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Gambia affected by global financial crisis

Dec 22, 2009, 2:07 PM | Article By: Alieu Jabang & Sainey Marenah

As Exports, Remittances Decline

"The sharp decline in global economic activity had negatively and indirectly impacted on the Gambian economy in 2008 leading to a decline in Gambian exports, remittances inflows, manufacturing production, as well as in wholesale and retail trade."

This is according to Finance and Economic Affairs Minister Abdou Kolley, in his 2010 Budget Speech in which he detailed the impact on the home front of the financial and economic crises affecting the world in the past year.

"The world economy has been experiencing an unprecedented crisis of a magnitude that has not been witnessed since the Great Depression of the 1930s. This has resulted in a global slowdown, and is expected to put at risk developing countries' efforts to fight poverty and to meet the MDGs..."

"The good news for The Gambia is that our financial system is not directly exposed to the instability in the global financial markets, as domestic banks do not possessed US sub prime asset-backed securities and their holdings of foreign assets is very limited."

However, "although the Gambian financial system has not been directly affected, the second round impact of the crisis is already being felt, as we are net importers," Minister Kolley confirmed.

The Finance Minister told the National Assembly meeting in Banjul last Friday that "this is particularly apparent in the foreign exchange market where foreign currency flows from remittances and tourism have weakened, while there is an increased demand for foreign currency to pay for imports of oil and food."

Balance of payment figures, he announced, show that travel income plummeted by 5.8 percent to D2 billion in 2008, and is projected to decline even further by 4.6 percent in 2009.

"Similarly, remittances are estimated to decline by 7.7 percent from D1.3 billion in 2007 to D1.2 billion in 2008, and decline further by 7.6 percent in 2009," he added.

"As a result, real GDP growth at constant market prices is estimated to decline from 6.3 percent in 2008 to 5 percent in 2009. Despite all these challenges, the Gambian economy has shown great resilience in the face of such adversity, with revenues bouncing back significantly in 2009," Abdou Kolley declared.