009
Feb 2010 Feb 2010 Jan-Feb 2010 Jan-Feb 2010

Jan-Feb 2010 Jan-Feb 2010 Jan-Feb 2010 Jan-Feb 2010 Jan-Feb 2010 Feb 2010
Status in the latest reference period Overall 5.0 Agriculture 5.5 Industry 3.5 Services 5.7 Overall 3.8 Food 4.6 Non-food 2.6 Average US$74.31
4.7 28.1 2.9 2.9 0.0 0.2 0.6
Status in the Corresponding period a year ago Overall 6.3 Agriculture 26.6 Industry (-) 1.2 Services 4.2 Overall 7.0 Food 8.8 Non-food 4.8 Average US$44.60
14.4 1.3 3.0 2.6 0.4 0.8 1.2
Outlook for 2010 Overall 5.4 Agriculture 4.2 Industry 4.5 Services 6.2 Expected to remain moderate in the range of 3.7 to 5.8 percent. May stabilize around US$76 in 2010
Overall fiscal performance in 2010 is projected to be better than in 2009 due to significant budgeted deceleration in expenditure. Overall fiscal deficit is budgeted at 1.1% of GDP in 2010. However, fiscal performance in Jan-Feb 2010 was not better than Jan-Feb 2009.
Domestic debt as % of GDP Yield on 91-days TBs (%) Yield on 182days TBs (%) Yield on 364days TBs (%) GR of Money supply (M2) (%) Banks assets (Billion Dalasi) CBG policy rate (%) Overall BOP Balance (Mln D) Current A/C Balance (Mln D) Capital-Fin. A/C Balance (Mln D) Dalasi/ UK Dalasi/ US$ Dalasi/ CHF Dalasi/ CFA5000 Dalasi/ Euro
21.7 10.7 11.7 13.2 17.9 18.7 14 (-) 144 1540 (-) 1684
23.4 11.1 12.8 14.4 19.3 19.6 16 (-) 767 (-) 1110 342
Likely to decline in 2010. Yields may come down further as CPI inflation is moderate.
Feb 2010 Feb 2010 Feb 2010 Jan 2010 End-Dec 2009 March 2010 2009 2009 2009 End-Feb 2010 End-Feb 2010 End-Feb 2010 End-Feb 2010 End-Feb 2010
Money growth rate is likely to remain high. Likely to increase MPC reduced policy rate to 14% in Dec 2009. BOP situation is likely to remain comfortable in 2010 due to revival of exports, tourist income, remittances and foreign investment. Dalasi is expected to depreciate against major currencies in 2010.
42.32 37.38 26.94 26.11 25.27 22.04 284.26 257.78 39.02 33.6 1. Global Economic Outlook
1.1 Policy-Driven and Multi-speed Recovery, but it is Painful and Sluggish As per the IMF latest projections made in the World Economic Outlook Update January 2010, the global economy has started recovery at a faster speed than anticipated earlier but the recovery is uneven over regions (Table 1.1). Following the deepest global downturn in recent history, economic growth broadened to advanced economies in the second half of 2009. In 2010, world output is expected to rise by 4 percent. This represents an upward revision of percentage point from the October 2009 World Economic Outlook. But in the most advanced economies, the recovery is weak, painful and slow by past standards, whereas in many emerging and developing economies, activity is relatively vigorous, largely driven by buoyant internal demand. Policies need to foster a rebalancing of global demand, remaining supportive where recoveries are not yet well sustained. Prospects of African Economies In recent years African economies in general experienced an economic boom contributed by two favorable factors: namely (a) rising exports driven by high commodity prices, and (b) increasing inflows of remittances and foreign investment. The ongoing financial crisis and economic slowdown in the developed countries have led to reversal of these positive factors and imposed serious adverse impact on the African economies. Real GDP growth in Africa as a whole is projected to decline from an average of 6% in 200408 to 1.9% in 2009, before accelerating to 4.3% in 2010 and 5.3% in 2011. Growth projections for Sub-Saharan Africa have been revised upward to 1.6 percent in 2009 and 4.3 percent in 2010 while growth projection for 2011 remains unchanged at 5.5 percent (see Table 1.1). This growth performance, while disappointing in light of the experience of the mid-2000s, is still encouraging given the severity of the external shocks. An important factor behind this outcome has been that many governments in the region have been able to use fiscal balances as shock absorbers, sustaining domestic demand and helping contain employment losses.
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Source: World Economic Outlook- Sustaining the recovery, October 2009, International Monetary Fund, Washington D.C.
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Box 1.1 IMF Outlook for Sub-Saharan Africa Published on October 3, 2009 Expresses Cautious Optimism The International Monetary Fund (IMF) released the Regional Economic Outlook: Sub-Saharan Africa on October 3, 2009. Ms. Antoinette Monsio Sayeh, Director of the IMF's African Department summarized the report's main findings as follows: The global economic crisis has hit sub-Saharan Africa hard, reducing economic growth to just 1 percent in 2009 after a period of sustained high economic growth. Oil exporters and middle income countries in the region have been particularly badly affected and most low-income countries somewhat less so. In all SSA countries, however, the crisis will likely slow, if not reverse, progress on poverty reduction. Unemployment and under-employment, already endemic, have likely risen across the region. But playing-off the global economic recovery, we expect growth in subSaharan Africa to rise to 4 percent in 2010 and 5 percent in 2011. In many countries the prudent macroeconomic policies pursued in recent years have provided some policy space to counter the effects of the slowdown. Accordingly, most countries have been able to maintain or even raise public spending, allowing fiscal deficits to widen temporarily. Where possible, monetary policy has also played a supportive role. There are significant downside risks, however. Therefore, wherever possible, IMF staff recommends that fiscal and monetary policies remain supportive until the economic recovery is well-established. As the recovery gains strength, the emphasis of fiscal policy will need to shift from stabilization to medium-term considerations, including debt sustainability. In countries with binding financing constraints, the room for fiscal policy is more limited and the primary focus will need to remain on reducing macroeconomic imbalances. Financial sectors have been for the most part resilient, but prudential supervision will need to remain vigilant in the face of the impact of the economic slowdown on the quality of banks portfolios. Scaled-up financial support from the IMF has buttressed countries policy response. The doubling of lending limits and more flexible policies have facilitated a rapid response to countries needs, and new IMF commitments to sub-Saharan Africa have reached over US$3 billion so far this year, compared to some US$1.1 billion for the whole of 2008 and only US$0.1 billion in 2007. Looking ahead, it will be critical that other development partners support this effort and those of other international financial institutions.
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Figure 1.1 Sub-Saharan Africa: Projected GDP Growth, 200811
Source: IMF, African Department database. Note: The country borders or names in this map do not necessarily reflect the IMFs official position.
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Box 1.2 IMF-World Bank Debt Sustainability Analysis for African Economies The objective of the IMF-World Bank debt sustainability framework, which was introduced in 2005, is to support low-income countries in their efforts to achieve their development goals without creating future debt problems (see The Debt Sustainability Framework for Low-Income Countries, Occasional Paper 266, IMF (2008). A debt sustainability analysis using the DSF looks at five debt burden indicators to evaluate the risk of external debt distress: the ratios of (i) present value (PV) of debt-to-GDP; (ii) PV of debt-to-exports; (iii) PV of debt-to-revenues; (iv) debt service-to-revenues; and (v) debt service-to-exports. The risk of debt distress is derived by reviewing the evolution of debt burden indicators compared to their indicative policy-dependent debt-burden thresholds using a baseline scenario, alternative scenarios, and stress tests. The thresholds depend on the quality of a countrys policies and institutions as measured by the three-year average of the World Banks Country Policy and Institutional Assessment (CPIA) index.
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The Gambia Monthly Economic Bulletin- March 2010 1.2 World Commodity Prices
Inflation pressures will remain subdued in most economies The global recession caused a large drop in inflation and rising concern about mild deflation. The still-low levels of capacity utilization and well-anchored inflation expectations are expected to contain inflation pressures (Figure 3) However, the decline in inflation pressures has been limited among some emerging economies. In the advanced economies, headline inflation is expected to pick up from zero in 2009 to 1 percent in 2010, as rebounding energy prices more than offset slowing labor costs. In emerging and developing economies, inflation is expected to edge up to 6 percent in 2010, as some of these economies may face growing upward pressures due to more limited economic slackness and increased capital flows.
Commodity prices are rebounding Commodity prices have rebounded ahead of the recovery (Table 1.2). Average Brent crude oil prices declined to $74.31 per barrel in February 2010 from $76.37 per barrel in January 2010. Looking ahead, commodity prices are expected to rise a bit further supported by the strength of global demand, especially from emerging economies. However, this upward pressure is expected to be modest, given the above-average inventory levels and substantial spare capacity in many commodity sectors. Accordingly, the IMFs baseline petroleum price projection is unchanged at $76 a barrel for 2010 and revised up to $82 a barrel in 2011. Other non-fuel commodity prices have also been marked up modestly by the IMF WEO Update.
Table-1.2 Trends of World Commodity Prices 16
Source: World Bank Pink Sheet March 2010
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Source: World Bank Pink Sheet March 2010
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The Gambia Monthly Economic Bulletin- March 2010 2. Current State of the Gambian Economy 2.1 Overall and Sectoral GDP Growth Rates The sharp decline in global economic activity had adverse impact on the Gambian economy in 2008 leading to decline of exports and remittances and decline of manufacturing production and wholesale and retail trade. However, thanks to bumper crops contributed by favorable monsoon at home and high international prices of food grains, and very good performance by electricity, telecom and financial sectors, the real GDP growth at constant 2004 market prices improved from 6% in 2007 to 6.3% in 2008 (Table-2.1 and Figure-2.1). As per the Preliminary Estimates of the GBOS, real GDP growth in 2009 at constant market prices is expected to be 5% supported by a growth of 5.5% in agricultural production, 3.5% by industrial production and 5.7% in services production. Share of agriculture increased from 21.6% in 2007 to 25.3% in 2009, while share of industry declined from 14.7% to 13.2% and that of services declined from 63.7% to 61.5% during the same period. Increase of agricultural share was contributed by increase in share of crops, while decline of services share was mainly due to decline of share of wholesale and retail trade, and transport and communications.
GDP Composition(%) in 2009

