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The Gambia’s economy and its humps

Nov 9, 2015, 10:21 AM

Latest developments in the state of our economy, as reported by the Monetary Policy Committee (MPC) of the Central Bank of The Gambia, gave a fine forecast of growth by 4.7 per cent in 2015 compared to 0.5 per cent in 2014, saying this is as a result of the expected rebound in tourism and agriculture.

That could be fine in itself as we are now seeing increasing number of tourist arrivals into the country, with the recent arrival of 200 British tourists last week and 190 Polish tourists at the weekend, in addition to the first flight of a good number of arrivals.

It is also true that the banking sector is making a good headway as its fundamentals remain sound.

Its total assets increased to D28.3 billion in the year to end-September 2015, or 12.8 per cent, and its capital and reserves stood at D4.2 billion, higher than the D3.2 billion in September 2014.

However, with a domestic debt standing at D20.7 billion (54.2 per cent of GDP), or 23.8 per cent in the year to end-September 2015, from a year earlier, as well as Government fiscal operations, external sector developments of the economy, and the inflation trend, a lot needs to be worked on by the relevant economic planners, especially the CBG, to get the economy doing well for the layman in the country.

There is overall budget deficit on cash basis, including grants, estimated at D1.9 billion (5.1 percent of GDP), slightly higher than the deficit of D1.6 billion (4.4 percent of GDP) in the first nine months of 2014.

“Provisional balance of payments (BOP) estimates for the first nine months of 2015 indicate that the current account deficit widened to US$75.9 million compared to the deficit of US$47.9 million in the first nine months of 2014,” the MPC report stated.

“Of the components of the current account, the goods account deficit rose to US$186.10 million compared to the deficit of US$160.90 million in the corresponding period in 2014. Imports rose to US$276.80 million, or 6.5 percent while exports declined to US$76.5 million, or 7.8 percent.

“The services account surplus increased slightly to US$40.3 million compared to US$38.30 million in the corresponding period a year ago.The income account also worsened with the deficit widening to US$21.30 million compared to US$18.20 million in the first nine months of 2014 owing primarily to higher external interest payments.

“Current transfers are estimated at a surplus of US$104.80 million, higher than the surplus of US$89.90 million in the first nine months of 2014. While transfers to general government declined to US$23.0 million, workers’ remittances increased significantly to US$90.30 million from US$64.90 million.”

The report also stated a weakening in the strength of the country’s import cover from 4.5 to 3 months. It stated: “As at end-September 2015, gross international reserves amounted to US$83.93 million, equivalent to about 3 months of import cover compared to US$139.42 million, or 4.5 months of imports at end-September 2014.

Another cause for concern is the volume of transactions in the domestic foreign exchange market, which decreased to US$1.1 billion, or 23.7 percent from a year earlier, although the report also stated that in the year to end-September 2015, the Dalasi appreciated against the US dollar by 7.35 percent, Euro (22.43 percent) and British Pound (11.46 percent).

But this appreciation of the dalasi has not curbed the inflationary trend in the country, which is why the IMF is calling for a rethink in the government’s directive as regards the imposition of exchange rate in the country.

The MPC report stated:Consumer price inflation, measured by the National Consumer Price Index (NCPI), accelerated to 6.6 percent in September 2015, from 6.3 percent in September 2014. The sole driver of consumer price inflation was food prices which increased to 8.05 percent from 7.34 percent in September 2014.”

“Mend the humps in the economy to realize the gains in tourism and agriculture”

The Point