Dec 3, 2009, 12:17 PM
Mr. BALA-GAYE: I will make my opening statement by stating the present state of the macroeconomic performance of The Gambia, as well as dealing with some of the policy challenges posed by the rising food and oil prices.
The Gambia 's macroeconomic performance continues to be
very, very strong following robust growth in real
However, the uncertainties in the global economy can negatively impact growth. Recent developments in international commodity markets pose challenges and constraints in the fight against poverty in developing countries, promoting food self-sufficiency, and maintaining broad macroeconomic stability.
In The Gambia, the availability of basic commodities, the appreciation of our national currency, the dalasi, and the relatively tight monetary policy stance have helped contain the impact of high prices.
After increasing sharply in 2007, driven by rising global oil and food prices, consumer price inflation decelerated in 2008. Year-on-year inflation rose from 1.4 percent in December 2006 to 6 percent in December 2007 before declining to 1.4 percent in April 2008. However, inflation accelerated to 2.2 percent, 3.85 percent in June, July, and August 2008.
Our expectations are that inflation will remain within the end-December 2008 target of 6 percent. This is purely based on the policy measures implemented by the government of The Gambia, including reducing the sales tax on rice and essential commodities in the consumption basket of most households in The Gambia from 15 percent in July 2007 to 0 in May 2008, maintaining a market-driven price mechanism for petroleum products, and the continued implementation of fiscal and monetary policies.
Mr. Moderator, given that the increases in global food and oil prices are likely to become a permanent feature of the global economy in the near to medium term, combating food price inflation can negatively impact growth, employment, poverty reduction, and the attainment of the Millennium Development Goals. Thus, to enhance the effectiveness of policy responses over the medium to long term, and avoid negative spillovers, the Government of The Gambia plans to implement a set of structural reforms geared toward increasing food production.
Now, these measures include increasing land acreage allocated to food production, provision of agricultural extension services to farmers, provision of farm inputs such as fertilizers, farm implements, and high-yielding and drought-resistant seeds; promotion of mechanized farming through the provision of tractors and cost-effective farming technologies; and improving access to finance to the farming community.
The implementation of the above-measures and policies are not without costs to governments' investments and programs. As a result, substantial resource flows from our development partners in the form of budget support, balance of payments support, and other forms of aid will significantly assist in giving governments an enlarged fiscal space for increased pro-poor spending, sustained output growth, and maintaining broad macroeconomic stability.
Beyond that, a collective global effort is required to eliminate barriers to the flow of capital and trade expertise to areas where they can make a difference. In a forum such as this, and also in the oil and food and agricultural organizations, efforts must be made to eliminate the policy constraints and distortions that impede fuel and food supply increases if we are to put a lid on global inflation. I thank you for your attention.
Mr. BALA-GAYE: As far as The Gambia is concerned and from what we have been informed, at the level of the commercial banks they are really insulated. Our central bank, too, in terms of where it deposits its own reserves, I think we were also informed that the central bank is insulated. I mean, there is no doubt that the effects will be felt in the economy. I mean, with the credit crunch, we are anticipating that there will definitely be a drop in our tourism receipts as well as remittances from Gambians in the diaspora.
Mr. BALA-GAYE: Yes, the first question has been very well
answered by my two colleagues. Trade is the basis for a single currency and
certainly one that we are trying to forge in
Now, coming to the other question, I mean, that I have already answered; I have already spelt out the effects of the financial crisis in The Gambia. My colleagues have already talked about the issue of aid, which is very, very important, that aid flows will dry up because of the present financial crisis, and what do we do when that happens?
This is what all of us are thinking about, that we must now look inward; we must now be in a position to raise adequate domestic resources so that we can finance growth and development in our own countries. We must also try to develop South-South cooperation in this context and see what cooperation we can forge among ourselves, even if it is not financial but in terms of technical assistance and other forms of cooperation among ourselves.
So, we are all looking at the situation. Immediately I cannot tell you that we have defined a strategy. It has just come on to us, as the Kenyan Minister has said. We will work through it, but the basis of it all is that we must be self-reliant in the medium and the long term. That is the answer to all this, that the countries must strive to be self-reliant, and this is where The Gambia is going to.
Mr. BALA-GAYE: I think questions on what would have been the impact of food and oil prices on the African economies would have been much more appropriate.
Now, talking of the financial global crisis, my colleague,
the Kenyan Minister, has said we need to understand this first. The African
Development Bank, we are told, will be organizing a conference in
Mr. BALA-GAYE: This is a medium-sized question and we will
all try to give our own views. We have to come to