Others Business 7% 11% Agriculture 26% Mining 2% Manufacturing Trade 26% 6% Utilities 2% Construction 4%
Transport 12% Hotels 4%
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The Gambia Monthly Economic Bulletin- March 2010 Figure-2.1: Trends of sectoral growth rates during 2000-2009 (in percentage)
30.0 20.0 10.0 0.0 -10.0 -20.0 -30.0 GDPMP Agriculture Industry Services 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Table-2.1: Sectoral Growth Rates and Shares in GDP in the Gambia in 2005-2009 (in %)
Items GDP at 2004 basic price Agriculture and allied -- Crops -- Livestock -- Forestry -- Fishing Industry -- Mining and quarrying -- Manufacturing -- Electricity, gas, water -- Construction Services -- Wholesale/retail trade -- Hotels/ restaurants -- Transport / telecom -- Financial -- Real est., business -- Public administration -- Other service
2006 Actual 3.1 -14.3 -26.3 2.4 3.0 7.8 4.5 1.2 4.1 8.7 6.0 10.0 16.1 15.7 2.7 5.7 -3.9 11.1 11.0
Sectoral GDP Growth Rates (in percentage) 2007 2008 2009 Actual Actual Estd. 6.0 6.3 5.0 -1.9 -15.2 11.9 -4.0 18.0 2.5 -14.1 3.9 59.1 -4.3 8.3 9.7 14.3 7.0 -0.9 1.4 12.9 17.8 26.6 55.2 4.3 1.0 3.5 -1.2 8.8 -8.3 1.7 5.0 4.2 -2.3 2.9 -8.0 28.2 0.0 42.1 27.0 5.5 5.5 4.5 0.7 11.3 3.5 8.8 0.4 10.0 3.0 5.7 1.0 3.0 8.0 3.0 2.5 2.0 37.1
2010 Proj
5.4 4.2 4.5

3.9 2.0 3.9 4.5 10.0 3.3 10.7 1.0 6.2 1.0 3.8 8.8 8.0 3.4 3.4 24.8
Sectoral Shares in GDP (in percentage) 2006 2007 2008 2009 Actual Actual Actual Estd. 100.0 100.0 100.0 100 23.1 11.8 8.8 0.7 1.9 15.1 2.4 7.0 1.1 4.6 61.8 28.2 3.6 12.8 7.5 3.4 2.6 3.7 21.6 9.5 9.4 0.6 2.1 14.7 1.9 7.0 1.6 4.2 63.7 29.5 3.9 13.0 7.0 3.3 2.8 4.1 25.3 13.6 9.0 0.6 2.0 13.4 1.9 5.9 1.5 4.1 61.3 26.6 3.7 11.0 8.3 3.0 3.7 4.9 25.3 13.7 9.0 0.5 2.1 13.2 2.0 5.6 1.6 4.0 61.5 25.5 3.6 11.3 8.2 3.0 3.6 6.3
Source: Gambian Bureau of Statistics (GBOS) http://www.gbos.gm for the years 2006-2009 and projections for 2010 are made by the Research Team.
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The Gambia Monthly Economic Bulletin- March 2010 2.2 Consumer Price Index and Inflation As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflation decelerated significantly from 7% in Feb 2009 to 3.8% in Feb 2010. The 12-month average inflation rate also decelerated from 4.8% in Feb 2009 to 4.1% in Feb 2010. Food and drinks (with weights of 55.1% in overall CPI) recorded an annual point-to-point inflation rate of 4.6% in Feb 2010, down from 8.8% a year ago, and contributed 70.9% to overall inflation in Feb 2010. Non-food items (with weights of 44.9% in overall CPI) recorded annual inflation rate of 2.6% in Feb 2010, down from 4.8% a year ago and contributed 29.1% to total inflation. Among other groups, transport recorded an inflation of 2.4%, utilities 2.3%, restaurants and hotels 4% and miscellaneous goods and services 8.2% in Feb 2010.
Weights Wi (%) 100.0 55.1 0.7 11.2 3.4 5.2 1.2 4.4 3.0 8.1 1.5 0.4 5.9 44.9
Table-2.2 CPI Inflation Rates in February 2010 (in percentage) Feb 2009 Feb 2010 Inflation Contributio Wi (CPIi1 Index Index (%) CPIi0) n2 (%) Overall 120.25 124.78 3.8 447.9 100.0 Food 125.57 131.34 4.6 317.7 70.9 Tobacco 105.68 106.64 0.9 0.6 0.1 Clothing 110.98 113.14 1.9 24.3 5.4 Utilities 121.18 124.02 2.3 9.7 2.2 Furnishing 114.87 116.37 1.3 7.8 1.8 Health 101.77 101.82 0.0 0.1 0.0 Transport 119.93 122.85 2.4 12.9 2.9 Telecom 101.95 102.5 0.5 1.6 0.4 Recreation 104.50 105.74 1.2 10.0 2.2 Education 102.24 102.99 0.7 1.1 0.3 Hotels 115.89 120.53 4.0 1.7 0.4 Misc. 124.28 134.49 8.2 60.5 13.5 Non-food 113.79 116.73 2.6 132.1 29.1 Source of basic data: Gambian Bureau of Statistics (GBOS). http://www.gbos.gm
Items
Contribution of an item to overall inflation is estimated by the following formula: Contribution of Item (i) = Wi (CPIi1 CPIi0) / Wi (CPIi1 CPIi0) expressed as a percentage. where CPIi1 = Consumer Price Index for Item (i) in the current period CPIi0 = Consumer Price Index for Item (i) in the previous period Wi = Weights for Item (i) and W = Total weights = Wi For example, contribution of food is estimated as 100 X 317.7 / 447.9 = 70.9%.
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The Gambia Monthly Economic Bulletin- March 2010 2.3 Projection of CPI inflation for the year 2010 We have made three alternative projections of inflation rates for the year 2010, on the basis of the following assumptions: (1) Alternative-1: It is assumed that the CPI variation for a month over the previous month in 2010 will be the average CPI variation for the month over the previous month in last two years (2009 and 2008). Thus, Mar 2010 CPI is estimated by the following formula: Projected CPI for Mar 2010 = Feb 2010 CPI + [Mar 2009 CPI Feb 2009 CPI + Mar 2008 CPI Feb 2008 CPI]/ 2. For subsequent months, CPI is projected by the similar formula. (2) Alternative-2: It is assumed that the variation of CPI for a month over the previous month in 2010 will be the same as that for the respective month over the previous month in 2009. For example, CPI for Mar 2010 is estimated by the following formula: Projected CPI for Mar 2010 = Feb 2010 CPI+ (Mar 2009 CPI Feb 2009 CPI). For the subsequent months, CPI is projected by the similar formula. (3) Alternative-3: Average of inflation rates under Alternatives 1 and 2. Results are presented in Table 2.3 which indicates that inflation rate is expected to remain moderate in the range of 3.7% to 5.8% during 2010, and the year-end 12-month average inflation rate is expected to be around 4.3%. Table-2.3: Projections of CPI inflation for the year 2010 (in percentage)
2007 Index Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4
Ave 106.86 107.01 109.36 111.64 112.05 111.98 111.95 112.09 111.86 111.95 112.13 112.26 107.7 111.9 112.0 112.1 110.9
2008 Index
112.31 112.34 112.73 113.21 113.83 114.48 116.21 117.65 118.96 119.29 119.54 119.93 112.5 113.8 117.6 119.6 115.9
2009 Index
120.13 120.25 120.30 120.36 120.51 120.61 120.84 121.15 121.75 121.99 122.7 123.19 120.2 120.5 121.2 122.6 121.1
2010Alt1
2010Alt2
124.4 2 124.7 8 125.0 0

125.27 125.66 126.03 127.01 127.89 128.84 129.13
124.4 2 124.7 8 124.8 3

124.89 125.04 125.14 125.37 125.68 126.28 126.52 127.23 127.72
2008 Inf.rate 5.1 5.0 3.1 1.4 1.6 2.2 3.8 5.0 6.3 6.6 6.6 6.8
2009 Inf.rate 7.0 7.0 6.7 6.3 5.9 5.4 4.0 3.0 2.3 2.3 2.6 2.7 6.9 5.8 3.1 2.5
2010Alt1 3.6 3.8 3.9 4.1 4.3 4.5 5.1 5.6 5.8 5.8 5.6 5.6 3.7 4.3 5.5 5.7
2010Alt2
2010 Alt3
3.6 3.8 3.8 3.8 3.8 3.8 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.8 3.7 3.7 3.7
3.6 3.8 3.8 3.9 4.0 4.1 4.4 4.6 4.8 4.8 4.7 4.6 3.7 4.0 4.6 4.7 4.3
129.6 1 130.0 5 124.7 125.7 127.9 129.6 127.0
124.7 125.0 125.8 127.2 125.7 23
4.4 1.7 5.0 6.7 4.5
4.6
4.8

