CBG reveals Gambia’s economic situation

Mar 5, 2021, 12:49 PM | Article By: Pa Modou Cham

The Monetary Policy Committee (MPC) of the Central Bank of The Gambia (CBG) yesterday briefed the media about the situation of Gambia’s economic and financial development and its appropriate policy decisions.

According to Central Bank Governor Buah Saidy, in the fourth quarter of 2020, the foreign exchange market recorded an excess demand of US$5.72 million indicative of a pick-up in economic activity during the period as fears of the Covid-19 was allayed by the production and roll out of the vaccine.

He indicated that the volume of transactions in the foreign exchange market declined to US$2.17 billion as at end-December 2020 compared to US$2.20 billion in the corresponding period of 2019.

On domestic debt situation, Mr. Saidy stated that the total outstanding domestic debt stock as at end December 2020 grew by 4. 3% to D34.6 billion (32.4% of the Gross Domestic Product) from D33.1 billion (36.2% of GDP) in the corresponding period in 2019.

On monetary development, the economist said; “growth in money supply (M2) toned-down to 22.0% at end December 2020, from 27.1% at end December 2019. The increase in both the net foreign assets (NFA) and net domestic assets (NDA) of the banking system moderated to 45.0% and 11.8% in 2020, from 61.3% and 7.2% in 2019.”

After taking some factors into consideration, Governor Saidy said the committee decided to maintain the policy rate (MPR) at 10%, maintain the required reserve at 13% and the standing lending facility at 11.0%.

Dwelling on the real sector, the governor further indicated that the Gambia Bureau of Statistics (GBoS) estimated real GDC growth for 2019 at 6.2%, 0.3 percentage points lower than the 2018 real growth. He added that growth was largely aided by good performance in the services sector, construction and improved business sentiments.

The former Finance PS continued by dilating on the development of the external sector, stating that the preliminary balance of payments estimate for end December 2020 revealed a worsened external sector position for the country. 

"The current account balance deteriorated to a deficit of US$119.34 million in December 2020 from a deficit of UD$36.60% in December 2019, due to weakened goods and service account balances."

On fiscal operations, Mr. Saidy reiterate that the preliminary data on the government fiscal operations for 2020 showed a deterioration in the fiscal position, while adding that overall budget deficit, including grants expanded to D4.2 billion in 2020 from a deficit of D2.7 billion in 2019. He further stated that the budget deficit including grants rose to D13.4 billion in the review period relative to a deficit of D7.5 billion a year ago.