Gambia Monthly Eco Bulletin May 2009

The Gambia Monthly Economic Bulletin- May 2009

THE GAMBIA MONTHLY ECONOMIC BULLETIN1 May 2009

Institutional Support Project for Economic and Financial Governance (ISPEFG) Department of State for Finance and Economic Affairs (DOSFEA) The Republic of Gambia The Quadrangle, Banjul, the Gambia

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The Gambia Monthly/ Quarterly Economic Bulletin provides an update on recent economic developments and policies in the Republic of the Gambia. The Bulletin is prepared by a research team comprising Tamsir Cham, Director; Momodou Taal, Principal Economist and Ami Khan, Senior Economist, in the Economic Management and Planning Unit (EMPU) and Tarun Das, Macroeconomic Adviser (ISPEFG); Ministry of Finance and Economic Affairs (MOFEA); with key inputs from the Debt Management Adviser, Fiscal/Financial Adviser, the Central Bank of Gambia (CBG), the Gambian Bureau of Statistics (GBOS), and the Gambian Revenue Authority (GRA). Any questions and feedback can be addressed to: Either Tamsir Cham ([email protected]) or Tarun Das ([email protected])

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The Gambia Monthly Economic Bulletin- May 2009

Political and Administrative Structure The Gambia is divided into seven regions comprising two Municipalities namely, Banjul City Council (BCC) and the Kanifing Municipal Council (KMC) and five provincial administrative regions namely, Western Region (WR), North Bank Region (NBR), Lower River Region (LRR), Central River Region (CRR) and Upper River Region (URR). Politically, the relevant units are Local Government Areas (urban), Districts, Wards and Villages. The Gambia has 35 districts and about 1870 villages with an average of 13 compounds. Basic Facts about Gambia: Fiscal year: 1st January to 31st December Items (Year) Units Value Rank in the World from top in descending order Area (2009) Sq. km. 11,300 171 out of 248 countries Population (2008) Million 1.735 148 out of 241 countries GDP PPP (2004) Million US$ 3284 167 out of 224 countries GDP Nominal (2006) Million US$ 511 199 out of 229 countries GDP PPP per capita (2004) US$ 1945 177 out of 223 countries GDP per capita (2006) US$ 329 192 out of 207 countries Poverty Ratio (% of people Percent 59 7 out of 59 countries 2

The Gambia Monthly Economic Bulletin- May 2009 below One-US$) (2000) Source: http://www.nationmaster.com

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The Gambia Monthly Economic Bulletin- May 2009

____________________________________________________________ Contents Items

Page

ISPEFG Project/ Research Team and Document History

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Highlights

5-6

At a Glance

7-10

1. Global Economic Outlook and Global Public Policy 1.1Sustained weakness and risk in global output and trade in 2009 1.2Global Commodity Prices and Inflation 1.3 Trends of international crude oil prices

2. Current State of the Gambian Economy 2.1Overall and Sectoral GDP Growth Rates

11-15 11 14 14

2.8Domestic Debt and Outstanding Treasury Bills 2.9Treasury Bills Yields 2.10Money Supply in March 2009 2.11Sectoral Distribution of Bank Credits in March 2009 2.12Commercial Banks’ Assets in April 2009 2.13Commercial Banks’ Liabilities in April 2009 2.14Interest Rates and CBG Policy Rates in May 2009 2.15Balance of Payments and Foreign Exchange Reserves 2.16Exchange Rates in May 2009

16-37 16 18 19 21 22 23 27 28 29 30 31 32 33 34 35 37

3. Assessment of Quantitative Targets agreed with IMF under MEFP

38-39

2.2Growth Rates of Selected Indicators for Trade and Transport

2.3Consumer Price Index (CPI) and Inflation 2.4Factors affecting inflation and Anti-inflationary Measures 2.5Projection of CPI inflation during May-December 2009 2.6Government Fiscal Performance in January-April 2009 2.7 External Debt Situation

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The Gambia Monthly Economic Bulletin- May 2009

ISPEFG Project and Monthly Report Research Team

Project Supervisors

Honorable Mr. Mod A. K. Secka, Permanent Secretary-I and Honorable Mr. Serign Cham, Permanent Secretary-II

Project Coordinator

Mr. Momodou Cham

Director (EMPU) Principal Economist Senior Economist Technical Assistant (Debt Management) Technical Assistant (Fiscal/ Financial) Technical Assistant (Macroeconomic)

Mr. Tamsir Cham Mr. Momodou Alagie Taal Ms. Ami Khan Mr. Adam Aikuta Mr. Dan Mambule Mwanje Mr. Tarun Das

Document History: This report is an update of the following reports prepared by the Research Team: 1. The Gambia Quarterly Economic Bulletin, pp.1-30, 31 March 2009. 2. The Gambia Monthly Economic Report, pp.1-18, 31 March 2009.