Note: Projections are made by the Research Team. Alternative projections 1, 2 and 3 are defined in the text above.
24
The Gambia Monthly Economic Bulletin- March 2010 2.4 Government Fiscal Performance in January-February 2010 Columns (4), (5) and (6) of Table-2.4.1 present major item-wise revenue realization and expenditure of the government in the first two months (i.e. Jan-Feb) of 2008, 2009 and 2010 respectively. Columns (7) and (8) indicate annual percentage changes of major items of revenues and expenditure in Jan-Feb 2009 and Jan-Feb 2010 respectively over those in the corresponding period of the previous year. Governments fiscal performance was not satisfactory in Jan-Feb 2010 compared with Jan-Feb 2009. Tax revenues declined by 7.5% in Jan-Feb 2010 over Jan-Feb 2009 compared with a growth of 17.1% in Jan-Feb 2009 over Jan-Feb 2008. However, there was better performance of non-tax revenues in Jan-Feb 2010 than in Jan-Feb 2009. In Jan-Feb 2010, total expenditures & net lending increased significantly by 28.1% over Jan-Feb 2009 due to 17.7% increase in current expenditure and 55.8% increase of capital expenditure and net lending over Jan-Feb 2009. There was a fiscal deficit of (-) D8.5 million in Jan-Feb 2010 compared to a fiscal surplus of D107.1 million in Jan-Feb 2009. There was a Basic surplus of D61.4 million and Basic Primary surplus of D167.9 million in Jan-Feb 2010, lower than Basic surplus of D199.6 million and basic primary surplus of D304 million in Jan-Feb 2009. Table-2.4.1 Govt Financial Performance in Jan-Feb 2010 (Million Dalasi)
Items 2009 Actual 2010 Budget 2008 Jan-Feb 2009 Jan-Feb 2010 Jan-Feb
Ja-Fb-09 % ch over Ja-Fb 08 Ja-Fb-10 % ch over Ja-Fb-09
(1) (2) (3) (4) (5) (6) (7) (8) Revenue and grants 4893.0 5474.1 658.2 752.8 818.4 14.4 8.7 Domestic Revenue 3904.9 4413.2 616.0 713.3 684.1 15.8 -4.1 Tax Revenue 3517.5 3991.3 559.8 655.7 606.6 17.1 -7.5 Nontax Revenue 387.4 421.9 56.3 57.6 77.5 2.4 34.5 Grants 988.1 1061.0 42.2 39.5 134.4 -6.5 240.3 Exp & Net Lending 5631.9 5772.9 637.5 645.7 826.9 1.3 28.1 Current Expenditure 3625.1 4455.6 477.1 469.9 553.1 -1.5 17.7 Personnel Emoluments 1191.8 1499.3 147.7 175.5 236.9 18.8 35.0 Other Charges 1691.9 2193.9 191.1 190.0 209.6 -0.6 10.3 Interest 741.4 762.4 138.3 104.4 106.5 -24.5 2.0 External 153.2 176.3 56.1 25.7 32.8 -54.1 27.4 Domestic 588.3 586.1 82.2 78.6 73.7 -4.3 -6.3 Cap Exp & Net Lending 2006.8 1317.3 160.5 175.8 273.8 9.6 55.8 Capital Expenditure 1889.1 1255.3 133.4 192.8 273.8 44.5 42.0 Externally financed 1300.1 1360.0 82.4 132.0 204.2 60.2 54.7 Net Lending 117.7 62.0 27.0 -17.0 0.0 -162.9 -100.0 Overall Fiscal Balance -739.0 -298.7 20.7 107.1 -8.5 417.1 -107.9 Basic Balance -427.0 0.3 60.9 199.6 61.4 227.7 -69.2 Basic Primary Balance 314.5 762.7 199.2 304.0 167.9 52.6 -44.8 Nominal GDP (GBOS) 25286 28046 25286 28046 10.0 10.9 22978 Source: Statistics and Special Studies Unit, MOF. Notes: (1) Overall balance = (Revenue and Grants) minus (Expenditure and Net Lending); (2) Basic Balance = (Domestic Rev) less (Exp. and Net Lending excluding externally financed capital exp) and (3) Basic Primary Balance = Basic Balance plus interest payments
25
The Gambia Monthly Economic Bulletin- March 2010 Column (2) to (6) of Table-2.4.2 indicates the item-wise fiscal performance of the government, as percentage of GDP, for 2009-outturn, 2010-Budget, Jan-Feb 2008, Jan-Feb 2009 and Jan-Feb 2010 outturn respectively. It is observed from the table that the fiscal performance in Jan-Feb 2010 is not better than in Jan-Feb 2009 in terms of percentages of GDP. Basic surplus at 0.2% of GDP in JanFeb 2010 is significantly lower than 0.8% of GDP in Jan-Feb 2009. The Budget for 2010 has targeted at total revenue and grants amounting to 19.5% of GDP (marginally higher than 19.4% of GDP in 2009-Outturn) and total expenditure and net lending amounting to 20.6% of GDP (significantly lower than 22.3% of GDP in 2009-Outturn) resulting in an overall fiscal deficit amounting to 1.1% of GDP, significantly lower than 2.9% of GDP recorded in 2009-Outturn. Significant reduction in total expenditure is sought to be achieved through drastic cut in capital expenditure from 7.5% of GDP in 2009-Outturn to 4.5% of GDP in 2010 Budget. Such a cut in capital expenditure may be good to maintain fiscal sustainability, but may affect adversely development activities unless funds are supplemented by donors assistance. Table-2.4.2 Govt Financial Performance in 2009 and Jan-Feb 2010 (As % of GDP at current market prices) 2009 2010 2008 2009 Items
(1) Revenue and grants Domestic Revenue Tax Revenue Nontax Revenue Grants Exp & Net Lending Current Expenditure Personnel Emoluments Other Charges Interest External Domestic Cap Exp & Net Lending Capital Expenditure Externally financed Net Lending Actual (2) 19.4 15.4 13.9 1.5 3.9 22.3 14.3 4.7 6.7 2.9 0.6 2.3 7.9 7.5 5.1 0.5 -2.9 -1.7 1.2 Budget (3) 19.5 15.7 14.2 1.5 3.8 20.6 15.9 5.3 7.8 2.7 0.6 2.1 4.7 4.5 4.8 0.2 -1.1 0.0 2.7 Jan-Feb (4) 2.9 2.7 2.4 0.2 0.2 2.8 2.1 0.6 0.8 0.6 0.2 0.4 0.7 0.6 0.4 0.1 0.1 0.3 0.9 Jan-Feb (5) 3.0 2.8 2.6 0.2 0.2 2.6 1.9 0.7 0.8 0.4 0.1 0.3 0.7 0.8 0.5 -0.1 0.4 0.8 1.2
Overall Bal Inc. grants Basic Balance Basic Primary Balance
2010 Jan-Feb (6) 2.9 2.4 2.2 0.3 0.5 2.9 2.0 0.8 0.7 0.4 0.1 0.3 1.0 1.0 0.7 0.0 (-) 0.0 0.2 0.6
Source: Statistics and Special Studies Unit, MOF. Notes: (1) Overall balance = (Revenue and Grants) minus (Expenditure and Net Lending); (2) Basic Balance = (Domestic Revenue) less (Expenditure and Net Lending excluding externally financed capital expenditure) and (3) Basic Primary Balance = Basic Balance plus interest payments
26
2.5 Projection of Fiscal Outturn for the Year 2010

