Gambia battles with increased domestic debt

The Gambia’s domestic debt has continued to increase unabated over the year with its current stock estimated to be in the region of D9 billion, which is 31.3 per cent of the country’s Gross Domestic Product (GDP).

According to the Monetary Policy Committee (MPC) of the Central Bank of The Gambia (CBG), as at end-March 2012, the country’s domestic debt “increased to D9.2 billion (31.3 per cent of GDP) or 5.2 per cent from a year ago”.

A large chunk of the debt is accumulated from the issue of Treasury bills and ‘Sukuk-Al-Salaam’, which together accounted for 78.8 per cent or D7.43 billion of the debt stock, compared to D6.0 billion in March 2011.

A May 11 press release by the MPC states further that the yield on all maturies of Treasury bills increased with the exception of the 364-day bills.

“The yield on the 91-day and 182-day bills increased from 9.58 per cent and 10.46 per cent in March 2011 to 10.23 per cent and 11.52 per cent respectively in March 2012,” the release says, adding that the yield on the 91-day Sukuk-Al-Salaam also rose from 9.57 per cent in March 2011 to 10.03 per cent in March 2012.

“The yield on the 364-day bills declined slightly to 12.80 per cent from 13.09 per cent in March 2011,” the release notes.

Balance of Payment

The country’s balance of payment (BOP) strength also took a downward swing from 2010 to 2011 for which latest estimates are available.

Even though provisional balance of payments estimates indicate an overall surplus of US$31.73 million in 2011, this was lower than the US$86.52 million in 2010.

“The current account, including official transfers, was in surplus of US$66.86 million, higher than the surplus of US$56.25 million a year ago. The capital and financial account, however, recorded a deficit of US$35.12 million from a surplus of US$30.27 million in 2010,” the MPC release states.

Economic growth

While national economies are struggling to maintain sound economic growth, vagaries of the financial crisis in the Eurozone are yet giving some mixed signals that keep the crisis “yet to be resolved”.

According to the IMF’s April 2012 edition of the World Economic Outlook, global and GDP growth is forecast to slow to about 3.5 per cent in 2012 from about 4 per cent in 2011, the release says, adding that in the advanced economies, growth is projected at about 1.5 per cent, slightly lower than the 1.6 per cent in 2011.

“Emerging and developing economies continue to reap the benefits of strong macroeconomic and structural policies, but domestic vulnerabilities have been gradually building,” the release notes.

As regards The Gambia, the Bank MPC release quoted the Gambia Bureau of Statistics (GBOS) as stating that real GDP growth moderated to 3.3 per cent in 2011 from the 5.5 per cent in 2010 attributed mainly to the early cessation of rains which affected crop production.

It says further: “Agriculture value-added is estimated to have declined by 5.2 per cent compared to the robust growth rate of 12.1 per cent in 2010. Crop production, accounting for 56.4 per cent of agricultural output, contracted by 12 per cent from the strong growth rate of 14.3 per cent in 2010. The value-added of livestock also fell from 10.9 per cent in 2010 to 6.3 per cent in 2011. In contrast, forestry and fisheries sub-sectors grew by 3.5 per cent and 2.1 per cent from 3 per cent and 1.7 per cent respectively in 2010.”

The value-added of the industrial sector, according to MPC report, is estimated at 1.3 per cent, lower than the revised growth rate of 2.6 per cent in 2010.

Mining and quarrying, manufacturing and electricity, gas and water supply grew by 1.6 per cent, 3.9 per cent and 1.4 per cent compared to 14.2 per cent, 0.4 per cent and 7.7 per cent respectively in 2010. Construction valued-added contracted by 2.9 per cent on top of the contraction of 3.7 per cent in 2010.

“In the year to end-March 2012, money supply grew by 9.0 per cent but lower than the growth rate of 14.9 per cent in March 2011,” the report indicates.

“Quasi money grew at a slightly faster pace (9.3 per cent) than narrow money (8.3 per cent). Annual growth in reserve money was 8.7 per cent of end-March 2012 relative to 15.9 per cent in the preceding year.

“Services grew by 9.5 per cent, significantly higher than the 1.1 per cent in 2010. All the services subsectors grew at a robust pace. In particular, wholesale and retail trade and hotels and restaurant grew by 9.7 per cent and 34.2 per cent after contracting by 0.4 per cent and 35.7 per cent in 2010 respectively.”