3. Fiscal Performance in the First Quarter of 2009, pp.1-4, 16 April 2009. 4. The Gambia Quarterly Economic Bulletin-An Update, pp.1-40, 30 April 2009. 5. The Gambia Monthly Economic Report, pp.1-38, 30 April 2009. 6. The Gambia Monthly Economic Report, pp.1-39, 31 May 2009. 7. The Gambia Monthly Economic Abstract, pp.1-15, 31 May 2009.

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The Gambia Monthly Economic Bulletin- May 2009 HIGHLIGHTS Impact of Global Financial Crisis and Economic Slowdown •

In recent years African countries in general experienced an economic boom contributed by three favorable factors namely increased donors funding, rising exports driven by high commodity prices, and inflows of remittances and foreign investment.

•

Since the middle of 2008 the US housing bubbles had led to severe financial crisis and economic slowdown in the developed countries, which in turn led to reversal of the positive factors mentioned above and imposed serious adverse impact on the African economies.

•

As per the latest IMF World Economic Outlook (April 2009) projections, world output is projected to decline by 1.3 percent in 2009 as a whole and to recover gradually in 2010, growing by only 1.9 percent. In African developing economies, growth is projected to slow down significantly from 5.2 percent in 2008 to 2 percent in 2009

Food and Oil Prices •

Due to sluggish demand and economic slowdown, there had been significant decline of world commodity prices including food and petroleum since August 2008.

•

Given weakness in the Chinese demand and negative growth in the US and EU and OPEC’s decision to have no supply cuts, global crude oil prices were projected to remain soft and rule around $51 per barrel in 2009. However, since April 2009 petroleum prices started rising and increased to US$60 per barrel in May 2009.

Impact on the Gambian Economy

•

A global crisis of this magnitude is bound to have adverse impact on any country. The Gambian economy was not an exception and witnessed sharp decline in exports, remittances, manufacturing production and wholesale and retail trade during 2008.

•

However, thanks to bumper crops contributed by favorable monsoon and very good performance by electricity, telecom and financial sectors, the real GDP growth improved from 6.1% in 2007 to 7.2% in 2008, supported by a spectacular growth of 28.4% in agriculture output.

•

Real GDP growth rate in 2009 is expected to be around 4.5% aided by a growth of 6% in agriculture value added, 2% in industry and 4.4% in services.

CPI Inflation

•

Annual point-to-point CPI inflation accelerated from 1.4% (Food 1.7% and non-food 1%) in April 2008 to 6.3% (Food 7.7% and non-food 4.5%) in April 2009. The 12-month average inflation rate accelerated marginally to 5.5% in April 2009 from 5.4% a year ago.

Government Financial Performance

•

Government Financial Performance is significantly better in Jan-April 2009 than in Jan-April 2008. In Jan-April 2009 revenue and grants increased by 15.5% aided by 16.7% increase in taxes, 4.7% increase in non-taxes and 16.9% increase in grants over Jan-April 2008.

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The Gambia Monthly Economic Bulletin- May 2009 •

Overall, there is a fiscal surplus of 35 million Dalasi in Jan-April 2009, lower than the fiscal surplus of 75 million Dalasi in Jan-April 2008, due to significant increase of capital expenditure by 88% in Jan-April 2009 over Jan-April 2008. Domestic Debt and Treasury Bills Yields

•

At the end of April 2009, outstanding domestic debt stood at D5.7 billion (amounting to 28.4% of GDP), down by 5.9% from the outstanding domestic debt at D6 billion (amounting to 33.5% of GDP) a year ago. Treasury bills accounted for 84.4% of total domestic debt at the end of April 2009, compared to 80.3% a year ago.

•

Yields on treasury bills fluctuated widely in recent months. Despite significant decline of CPI inflation from 7% in January 2009 to 6.3% in April 2009, Average yield on the 91-day increased from 10.5% in Jan 2009 to 12% in April 2009, yield of 182-day bills increased from 12.1% to 13% and that of 364-day bills increased from 14.4% to 14.6% over the period.