Column (2) of the Table-2.5.3 below presents detailed item-wise revenues and expenditure in Jan-Feb 2010. The ratios of actual realization for any item in Jan-Feb to the final outturn for the item during the last five years viz. 2005, 2006, 2007, 2008 and 2009 are presented in columns (3) to (7) respectively. Item-wise average ratios for these five years are presented in column (8). Taking these ratios as norms to take care of monthly seasonality over the year, expected revenue and expenditure outcomes for the full year 2010 are estimated by the following formula and are presented in column (9) of the Table-2.5.3. Expected outturn for an item in 2010 = 100 X (actual realization in Jan-Feb 2010) / average realization ratio (in percentage) in Jan-Feb in the last five years (2005-2009) Comparison of the expected outcome given in Column (9) with the budget estimates given in Column (10) leads to the following conclusions: (a) Tax revenue target given in the Budget 2010 may not be realized, unless tax revenue collections improve significantly in the subsequent months in 2010. (b) Non-tax revenue realization may also fall short of targets by marginal amounts. (c) Grants may also fall short of budget estimates unless their inflows and disbursement are augmented significantly in the subsequent months in 2010. (d) Both the current and capital expenditure are expected to remain within budget estimates. (e) Although capital expenditure has been drastically pruned down in the 2010 Budget, its utilization needs to be augmented significantly in the subsequent months. (f) Overall, it is expected to have a fiscal deficit of D204 million (0.7% of GDP) compared to budgeted fiscal deficit at D299 million (1.1% of GDP). (g) It is a matter of serious concern that the Basic balance is likely to generate a deficit of (-) 2.7% of GDP compared to budget target of nearly 0% of GDP. Primary balance is likely to be (-) 0.2% of GDP, compared to Budget target at 2.7% of GDP.
2.5.3 Government Fiscal Performance in Jan-Feb 2010 and Expected Outturn for 2010 Items 2010Ja-Fb Actual (2) 818.5 684.1 606.6 217.7 91.7 74.4 9.3 27.4 14.9 Ratio of Jan performance in Annual Outturn (in Percentage) 20052006200720082009Ja-Fb Ja-Fb Ja-Fb Ja-Fb Ja-Fb (3) (4) (5) (6) (7) 19.1 17.2 17.6 17.6 15.4 16.8 17.7 18.0 17.6 18.3 16.9 18.2 18.0 17.8 18.6 17.6 18.7 19.7 17.9 21.2 17.1 15.6 15.9 16.5 21.8 15.5 18.5 19.1 14.4 15.9 12.7 11.3 8.4 24.4 14.3 58.3 60.6 57.2 51.0 55.9 76.1 82.6 80.4 77.7 78.9 Ave. ratio 20052009 (8) 2010 Proj. Outturn3 (9) 4527.3 3751.5 3355.3 1106.3 527.8 446.1 65.1 48.5 18.8
2010 Budget Estimate
(1) 1.Rev & grants (2+5) 2.Dom. Revenue (3+4) 3.Tax Rev (3.1+3.2) 3.1 Direct Tax (a to e) (a) Personal (b) Corporate (c) Capital Gains (d) Payroll (e) Other
(10) 5474.1 4413.2 3991.3
17.4 16.7 14.2 56.6 79.1
Expected outturn for an item in 2010 = 100 X (actual realization in Jan 2010) / average realization ratio (in percentage) in Jan in the last five years (2005-2009).
27
2.5.3 Government Fiscal Performance in Jan-Feb 2010 and Expected Outturn for 2010 2010Ratio of Jan performance in Ave. 2010 Ja-Fb Annual Outturn (in Percentage) ratio Proj. Actual 2005Out200520062007200820092009 turn4 Ja-Fb Ja-Fb Ja-Fb Ja-Fb Ja-Fb (1) (2) (3) (4) (5) (6) (7) (8) (9) 3.2 Indirect Tax 388.9 16.7 18.0 17.2 17.7 17.7 2249.0 3.2.1 Dom Tax on G&S 101.0 18.3 16.4 18.4 17.2 19.0 575.2 (a) Stamp Duties 2.9 8.8 10.4 8.4 4.6 23.8 11.2 26.3 (b) Excise Duties 25.3 9.3 13.9 19.0 22.7 17.3 16.4 154.1 (c) Dom Sales Tax 72.7 20.2 17.6 18.5 16.3 19.5 18.4 394.9 3.2.2 Tax on Ext Trade 287.9 16.2 18.5 16.9 17.9 17.3 1673.8 (a) Duty (i+ii) 151.8 18.5 21.9 16.6 17.9 18.7 806.8 (i) Oil 74.4 23.9 26.6 19.4 12.7 22.2 20.9 355.4 (ii) Non-oil 77.3 16.4 19.3 15.0 20.5 14.5 17.1 451.4 (b) Sale tax on imp (i+ii) 136.2 13.7 14.5 17.1 18.0 15.2 867.0 (i) Oil 34.0 14.4 15.6 16.4 16.2 14.7 15.4 219.9 (ii) Non-oil 102.2 13.6 14.1 17.3 18.6 15.3 15.8 647.1 4. Nontax Rev (a to d) 77.5 15.6 12.1 18.1 15.9 14.9 396.2 (a) Govt Charges 32.2 23.6 18.2 13.3 24.2 27.2 21.3 151.2 (b) NTR from CRD 0.8 27.2 20.0 23.5 16.4 29.6 23.3 3.6 (c) NTR from CED 16.0 14.0 14.3 18.0 15.0 15.3 104.1 (d) Others 28.5 22.0 21.0 30.8 15.0 15.0 20.8 137.3 5. Grants 134.4 46.2 8.6 10.5 17.3 4.0 17.3 775.8 6. Exp & Net Lend (7+8) 826.9 4731.7 19.9 11.8 18.3 14.7 11.5 7. Cur. .Exp (7.1 to 7.3) 553.1 17.1 12.5 14.3 15.0 13.0 3830.8 7.1 Pers. Emoluments 236.9 20.4 16.6 15.7 15.0 14.7 16.5 1435.9 7.2 Other Charges 209.6 16.5 8.6 13.1 12.8 11.2 12.4 1684.1 7.3 Interest (a+b) 106.5 9.3 5.2 8.8 11.3 8.1 710.8 (a) External 32.8 23.7 24.6 22.3 36.5 16.8 24.8 132.2 (b) Domestic 73.7 13.7 10.4 11.6 14.7 13.4 12.7 578.6 8. Cap Exp & Net Lend. 273.8 43.7 10.5 28.2 14.0 8.8 900.8 8.1 Capital Exp. (a+b) 273.8 39.5 10.9 22.3 13.0 10.2 900.8 (a) Ext. Financed (i+ii) 204.2 46.4 11.5 26.3 16.3 10.2 224.5 (i) Loans 69.9 0.0 11.9 31.6 11.8 14.7 91.0 76.8 (ii) Grants 134.4 46.4 8.6 10.5 25.5 5.9 91.0 147.7 (b) GLF Capital 69.6 25.1 0.1 6.2 9.8 10.3 10.3 676.4 8.2 Net lending 0.0 0.0 0.0 103.1 22.9 -14.4 22.3 0.0 9. Overall fiscal bal (1-6) -8.4 -204.4 10.Basic balance 61.4 -755.7 11. Basic Primary Bal. 167.9 -44.8 Memorandum Items: As percentage of IMF Program Nominal GDP (equal to D19904 million) 12. Fiscal bal (1-6)5 (-) 0.0 -0.7 13.Basic balance 0.2 -2.7 14. Basic Primary Bal. 0.6 -0.2 Items
2010 Budget Estimate
(10)
421.9
1061.0 5772.9 4455.6 1499.3 2193.9 762.4 176.3 586.1 1317.3 1255.3 1360
62.0 -298.7 0.3 762.7 -1.1 0.0 2.7
Expected outturn for an item in 2010 = 100 X (actual realization in Jan 2010) / average realization ratio (in percentage) in Jan in the last five years (2005-2009). 5 (1) Overall balance = (Revenue and Grants) minus (Expenditure and Net Lending); (2) Basic Balance = (Domestic Revenue) less (Expenditure and Net Lending excluding externally financed capital expenditure) and (3) Basic Primary Balance = Basic Balance plus interest payments
28
The Gambia Monthly Economic Bulletin- February 2010 2.6 Domestic Debt and Treasury Bills Outstanding (a) At the end of February 2010, outstanding domestic debt stood at D6.1 billion (amounting to 21.7% of GDP), compared to the outstanding domestic debt at D5.9 billion (amounting to 23.4% of GDP) a year ago. (b) Including CBG support, the total outstanding domestic debt increased to D7.1 billion at end-Feb 2010, from D6.6 billion a year ago. Outstanding Treasury bills increased by 9.2 percent to D5.1 billion and accounted for 84.2 percent of the stock (excluding overdraft).. (c) The share of Treasury bills increased from 79.4% at end-Feb 2009 to 84.2% at end-Feb 2010, that of Sukuk Al-Salam increased from 1.6% to 2.3% and that of Govt. bonds increased from 4.2% to 4.5%, while the share of NIB treasury bills declined from 14.8% to 9% over the same period. Table-2.6-A Outstanding Domestic Public Debt as on 31 January 2010 Million Dalasi Composition (in %) % change in Feb 2010 28 Feb 28 Feb 28 Feb 28 Feb over Feb 2009 2009 2010 2009 2010 Treasury bills 79.4 84.2 4,696 5,128 9.2 Sukuk Al-Salam 1.6 2.3 92 142 54.9 Government Bonds 250 275 4.2 4.5 10.0 NIB Treasury Notes 14.8 9.0 873 547 -37.4 Total dom. Debt 5,911 6,092 100 100 3.1
Type of debt Total incl. overdraft Nominal GDP As % of GDP 6,619 25286 23.4 7,118 28046 21.7
Including overdraft
26.2
25.4
Domestic Debt Sustainability As per the analysis made by the CBG, the current level of Gambias domestic debt is not sustainable. Out of three sustainability indicators given in Table-2.6.B, one indicator viz. debt service to revenue ratio is not satisfied. Table-2.6-B Primary Benchmarks for Domestic Debt Sustainability Ratios (%) Item Threshold 2006 2007 2008 2009 Estimated 1. Debt service to 28-63 142 124 118 91 revenue ratio 2. Debt to GDP ratio 20-25 33 30 27 25.4 3. Debt to revenue 92-167 180 158 166 147 ratio
Note: (1) Debt service is the sum of interest payments plus the amortization (i.e. repayment of principal) including the rollover of treasury Bills. (2) There are no internationally agreed levels of thresholds. The thresholds used here are those used by the Debt Relief International (DRI) for many HIPC countries. Source: Central Bank of Gambia
29
The Gambia Monthly Economic Bulletin- February 2010 2.7 Treasury Bills Yields Yields on treasury bills fluctuated widely in recent months. As expected, the higher the maturity of treasury bills, the higher is the yield. However, despite stability in deposit rates and significant decline of annual point-to-point CPI inflation rate from 7% in Jan 2009 to 2.8% in Dec 2009, average yields on the 91-day bills increased from 10.5% in Jan 2009 to 11% in Dec 2009 and yield on 182-day bills from 12.1% in Jan 2009 to 12.9% in Dec 2009. In view of the declining trend of inflation rates, the Monetary Policy Committee reduced the policy rate by 2 percentage points to 14% with effect from December 2009. As a result, average yields of the 91-day, 182-day and 364-day bills fell from 11%, 12.9% and 14.3% respectively in December 2009 to 10.3%, 12% and 13.6% respectively in Jan 2010 and to 10.7%, 11.7% and 13.2% respectively in February 2010.
Table-2.7 Average yields on treasury bills (in percentage per annum) 2009 2010 2008 91-D 162-D 364-D 91-D 182-D 364-D 91-D 182-D 10.5 12.1 14.4 10.3 12.0 10.6 11.4 13.6 11.1 12.8 14.4 10.7 11.7 10.9 11.9 13.7 11.0 12.1 13.6 11.4 12.7 14.4 12.0 13.0 14.6 10.9 11.9 13.3 12.5 13.8 15.3 10.2 11.3 13.0 13.0 13.8 15.6 10.0 11.2 13.3 11.5 12.0 14.4 9.6 10.6 12.6 10.2 11.2 13.3 8.8 10.2 12.1 10.4 11.7 14.3 8.9 11.0 13.1 10.8 12.1 14.2 10.3 11.4 13.6 10.8 12.3 14.0 10.1 13.4 13.7 11.0 12.9 14.3 9.9 12.5 14.0
364-D
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
13.6 13.2
Trends of Yields of Treasury Bills during 2007-2010
30
The Gambia Monthly Economic Bulletin- February 2010 2.8 Money Supply Broad money supply (M2) recorded an annual growth of 17.9% in January 2010, compared to 19.3% a year ago. While quasi money increased by a faster pace of 27.3%, narrow money increased by 8.8 percent. On the supply side, 17.9% growth of broad money in January 2010 was supported by 7.7% growth in currency in circulation outside banks, 9.5% growth in demand deposits, 20.1% growth in savings deposits and 37% growth in time deposits. On the demand side, growth was due to 13.3% growth in net foreign assets and 19.3% growth in net domestic assets over a year. Domestic credit increased by 8.9% from D6.7 billion in Jan 2009 to D7.3 billion in Jan 2010, supported by 6.1% growth in government borrowing, 44.2% growth in credits to public entities and 14.7% growth in credits to the private sector, over a year. Table-2.8 Money Supply and Demand in January 2010
Components Jan 2008 Million Dalasi 8095 4077 Jan 2009 Million Dalasi 9656 4900 Jan 2010 Million Dalasi 11388 5333 Jan 2009 % share 100 51 19 31 49 28 21 100 34 27 7 66 69 28 2 37 2 -3 Jan 2010 % share 100 47 18 29 53 29 24 100 33 28 5 67 64 25 3 36 0 3 Jan-09 % ch. over Jan-08 19.3 20.2 18.4 21.3 18.4 8.4 35.0 19.3 -17.7 -11.6 -35.1 54.4 44.3 61.6 -29.5 44.3 0.0 -41.0 Jan-10 % ch. over Jan09 17.9 8.8 7.7 9.5 27.3 20.1 37.0 17.9 15.3 25.0 -22.3 19.3 8.9 6.1 44.2 14.7 -100.0 -218.8
1.Money Supply (M3) (2+3) 2.Narrow Money (2.1+2.2) 2.1 Currency 2.2 Demand deposits 3.Quasi money (3.1+3.2) 3.1 Savings deposits 3.2 Time deposits Demands for money (1+2) 1.Net foreign assets (1.1+1.2) 1.1 Monetary Authorities 1.2 Commercial banks 2.Net Dom. Assets (2.1+2.2) 2.1 Domestic credit (a) Credits to government (b) Credits to public entities (c) Credits to private sector (d) Credits to forex bureau 2.2 Other items, net
1577
2500 4018 2510 1508 8095 3942
1,867
3032 4757
2,011 3,321
6055
2,722 2,035
9656 3243
3,267 2,788
11388 3740 3222 518 7648 7303 2883 288 4132 0 345
2,914 1028
4153 4645 1681 284 2497 183 -492
2,577 667
6413 6704
2,717
200 3604 183 -291
Source: Central Bank of Gambia
31
The Gambia Monthly Economic Bulletin- February 2010
2.9 Performance by Commercial Banks