Money Supply and Bank Credits

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Annual growth rate of broad money supply (M3) accelerated from 3.7% in April 2008 to 18.8% in April 2009, supported by 17.8% growth in currency, 19.6% growth in demand deposits, 11.6% growth in savings deposits and 29.1% growth in time deposits. On the demand side, growth was mainly due to 31.9% growth in domestic credits.

•

Domestic credit increased from D5.1 billion in April 2008 to D6.7 billion in April 2009, supported by 46% growth in government borrowing, 103.3% growth in credits to public entities and 24.1% growth in credits to the private sector.

Commercial Banks Assets’ and Liabilities

•

Gambian banks were least affected by global financial crisis as the Gambian banks do not have large exposure to foreign assets or liabilities. At end-April 2009, foreign assets constituted only 8.9% of total assets and external liabilities constituted only 1.8% of total liabilities.

Interest Rates and Central Bank Policy Rates •

Given the acceleration in inflation and the weakening of the Dalasi, the MPC decided to increase the Rediscount Rate by one percentage point to 16.0% in October 2008. Since then policy rate remained unchanged at 16% until the end of March 2009.

•

Despite significant fall of the inflation rate since January 2009, Treasury bill yields, short-term deposit rates and commercial banks’ lending rates remain very high leading to wide interest rate spreads and high cost economy. Appropriate monetary measures are necessary to reduce the short-term deposit rates and the lending rates.

Balance of Payments and Exchange Rate

•

Balance of Payments estimates indicate an overall deficit of D767.3 billion (-) $34.2 million) in 2008 compared to surplus of D741.7 million ($29.8 million) in 2007, reflecting the deterioration in both current and capital accounts. The Net Usable Reserve of the CBG stood at US$95.6 million at end-March 2009 and was above the IMF Program target (floor) by US$3.6 million.

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Projections for 2009 BOP accounts indicate deterioration in the overall balance emanating from the on-going slowdown in global economic activity which is expected to adversely impact remittances, foreign direct investment and tourism income.

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The Gambia Monthly Economic Bulletin- May 2009

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In 2008, the Dalasi depreciated against major international currencies except the British Pound. Since Jan 2009, Dalasi has appreciated against major international currencies.

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The Gambia Monthly Economic Bulletin- May 2009

At a Glance- May 2009 Economic Indicators

Latest Reference Period

Status in the latest reference period

Status in the Corresponding period in the previous year

Outlook for 2009

1. Real Sector Growth Rates (in percentage) Overall 7.2 Overall 6.1 Overall 4.5 Agriculture 28.4 Agriculture 3.9 Agriculture 6.0 Industry 0.7 Industry (-) 3.1 Industry 2.0 Services (-) 0.6 Services 10.4 Services 4.4 Growth rates of selected indicators for transport and communication (in percentage)

Real GDP (FC) Growth rate (%)

Calendar year 2008

Ports cargo unloaded Ports cargo loaded Total cargo handled at ports Quantity of rice imports Quantity of flour imports Quantity of sugar imports Quantity of cement imports Quantity of POL imports Total cargo handled by air Total mail handled by air

Calendar year 2008 2008

9.5

11.8

20.9

-9.8

2008

10.6

9.3

2008

30.9

166.8

2008

-100.0

-10.9

2008

-10.8

83.4

2008

28.7

19.3

2008

6.5

-8.2

2008

-3.2

-31.1

2008

-53.8

65.6

2008

-5.4

-6.4

2008

-21.9

19.0

2008

-15.7

14.8

2008

-18.9

16.9

2008

-5.0

14.3

2008

-27.0

18.4

2008

2.5

2.8

2008

4.5

4.8

Total air-flights Arriving passengers Originating passengers Total air passengers Total tourist arrivals Vehicles imported Total licensed vehicles Fixed telephone subscribers

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Growth rate of ports cargo may decline.

Growth rates of rice and cement may decelerate, while growth rates of sugar and POL may improve.

Growth rates of air cargo and passenger traffic may improve by the end of 2009 if the developed countries start recovering in the quarter of 2009.

Tourists arrivals may go down. Likely to remain stable. Likely to remain stable.