(a) The Gambian banking industry consists of 13 banks with highly skewed distribution of assets. The industry is dominated by three large banks holding almost two-thirds of the total assets, although their share has declined over the years. (b) The industrys total assets increased to D14.8 billion in Dec 2009, up by 18.7% over a year, and the asset quality is satisfactory. The average risk-weighted capital adequacy ratio declined from 33.2% in Sep 2009 to 18.1% in Dec 2009, but it was well above the statutory norm at 8% and all the banks satisfied the minimum requirement. However, the ratio of non-performing loans to gross loans was 8% in Dec 2009 compared to 7% in Sep 2009, and profitability of banks declined during 2009. (c) Bank loans to economic sectors increased by 25.3% to D4.4 billion in Dec 2009 from 3.5 billion a year ago. Credit to manufacturing increased by 105%, followed by agriculture (87%), financial (29%), distributive trade (23%), construction (13%), other commercial (19.3%) and others (31%). Table-2.9 Sectoral Distribution of Bank Loans (Million Dalasi) 2008 2009 Annual GR Composition (%) 2009 2008 2009 Agriculture 140.4 262.5 86.9 4.0 5.9 Fishing 15.9 16.9 6.7 0.5 0.4 Manufacturing 106.0 217.4 105.0 3.0 4.9 Construction 441.5 499.0 13.0 12.5 11.3 Transportatio 288.9 312.7 8.2 8.2 7.1 n Trade 946.1 1160.7 22.7 26.9 26.3 Tourisum 196.8 211.2 7.3 5.6 4.8 Financial 113.5 146.4 29.0 3.2 3.3 Other com 684.6 816.8 19.3 19.4 18.5 Others 588.2 769.3 30.8 16.7 17.4 Total 3521.9 4413.0 25.3 100.0 100.0 Composition of Sectoral Loans in 2009 (%) Source: CBG
32
2.10 Commercial Banks Assets

Total assets of the commercial banks increased by 18.7% on year-on-year basis from D12.5 billion at end-Dec 2008 to D14.8 billion at end-Dec 2009. Gambian banks do not have large exposure to foreign assets or foreign liabilities. At end-Dec 2009, foreign assets constituted only 9.9% of total assets (foreign exchange 2.4%, balances abroad 6.5% and foreign investment 1.1%), down from 10.4% a year ago (foreign exchange 3.2%, balances abroad 6.1% and foreign investment 1.1%). Gambian banks also do not have large contingent liabilities. At end-Dec 2009 contingent liabilities constituted only 11.9% of total liabilities, compared to 11.5% a year ago. At end-Dec 2009, loans and advances increased by 25.7% over a year and constituted 27.7% of total assets, compared to 26.2% a year ago. At end-Dec 2009, investments in government Treasury Bills by the banks increased by 24.9% over a year and constituted 24.9% of their total assets. As expected, three large banks had the dominant share. At end-Dec 2009, loans and advances to the public sector increased by 108.8% over a year, while those to the private sector increased by only 16.5% over a year ago.
Table-2.10 Commercial Banks Assets at the end-December 2009 (Million Dalasi)

Assets (Million Dalasi) 1. Notes and coins 2. Foreign exchange 3. Local Bank balance ii. CBG iii. Banks locally 4. Balances abroad 5. Bills purchased 6. Loans and advances i. Public sector ii. Private sector 7. Investments i. Govt Treasury Bills ii. Others iii Foreign Invest. 8. Fixed assets 9. Guarantees 10. Other assets 11. Total assets (1 to 10) 12. Net Balance (11-9) Memo: Foreign Assets Dec-2007 204.3 118.1 918.2 884.5 33.7 1,186.6 9.3 2,446.6 91.7 2,355.0 2,958.8 2,605.7 198.9 154.2 548.8 1,201.6 835.3 10,427.7 9,226.1 1,459.0 Dec-2008 217.3 401.3 854.7 851.9 2.8 758.4 40.9 3,263.1 325.7 2,937.4 3,231.1 2,949.5 139.9 141.6 840.1 1,435.8 1,425.5 12,468.2 11,032.4 1,301.4 Dec-2009 211.9 348.0 1,221.9 999.2 222.6 959.1 74.3 4,101.8 679.9 3,421.9 3,998.2 3,683.9 152.3 161.9 1,140.8 1,764.2 985.4 14,805.6 13,041.4 1,469.1 % ch. Dc08 % ch. Dc09 Composition (% ) Dec-2008 Dec-2009 over Dc07 over Dc08 1.7 1.4 6.4 -2.5 3.2 2.4 239.7 -13.3 6.9 8.3 -6.9 43.0 6.8 6.7 -3.7 17.3 0.0 1.5 -91.7 7874.5 6.1 6.5 -36.1 26.5 0.3 0.5 338.1 81.6 26.2 27.7 33.4 25.7 2.6 4.6 255.3 108.8 23.6 23.1 24.7 16.5 25.9 27.0 9.2 23.7 23.7 24.9 13.2 24.9 1.1 1.0 -29.6 8.9 1.1 1.1 -8.2 14.3 6.7 7.7 53.1 35.8 11.5 11.9 19.5 22.9 11.4 6.7 70.7 -30.9 100.0 100.0 19.6 18.7 88.5 88.1 19.6 18.2 10.4 9.9 -10.8 12.9
Source: Central Bank of Gambia.
33
2.11 Commercial Banks Liabilities

As mentioned earlier, Gambian banks do not have large exposure to foreign liabilities. At end-Dec 2009, external sector related liabilities constituted only 4.9% of total liabilities (non-residents deposits 4%, balances with banks abroad 0.1% and external debt 0.8%), up from 3.1% a year ago (non-residents deposits 1.1%, balances with banks abroad 0.4% and external debt 1.6%). At end-Dec 2009 bank deposits increased by 21.7% over a year, aided by a growth of 9.4% in demand deposits, 19.8% in savings deposits and 45.1% in time deposits. At end-Dec 2009 banks capital and reserves increased by 9.5% and bank balances increased by 70.4%, while borrowings increased by 43.4% over a year. At end-Dec 2009, direct contingent liabilities (i.e. guarantees) of banks increased by 22.9% over a year and constituted 11.9% of total liabilities.
Table-2.11 Commercial Banks Liabilities at the end-December 2009 (Million Dalasi)

Liabilities (Million Dalasi) 1. Capital and reserves 2. Demand deposits i Residents ii Non residents iii Government entities 3. Savings deposits i Residents ii Non residents iii Government entities 4. Time deposits i Residents ii Non residents iii Government entities Total deposits 5. Bank Balances i HO & branches ii Other banks abroad iii. Banks locally 6. Borrowings from i Cent. bank of Gambia ii Other banks locally iii HO & branches iv Other banks abroad v. Other sources 7. Guarantees 8. Other liabilities 9. Total liabilities (1 to 8) 10. Net balance (9-7) Dec-2007 1,219.2 2,519.3 2,271.9 28.0 219.4 2,612.3 2,503.6 74.2 34.5 1,453.1 1,096.4 15.4 341.3 6,584.7 161.0 20.7 140.3 324.9 255.9 69.0 1,201.6 936.3 10,427.7 9,226.1 Dec-2008 1,448.0 3,286.7 2,653.5 39.5 593.6 2,737.9 2,638.8 75.0 24.0 1,938.9 1,386.2 18.1 534.6 7,963.5 137.0 86.7 50.3 414.6 12.0 201.1 201.5 1,435.8 1,069.3 12,468.2 11,032.4 Dec-2009 1,586.1 3,595.0 2,737.1 443.9 413.9 3,281.0 3,181.3 90.7 9.0 2,814.2 2,058.2 63.8 692.2 9,690.2 233.5 189.7 8.8 35.0 594.7 20.0 10.0 451.9 112.8 1,764.2 936.9 14,805.6 13,041.4 % ch. Dc08 % ch. Dc09 Composition (% ) Dec-2008 Dec-2009 over Dc07 over Dc08 11.6 10.7 18.8 9.5 26.4 24.3 30.5 9.4 21.3 18.5 16.8 3.1 0.3 3.0 41.1 1023.2 4.8 2.8 170.5 -30.3 22.0 22.2 4.8 19.8 21.2 21.5 5.4 20.6 0.6 0.6 1.1 20.9 0.2 0.1 -30.4 -62.4 15.6 19.0 33.4 45.1 11.1 13.9 26.4 48.5 0.1 0.4 17.7 251.9 4.3 4.7 56.6 29.5 63.9 65.4 20.9 21.7 1.1 1.6 -14.9 70.4 0.7 1.3 318.9 118.7 0.4 0.1 -64.2 -82.5 0.0 0.2 3.3 4.0 27.6 43.4 0.0 0.1 0.1 0.1 1.6 3.1 -21.4 124.8 1.6 0.8 -44.0 0.0 0.0 11.5 11.9 19.5 22.9 8.6 6.3 14.2 -12.4 100.0 100.0 19.6 18.7 88.5 88.1 19.6 18.2
Mem Central Bank o: 326.9 Source:Foreign liabl. of Gambia
384.5
720.0
3.1
4.9
17.6
87.3
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2.12 Interest Rates and Central Bank Policy Rates

Interest rate on treasury bills declined from 31% in 2003 to 14.9% in 2006 and further to 13.7% in 2007. It ranged in between 13.1% to 14.7% in 2008 and between 12.3% to 14.3% in 2009. The bank rate of the CBG declined from 29% in 2003 to 9% in 2007, but was raised to 10% at the end of 2007 to check effective demand and inflationary pressures on the economy. It has remained at 10% since then. However, with the introduction of the Monetary Policy Committee (MPC) Policy Rate, the Bank rate has become ineffective and non-operational. In response to tight monetary conditions and against a backdrop of falling inflation, the CBG reduced the statutory minimum reserve requirement of banks from 16% to 14% in March 2008. The CBG rediscount rate declined from 34% in 2003 to 14% in 2004. In order to counter emerging inflationary pressures, the CBG raised its rediscount rate by one percentage point from 14% to 15% in June 2007, and further to 16% in October 2008. The rediscount rate remained unchanged at 16% since then until November 2009. In view of the declining trend of inflation rates, the MPC reduced the policy rate by 2 percentage points to 14% with effect from December 2009. As a result, average yields of the 91-day, 182-day and 364-day bills fell from 11%, 12.9% and 14.3% respectively in December 2009 to 10.3%, 12% and 13.6% respectively in Jan 2010 and further to 10%, 11% and 12.9% respectively in February 2010. Despite significant fall of the yields on treasury bills in recent years, maximum short-term deposit rates and commercial banks lending rates remain very high, and there exist wide interest rate spreads. Successful disinflation allowed the weighted yield on treasury bills to fall from over 25% in early 2005 to 11.3% in February 2010. By contrast, commercial banks lending rates remained sticky above 20% due to high operating costs and high risks of bank credits.
Table-2.12 Trends of Nominal Interest rates (per cent per annum, end period)
Items Bank lending rare- min Bank lending rare- max Deposit rate (SB) min Deposit rate (SB) max Time dep (3 months) min Time dep (3 months) max Time dep (6 months) min Time dep (6 months) max Time dep (12 month) min Time dep (12 month) max Govt. treasury bills CBG Bank Rate CBG Rediscount Rate Bank lending rate Deposit rate (SB) Time deposits (3 months) Time deposits (6 months) Time deposits (12 month) Inflation (GDP-Deflator) CPI-Inflation Real GDP-Growth Rate Exch. Rate change (%)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
18 24 8 10 9.5 12.5 10 12.5 11 12.5 12 10 15 6 2 3 2.5 1.5 3.6 0.9 5.5 12.2
18 17 21 21 21 24 24 36.5 36.5 30 8 8 8 10 5 10 10 17 17 10 9.5 6 7 8 5 12.5 13 22 22 14 10 6 8 8 7 12.5 13 22 22 15 11 7 10 12 7 12.5 13 22 23 13 15 20 31 30 16 13 18 29 28 14 18 23 34 33 19 Range = Maximum-Minimum 6 7 15.5 15.5 9 2 2 9 7 5 3 7 15 14 9 2.5 7 14 14 8 1.5 6 12 11 6 Factors Influencing Interest Rates 14.9 15.0 22.9 13.6 3.9 4.5 8.6 17.0 14.3 5.0 5.7 0.7 2.4 2.1 -0.1 22.7 27.0 43.2 5.3 -4.8
18 28 5 7 5 8.5 6 13 6 13 12.8 9 14 10 2 3.5 7 7 0.0 2.1 3.1 -1.8
18 27 5 7 5 12.9 6 12.9 7 12.9 13.7 10 15 9 2 7.9 6.9 5.9 2.0 5.4 6.3 -11.4
18 27 4 7 5 13.6 6 13.6 7 13.6 13.6 10 16 9 3 8.6 7.6 6.6 8.0 4.9 6.3 -9.8
18 27 4 7 5 15.5 6 15.5 6 15.5 14.2 10 16 9 3 9.5 9.5 9.5 4.7 4.5 5.0 15.9
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2.13 BOP, Foreign Exchange Reserves and Exchange Rates

(a) BOP Situation in 2009 (a) Preliminary Balance of Payments estimates by the CBG for Jan-Sep 2009 indicated an overall deficit of D1066.6 million compared with a deficit of D721.6 million in Jan-Sep 2008. There was significant improvement in the BOP situation in the fourth quarter and the overall BOP outcome in 2009 was not as bad as it was anticipated earlier. (b) Preliminary BOP estimates by the CBG for 2009 indicate an overall deficit of D144 million compared to a deficit of D767 million in 2008. (c) Current account balance including transfers showed a surplus of D1.54 billion compared to a deficit of D1.11 billion in 2008, but the capital and financial account balance worsened to a deficit of D1.68 billion compared to a surplus of D342 million in 2008. (d) The goods account balance improved from a deficit of D2.92 billion in 2008 to D2.28 billion in 2009 attributed to the surge in exports, which more than offset the increase in imports. Exports, including re-exports, increased from D3.18 billion in 2008 to D4.65 billion in 2009, while imports increased from D6.10 billion to D6.93 billion over the period, resulting in narrowing down the trade deficit. (e) Net factor income deficit decreased from D757 million in 2008 to D217 million in 2009, while non-factor services surplus improved marginally from D757 million in 2008 to D770 million in 2009 and net transfers improved significantly from D1.81 billion in 2008 to D3.27 billion in 2009. (f) In terms of percentages to GDP there was significant improved in BOP situation as summarized in the following table: . Table-2.13: Balance of Payments in 2008-2009 (As % of GDP)
1 1.1 1.2 2 3 4 5 6 7 8 9 Items Goods balance (1.1-1.2) Exports of goods Imports of goods fob (Non-factor) Services, net (Factor) Income, net Transfers, net Current account balance (1+2+3+4) Capital Account Financial Account Capital & Financial A/C (6+7) Overall BOP Balance (5+8) 2008 -12.7 13.8 26.5 3.3 -3.3 7.9 -4.8 0.1 1.4 1.5 -3.3 2009
-9.0 18.4 27.4 3.0 -0.9 12.9 6.1 0.0 -6.7 -6.7 -0.6
(b) Foreign Exchange Reserves (a) At end-Jan 2010, gross international reserves totaled US$183.3 million, equivalent to 7.2 months of import cover. Volume of transactions in the domestic foreign exchange market remained virtually unchanged at US$1.54 billion in January 2010 from a year earlier.
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Table-2.13-A Balance of Payments during 2008 and 2009 (Million Dalasi)
(Million Dalasi) 1 1.1 a. b. c. 1.2 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3 3.1 3.2 4 4.1 4.2 4.3 5 6 7 7.1 7.2 7.3 8 9 Goods balance (1.1-1.2) Exports of goods (a+b+c) Exports of goods in trade stat Re-exports Other goods Imports of goods fob Services, net (2.1 to 2.7) Transport Travel Communications Insurance Construction Information technology Others business Income Investment income Compensation to labor Transfers, net (4.1+4.2+4.3) Official transfer Remittances Other transfer Current account balance Capital Account Financial Account (7.1+7.2) Foreign direct investment Other investment Reserve change Capital & Financial A/C (6+7) Overall BOP Balance (5+8) 2008 -2919.2 3175.7 330.4 2489.1 356.2 6094.9 757.5 -434.1 1624.1 214.4 -146.0 120.0 -70.9 -550.0 -757.4 -931.4 174.0 1809.4 137.2 1195.8 476.4 -1109.7 24.4 317.9 1555.7 -1429.6 191.8 342.3 -767.4 3624.4 7.1 22.4 22978.3 2009-Q1 -683.9 934.5 239.1 660.9 34.5 1618.4 370.3 -123.6 615.7 52.4 -38.0 12.9 -23.6 -125.5 -74.9 -115.2 40.3 154.1 108.3 290.2 -244.4 -234.4 0.0 -234.6 262.7 -311.1 -186.2 -234.6 -469.0 3155.4 7.8 26.2 25285.8
2009-Q2
-399.0 1331.6
2009-Q3
-565.0 1294.8 503.1 759.5 32.2 1859.8 -58.6 -157.0 151.8 80.6 -45.3 45.6 -9.8 -124.5 -35.9 -74.3 38.4 1160.8 289.6 333.9 537.2 501.3 0.0 -1242.1 262.7 -139.3 -1365.5 -1242.1 -740.8 2549.9 5.5 26.8 25285.8
2009-Q4
-635.0 1084.8 366.1 702.4 16.3 1719.8 423.4 -106.3 626.1 84.8 -39.8 -7.0 -9.8 -124.5 -48.1 -85.7 37.5 1120.3 248.8 333.9 537.6 860.6 0.0 69.9 262.7 84.9 -277.7 69.9 930.5 3480.5 8.1 26.8 25285.8
2009
597.8 706.8 27.0 1730.6