The Gambia Monthly Economic Bulletin- May 2009

At a Glance- May 2009 Continued Economic Indicators

Latest Reference Period

Status in the latest reference period in 2009

Status in the Corresponding period in 2008

Outlook for 2009

2. Inflation rate (in percentage) and Crude Oil price (in US$/ barrel) CPI inflation (%)

April 2009

Brent crude oil price (US$/ brl)

April 2009

Overall 6.7 Food 8.2 Non-food 4.8 Average US$47

Overall 3.1 Food 4.5 Non-food 1.2 Average US$109

Expected to rise in May 2009, but decline thereafter May rise to US$50 By the end of 2009

3. Government fiscal operations - Percentage change over previous period Revenue & grants Dom. Revenue Tax Revenue Nontax Rev Grants Exp & Net Lending Current Exp Per. Emoluments Other Charges Interest External Domestic Cap Exp & NL Cap. Expenditure Net Lending

Overall Bal Basic balance Basic Pr. Balance

Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009

16.2 15.4 16.5 4.7 30.0 19.6 5.1 17.6 0.7 -2.3 -19.5 2.7 72.8 87.9 -56.7 -41.0 46.4 14.9

-2.2 -4.9 0.1 -35.9 107.8 0.7 21.4 39.1 31.3 -1.8 -24.9 8.0 -38.0 -32.8 -62.8 -33.8 -61.5 -36.5

Fiscal performance in the first four months of 2009 i.e. Jan-April 2009 can be considered to be on track as per the Budget estimates. Better performance by revenue items in JanApril 2009 compared to that in Jan-April 2008. Overall Fiscal surplus of D35 million, despite significant increase of capital expenditure by 88% in Jan-April 2009 over Jan-April 2008.

4. Government fiscal operations as percentage of GDP at current market prices Rev. and grants Exp & Net Lending Interest Overall fiscal bal. Basic Balance Primary Bas. Bal,

Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009 Jan-Apr 2009

7.7 7.5 1.4 0.2 1.2 2.6

7.4 7.0 1.6 0.4 0.9 2.5

As % of GDP at current market prices, revenues, expenditures and basic balance are on-track.

5. Outstanding Domestic Public Debt in Million Dalasi Treasury bills Sukuk Al-Salam Govt Bonds NIB Treas. Notes Total (Million D) As % of GDP

April 2009 April 2009 April 2009 April 2009 April 2009 April 2009

4776 86 250 547 5659 28.4%

4826 64 250 873 6013 33.5%

Outstanding treasury bills are expected to decline.

Likely to decline in 2009.

6. Composition of Outstanding Domestic Public Debt (Percentage share in total) Treasury bills Sukuk Al-Salam Govt Bonds NIB Treas. Notes Total

April 2009 April 2009 April 2009 April 2009 April 2009

84.4 1.5 4.4 9.7 100

80.3 1.1 4.2 14.5 100

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Share of non-interest bearing Treasury notes is expected to decline.

The Gambia Monthly Economic Bulletin- May 2009

At a Glance- May 2009 Continued Economic Indicators Latest Reference Period Status in the latest reference period in 2009 Status in the Corresponding period in 2008 Outlook for 2009

7. Maturity Composition of Treasury Bills (in Percentage) 91-days 182-days 364-days

April 2009 April 2009 April 2009

14 13 72

9 22 69

Expected to remain stable

8. Yields of Treasury Bills (in Percentage) 91-days 182-days 364-days

April 2009 April 2009 April 2009

12.0 13.0 14.6

10.9 11.9 13.3

Yields may come down as CPI inflation has started decelerating.

9. Annual Growth Rate of Money Supply (Percentage) Broad Money supply (M3) Reserve Money

April 2009

18.8

3.7

April 2009

11.1

-6.0

Broad money growth rate is likely to decelerate.

10. CBG Policy Rates and Banks’ Lending rates (Percentage per annum) CBG Bank rate Rediscount rate Bank lending rate

April 2009 April 2009 April 2009

10 16 18 to 27

10 15 18 to 27

Banks’ lending rates may decline if the credit rating system is strengthened.

11. Share of Banks Foreign Assets/ Liabilities in Total Assets/ Liabilities (%) Foreign assets Foreign liabilities

April 2009 April 2009

8.9 1.8

10.9 3.6

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Likely to remain stable

The Gambia Monthly Economic Bulletin- May 2009

12. Sectoral distribution of bank credits (in percentage) Agriculture Fishing Manufacturing Building Transportation Trade Tourism Financial Inst. Other comm. Others Total credits

March 2009 March 2009 March 2009 March 2009 March 2009 March 2009 March 2009 March 2009 March 2009 March 2009 March 2009

6.7 0.6

7.9 0.5

3.7

4.7

10.7

10.7

9.5

8.6

25.5

23.2

8.0

6.7

3.2

3.6

19.8

17.6

12.3

16.5

100.0

100.0

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Bank credits to agriculture and manufacturing are rising at faster rate in 2009, while trade, commercial activities, and construction attract major shares of bank credits, indicating some revival of economic activities in 2009.