34.7
-93.3 190.1 82.9 -42.8 14.8 7.5 -124.5

-57.6
-101.2 43.7
834.6
151.9 434.2 248.5

412.8
0.0
-277.4
262.7 -484.2 -55.9

-277.4 135.4 3290.8 7.6 26.8 25285.8
-2282.8 4645.7 1706.1 2829.6 110.0 6928.6 769.8 -480.2 1583.6 300.7 -165.9 66.3 -35.8 -499.0 -216.5 -376.4 159.9 3269.8 798.7 1392.3 1078.9 1540.3 0.0 -1684.2 1050.8 -849.7 -1885.3 -1684.2
-143.9 3336.5 5.8 26.7 25285.8
Foreign Exchange Reserve Equi to months of imports Ave.Exch.rate(D/$) GDP at cmp (Million Dalasi)
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The Gambia Monthly Economic Bulletin- February 2010 Table-2.13-B Balance of Payments in 2008-2009 (As % of GDP)
BOP as % of GDP 1 1.1 a. b. c. 1.2 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3 3.1 3.2 4 4.1 4.2 4.3 5 6 7 7.1 7.2 7.3 8 9 Goods balance (1.1-1.2) Exports of goods (a+b+c) Exports of goods in trade stat Re-exports Other goods Imports of goods fob Services, net (2.1 to 2.7) Transport Travel Communications Insurance Construction Information technology Others business Income Investment income Compensation to labor Transfers, net (4.1+4.2+4.3) Official transfer Remittances Other transfer Current account balance Capital Account Financial Account (7.1+7.2) Foreign direct investment Other investment Reserve change Capital & Financial A/C (6+7) Overall BOP Balance (5+8) Foreign Exchange Reserve 2008 -12.7 13.8 1.4 10.8 1.6 26.5 3.3 -1.9 7.1 0.9 -0.6 0.5 -0.3 -2.4 -3.3 -4.1 0.8 7.9 0.6 5.2 2.1 -4.8 0.1 1.4 6.8 -6.2 0.8 1.5 -3.3 15.8 2009-Q1 -2.7 3.7 0.9 2.6 0.1 6.4 1.5 -0.5 2.4 0.2 -0.2 0.1 -0.1 -0.5 -0.3 -0.5 0.2 0.6 0.4 1.1 -1.0 -0.9 0.0 -0.9 1.0 -1.2 -0.7 -0.9 -1.9 12.5 2009-Q2 -1.6 5.3 2.4 2.8 0.1 6.8 0.1 -0.4 0.8 0.3 -0.2 0.1 0.0 -0.5 -0.2 -0.4 0.2 3.3 0.6 1.7 1.0 1.6 0.0 -1.1 1.0 -1.9 -0.2 -1.1 0.5 13.0 2009-Q3 -2.2 5.1 2.0 3.0 0.1 7.4 -0.2 -0.6 0.6 0.3 -0.2 0.2 0.0 -0.5 -0.1 -0.3 0.2 4.6 1.1 1.3 2.1 2.0 0.0 -4.9 1.0 -0.6 -5.4 -4.9 -2.9 10.1 2009-Q4 2009
-2.5 4.3 1.4 2.8 0.1 6.8 1.7 -0.4 2.5 0.3 -0.2 0.0 0.0 -0.5 -0.2 -0.3 0.1 4.4 1.0 1.3 2.1 3.4 0.0 0.3 1.0 0.3 -1.1 0.3 3.7 13.8
-9.0 18.4 6.7 11.2 0.4 27.4 3.0 -1.9 6.3 1.2 -0.7 0.3 -0.1 -2.0 -0.9 -1.5 0.6 12.9 3.2 5.5 4.3 6.1 0.0 -6.7 4.2 -3.4 -7.5 -6.7 -0.6 13.2
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Table-2.13-C: Quarterly BOP Summary Table 2008-2009 Percentage change over same quarter of previous year (%)
Items 1 1.1 a. b. c. 1.2 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3 3.1 3.2 4 4.1 4.2 4.3 5 6 7 7.1 7.2 7.3 8 9 Goods balance (1.1-1.2) Exports of goods (a+b+c) Exports of goods in trade stat Re-exports Other goods Imports of goods fob Services, net (2.1 to 2.7) Transport Travel Communications Insurance Construction Information technology Others business Income Investment income Compensation to labor Transfers, net (4.1+4.2+4.3) Official transfer Remittances Other transfer Current account balance Capital Account Financial Account (7.1+7.2) Foreign direct investment Other investment Reserve change Capital and Financial A/C (6+7) Overall BOP Balance (5+8) Foreign Exchange Reserve Equi to months of imports Ave.Exch.rate(D/$) GDP at cmp 2009-Q1 (Dalasi) -10.2 16.1 246.6 3.3 -64.2 3.3 -31.7 -10.1 -23.1 6.5 5.4 298.1 -8.7 -67.9 -58.2 -5.6 -66.3 153.7 32.4 -225.3 -4835.4 1798.1 -36.1 -64.0 -142.2 1798.1 6229.3 -28.7 5.7 23.4 10.0 2009-Q2 (Dalasi) -34.8 68.9 377.8 23.6 -70.4 23.6 -39.1 -3.1 -3.1 4.4 10.3 -73.5 -9.5 -67.3 -53.9 0.2 85.5 275.2 74.3 54.9 -246.9 158.8 -36.1 37.7 -66.5 214.9 -136.7 -18.9 0.6 31.1 10.0 2009-Q3 (Dalasi) -10.0 85.1 526.4 40.1 -58.2 40.1 -15.6 119.7 5.5 80.0 49.8 1704.0 -9.5 -79.7 -66.8 -18.3 132.4 899.8 -9.9 438.6 -233.8 -4796.0 -28.3 -330.3 240.9 -4283.6 114.8 -31.3 -24.9 23.1 10.0 2009-Q4 (Dalasi) -30.8 22.8 553.6 -4.5 -82.2 -4.5 130.7 -17.6 29.6 106.7 -2.8 -149.2 -9.5 -71.9 -59.6 -7.8 178.0 894.1 -6.4 2429.8 -271.1 -83.0 -28.3 -131.0 -187.3 -83.1 -1134.6 -4.0 54.2 3.6 10.0 2009 (Dalasi) -21.8 46.3 416.3 13.7 -69.1 13.7 1.6 10.6 -2.5 40.2 13.6 -44.7 -9.3 -71.4 -59.6 -8.1 80.7 482.2 16.4 126.5 -238.8 -629.8 -32.5 -40.6 -1083.1 -592.0 -81.2 -7.9 -6.9 19.4 10.0
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The Gambia Monthly Economic Bulletin- February 2010 2.14 Exchange Rate In 2009, the Dalasi depreciated against the British Pound by 7.2 percent, the US Dollar by 9.8 percent, the CFA by 11.2 percent and the Euro by 11.8 percent. However, in January and February 2010, the Dalasi started appreciating against the British Pound, CHF and Euro and remained unchanged against US$ compared with the exchange rates at end-Dec 2009. In February 2010, Dalasi depreciated against UK by 13.2%, against US$ by 3.2%, CHF by 14.6%, CFA by 10.3% and Euro by 16.1% over February 2009. Table-2.14 End-period mid-market exchange rates (Dalasi per unit of foreign currency)
Year Month UK US$ CHF CFA (5000) Euro
2009 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2010 Jan Feb 2009 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2010 Jan Feb
37.25 37.38 38.18 39.05 41.40 43.13 43.31 43.80 42.99 43.48 43.88 43.04 43.01 42.32
26.07 26.11 26.38 26.80 26.74 26.87 26.79 26.63 26.95 26.91 26.93 26.94 26.94 26.94
20.85 22.04 23.31 23.00 22.40 21.96 24.42 24.36 25.47 26.07 26.65 25.81 25.29 25.27
262.81 257.78 259.30 262.17 265.98 272.87 277.53 281.45 283.58 297.13 295.53 288.26 289.32 284.26
33.52 33.6 35.22 35.32 37.00 37.04 38.06 37.68 38.61 39.61 40.15 39.87 39.03 39.02 3.9 5.7 8.4 11.1 8.2 11.1 10.6 12.8 13.7 15.1 14.4 11.2 16.4 16.1
Annual Rate of appreciation (-) / depreciation (+) of Dalasi (in % over same month in 2008)
-15.9 16.7 4.7 1.9 -12.2 19.3 12.6 4.1 -6.6 35.6 21.7 14.2 -1.2 33.2 20.1 12.4 2.9 29.5 15.1 15.3 5.8 30.1 14.0 15.5 4.0 27.9 22.7 18.2 7.5 24.6 21.3 16.9 3.2 16.6 28.2 16.9 7.4 8.1 29.4 20.4 8.2 2.5 32.8 20.6 7.2 1.5 12.5 11.8 15.5 3.3 21.3 10.1 13.2 3.2 14.6 10.3 Source: Central Bank of Gambia (CBG)
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The Gambia Monthly Economic Bulletin- February 2010 3. Recent Policy Developments and Development Issues
3.1 Highlights of the Budget-2010

The Budget is based on sound macroeconomic policy framework to support inclusive growth, to maintain low inflation and improve debt sustainability. 102. The 2010 Budget represents a decisive step by Government to tackle The Gambias heavy debt burden, in particular interest payments on domestic debt. This budget aims to reduce debt and create savings that could become an important resource for other non-interest expenditures. Working closely with the Central Bank of The Gambia, Government believes that with sound budget implementation, T-bill yields can be significantly reduced in the months ahead. 103. Total revenue and grants is expected to increase from its budget of D4.582
billion in 2009 to D5.474 billion in 2010. This increase is driven mainly by increases in tax revenues, project grants and budget support. Tax revenue is projected to increase from its budget figure of D3.39 billion in 2009 to D3.991 billion in 2010, representing 18.58% of GDP. The overall increase in grants from a budget of D811 million in 2009 to D1.061 billion in 2010 is mainly due to expected increases in project disbursements from D513 million to D636 million and additional HIPC and EU budget support of D425 million. 104. Expenditure and Net Lending is projected to increase from D5.363 billion in
2009 to D5.772 billion in 2010. Interest payments on debt are projected to decline from a budget of D845 million in 2009 to D762 million in 2010. Other current expenditures, including externally financed, are projected to rise from D4.461 billion in 2009 D4.948 billion in 2010, of which Personnel Emoluments is expected to increase from D1.035 billion to D1.499 billion in 2009 to D1.499 billion in 2010. 105. The budget deficit for 2010 is projected at D298.7 million representing 1.39% of
GDP. This deficit will be fully financed through domestic and external resources. The net-external financing is estimated at D354.7 million while net domestic financing, which includes repayment of arrears and domestic loans is in the sum of D120 million. Proceeds from capital revenue is equivalent to D64 million.
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42
The Gambia Monthly Economic Bulletin- February 2010 3.2 Taxation Measures Announced in the Budget for 2010 109. The corporate tax will be gradually reduced, starting with a 2 percent reduction from 35 percent to 33 percent for 2010. Similarly, the turnover tax will be reduced by 0.5 percent. .... Meanwhile, the implementation of the tax on interest income has been differed. 110. Furthermore, following the completion of a nationwide Rental Property Survey, GRA will embark on a more rigorous collection of taxes on rented properties within the taxable threshold. 111. In 2008, Government zero-rated the sales tax on rice as a policy measure to minimize the impact of the food crisis, thus foregoing significant revenues. Now that we have passed the episode of high food prices and in a bid to encourage local agricultural production, Government would restore the sales tax on imported rice to the 5% level. 112. Excise tax on alcoholic products and unmanufactured tobacco will be increased in the following order: Unmanufactured tobacco from D26.04/kilo to D75/kilo; Wine from D100/litre to D150/litre; Spirits from D150/litre to D175/litre; and Beer from D75/litre to D100/litre. 113. Significant investment is being made to enhance the security features of our national identification documents by going biometric, and as a result, the cost of these documents will be increased as follows: Drivers License from D300 to D500; Provisional Learners License from D50 to D100; International Drivers License from D500 to D1000; Passport from D500 to D1000. Furthermore, Personalised Number Plates will also be increased from D2500 to D5000. 114. The Road Tax Private and the Motor Vehicle Yearly License Private were last reviewed fifteen years ago. Consequently, Road Tax Private will be increased as follows: Less than 1 ton from D163 to D300; 1 to 2.5 tons from D205 to D400; and 2.5 tons and above from D251 to D500. The Motor Vehicle Yearly License Private will be increased as follows: Less than 1 ton from D221 to D400; 1 to 2.5 tons from D342 to D600; and 2.5 tons and above from D506 to D1000. 115. Although the Police will still be responsible for the technical aspects of issuing vehicle number plates and motor vehicle licences, all payments for road tax, vehicle licenses and number plates will henceforth be made with the Gambia Revenue Authority. The licence and the plates will only be issued by the Police upon presentation of a GRA payment receipt. This will enhance revenue administration, while allowing the Police to concentrate on their core functions. 116. The personal income tax structure is being reviewed to bring it in line with the prevailing economic conditions and to make it more progressive, fairer and revenue productive. Also, the audit and enforcement capacity of the Department of Domestic Taxes of GRA is being strengthened in anticipation of the planned introduction of a value added tax (VAT) system in place of sales tax on or before January 2013. These reform measures are aimed at ensuring that our tax system remains efficient and equitable.
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3.3 IMF Executive Board Completes Sixth Review Under The Gambias ECF Arrangement and Approves a 12-Month Extension and US$ US$7.1 Million Augmentation As per the Press Release No. 10/55 dated February 19, 2010, posted on the International Monetary Fund (IMF) Website, the Executive Board of the IMF completed the sixth review of The Gambias economic performance under a program supported by the Extended Credit Facility (ECF)6. The Board approved a waiver for the non-observance of the fiscal performance criterion based on corrective actions, notably the governments 2010 budget approved by the National Assembly, which aims for a near-zero basic balance. The Boards decision allows the government to request a further disbursement amounting to SDR 2.0 million (about US$ 3.0 million), bringing total disbursements under the ECF to The Gambia to SDR 20.2 million (about US$30.8 million). The Executive Board approved an extension for one year and an augmentation by SDR 4.67 million (about US$ 7.1 million) of The Gambia's ECF arrangement, originally approved on February 21, 2007 (vide Press Release No. 07/28). The IMF Board complemented the Gambian authorities for pursuing satisfactory economic policies which contributed to robust economic growth and low inflation despite ongoing global economic crisis. However, they observed that even after extensive debt relief, The Gambia remains at high risk of debt distress. Besides the yields on Treasury Bills are ruling high mainly due to fiscal slippages and the governments recourse to domestic borrowing. The governments efforts to strengthen its debt management strategy are, therefore, welcome. Until the debt burden is reduced, Government should continue to limit external borrowing to highly concessional loans. The governments budget for 2010 appropriately targets a near-zero basic balance that will return The Gambia to a path of declining domestic debt. Fiscal restraint will ease pressure on TBill yields and eventually generate fiscal savings for other spending priorities. However, disciplined budget execution will be key to achieve these results, and the governments new action plan to improve public financial management is in the right direction to achieve such fiscal discipline. The IMF appreciates the governments commitment to maintain low inflation and to take steps to ease pressures on interest rates. The reinforced banking supervisory framework, including the phased-in increase in the minimum capital requirement, will contribute to the development of the sound and efficient banking system.
The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Funds main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF currently carries a zero interest rate, with a grace period of 5 years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years.
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The Gambia Monthly Economic Bulletin- February 2010 3.4 Assessment of Quantitative Targets agreed with IMF under PRGF The Gambias three-year Poverty Reduction and Growth Facility (PRGF) arrangement was approved by the IMFs Executive Board in February 2007. The third review was completed on September 8, 2008 and the Fourth Review was done in February 2009. The updated Letter of Intent (LOI) and Memorandum of Economic and Financial Policies (MEFP), and Technical Memorandum of Understanding (TMU) were signed jointly by the then honorable Finance Minister Mr. Mousa Gibril Bala-Gaye and honorable Governor, Central Bank of Gambia, Mr. Momodou Bamba Saho, on February 3, 2009. The MEFP reviewed progress in implementing the Governments PRGF supported program in 2008, and set out the policies that the Government will pursue in 2009. The Government of Gambia committed that the program, as usual, will continue to be monitored based on agreed quantitative targets and a set of structural performance criteria and benchmarks indicated in the MEFP as per program reviews. The quantitative financial targets for endMarch 2009 and end-September 2009 are performance criteria; and those for endDecember 2008, endJune 2009, and end-December 2009 are indicative targets. Performance of Monitored Variables at the end of December 2009 With regard to the performance of the monitored variables under the PRGF vis--vis their endDecember 2009 targets, the CBG through pro-active, consistent and prudent use of various monetary policy instruments, was able to meet comfortably all the quantitative targets. The Net useable reserves (NUR) totaled US$148.9 million at end-December 2009 and were above the end-December target (floor) by US$0.13 million. Similarly, the Net Domestic Assets (NDA) of the Central Bank amounting to D1.4 billion was below target ceiling by D50.9 million. The target for basic fiscal balance (floor) was fixed at D685.6 million for the end of December 2009. However, despite good revenue realization, Government failed to achieve this target due to expenditure pressures. Government achieved a basic balance of (-) D426.9 million at the end of December 2009, which was well below the target. Government did not default on the payment of debt services on any external debt. As agreed under the Program, the government did not contract or guarantee any new non-concessional external loan having maturity exceeding one year. There is also no non-concessional external debt outstanding on government account having original maturity exceeding one year.
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Gambia Monthly Economic Bulletin March 2010

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Gambia Monthly Economic Bulletin March 2010

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The Gambia Monthly Economic Bulletin- March 2010

THE GAMBIA MONTHLY ECONOMIC BULLETIN1

The Gambia Monthly Economic Bulletin- March 2010

The Gambia Monthly Economic Bulletin- March 2010 Source: http://www.nationmaster.com

The Gambia Monthly Economic Bulletin- March 2010

The Gambia Monthly Economic Bulletin- March 2010

The Gambia Monthly Economic Bulletin- March 2010

ISPEFG Project and Monthly Economic Bulletin Research Team

Project Supervisor Project Coordinator Macroeconomic Adviser Principal Economist Economist

The Gambia Monthly Economic Bulletin- March 2010

Government Fiscal Performance

The Gambia Monthly Economic Bulletin- March 2010

Balance of Payments, Foreign Exchange Reserves and Exchange Rate

At a Glance- March 2010

The Gambia Monthly Economic Bulletin- March 2010

Latest Reference Period 2009

Feb 2010 Feb 2010 Jan-Feb 2010 Jan-Feb 2010

The Gambia Monthly Economic Bulletin- March 2010

The Gambia Monthly Economic Bulletin- March 2010

The Gambia Monthly Economic Bulletin- March 2010

The Gambia Monthly Economic Bulletin- March 2010

The Gambia Monthly Economic Bulletin- March 2010

The Gambia Monthly Economic Bulletin- March 2010

Table-1.2 Trends of World Commodity Prices 16

The Gambia Monthly Economic Bulletin- March 2010

Source: World Bank Pink Sheet March 2010

The Gambia Monthly Economic Bulletin- March 2010

Source: World Bank Pink Sheet March 2010

GDP Composition(%) in 2009

Transport 12% Hotels 4%

5.4 4.2 4.5

The Gambia Monthly Economic Bulletin- March 2010

124.4 2 124.7 8 125.0 0

124.4 2 124.7 8 124.8 3

129.6 1 130.0 5 124.7 125.7 127.9 129.6 127.0

124.7 125.0 125.8 127.2 125.7 23

4.4 1.7 5.0 6.7 4.5

The Gambia Monthly Economic Bulletin- March 2010

Overall Bal Inc. grants Basic Balance Basic Primary Balance

The Gambia Monthly Economic Bulletin- March 2010

2.5 Projection of Fiscal Outturn for the Year 2010

(10) 5474.1 4413.2 3991.3

17.4 16.7 14.2 56.6 79.1

The Gambia Monthly Economic Bulletin- March 2010

2010 Budget Estimate

62.0 -298.7 0.3 762.7 -1.1 0.0 2.7

Trends of Yields of Treasury Bills during 2007-2010

Source: Central Bank of Gambia

The Gambia Monthly Economic Bulletin- February 2010

2.9 Performance by Commercial Banks

The Gambia Monthly Economic Bulletin- February 2010

2.10 Commercial Banks Assets

Table-2.10 Commercial Banks Assets at the end-December 2009 (Million Dalasi)

Source: Central Bank of Gambia.

The Gambia Monthly Economic Bulletin- February 2010

2.11 Commercial Banks Liabilities

Table-2.11 Commercial Banks Liabilities at the end-December 2009 (Million Dalasi)

Mem Central Bank o: 326.9 Source:Foreign liabl. of Gambia

The Gambia Monthly Economic Bulletin- February 2010

2.12 Interest Rates and Central Bank Policy Rates

18 28 5 7 5 8.5 6 13 6 13 12.8 9 14 10 2 3.5 7 7 0.0 2.1 3.1 -1.8

The Gambia Monthly Economic Bulletin- February 2010

2.13 BOP, Foreign Exchange Reserves and Exchange Rates