The Gambia Monthly Economic Bulletin- May 2009

At a Glance- May 2009 Continued Economic Indicators Latest Reference Period Status in the latest reference period in 2009 Status in the Corresponding period in 2008 Outlook for 2009

13. Balance of Payments (Million US Dollar) Goods A/C Bal. Goods exports Goods imports Services, net Tourism Official transfer Remittances Income, net Current A/C Bal Overall BOP Bal Foreign Exch. Reserve Equi. to months of imports c.i.f.

2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 End Dec 2008 End Dec 2008

(-) 156.0 141.6 297.6 59.6 72.4 6.1 53.3 (-) 33.8 (-) 49.5 (-)34.2

(-) 166.3 132.2 298.5 66.8 75.1 5.2 38.8 (-) 44.6 (-) 58.8 29.8

125.2

159.4

5.7

6.2

Likely to remain under pressure.

Likely to deteriorate further in 2009.

14. Inter-bank Exchange Rate- End Period Mid-Market Rates Dalasi per unit of foreign currency UK £ US$ CHF Euro CFA (5000)

May 2009 May 2009 May 2009 May 2009 May 2009

40.20 26.78 22.75 36.09 256.38

40.25 20.64 19.46 32.10 245.84

Dalasi is likely to depreciate against major currencies during the year 2009.

15. Annual Appreciation (-)/ Depreciation of Dalasi per unit of foreign currency At the End of the period

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The Gambia Monthly Economic Bulletin- May 2009 UK £ US$ CHF Euro CFA (5000)

May 2009 May 2009 May 2009 May 2009 May 2009

-0.1 29.7 16.9 12.4 4.3

-24.6 -24.5 -12.0 -11.9 -11.9

Dalasi is likely to depreciate against major currencies in the second quarter.

16. Foreign Exchange Reserves (US$ Million) FER

End-Jan 2009

116.8

140.4

14

Likely to remain under pressure.

The Gambia Monthly Economic Bulletin- May 2009 1. Global Economic Outlook and Global Public Policies 1.1 Sustained weakness and risk in global output and trade in 2009 The global economy is presently passing through a critical conjecture affected adversely by a massive financial crisis and severe recession. As per the projections made by the IMF in their latest World Economic Outlook: Crisis and Recovery April 20092, world output is projected to decline by 1.3 percent in 2009 as a whole and to recover only gradually in 2010, growing by only 1.9 percent (Table-1.1). Achieving this turnaround will depend on stepping up efforts to heal the financial sector, while continuing to support demand with monetary and fiscal easing. This is the first global contraction in the last 60 years since the great depression in 1930s. Global real sectors and financial markets continue to weaken both in advanced and emerging economies. Trade volumes continue to shrink rapidly, while production and employment data suggest that the global activity continues to contract in the current quarter. Recent data point to sustained weakness in the period ahead (Figure-1). Africa and the Middle East: In African developing economies, growth is also projected to slow significantly from 5.2 percent in 2008 to 2 percent, while growth in the Middle East is projected to decline from 5.9 percent in 2008 to 2.5 percent in 2009 (Table-1.2). In Africa, growth is expected to moderate particularly in commodity exporting countries, and several countries are experiencing declining exports and lower inflows of tourism income, remittances, and foreign direct investment (FDI), while aid flows are under threat. In the Middle East, the effects of the financial crisis have been more limited so far. Despite the sharp drop in oil prices, government spending is largely being sustained to cushion the toll on economic activity. Prospects of the Gambian Economy: As per the IMF estimates, the real GDP growth in the Gambia decelerated from 6.3 percent in 2007 to 5.9 percent in 2008 and is projected to decelerate further to 4 percent in 2009 (Table-1.2) due to adverse impact of the global financial crisis and economic slowdown.

Figure-1: Trends of Global Growth Rates and World Trade

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World Economic Outlook: Crisis and Recovery, April 2009, IMF Washington D.C.

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The Gambia Monthly Economic Bulletin- May 2009

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The Gambia Monthly Economic Bulletin- May 2009 Table 1.2 Growth Prospects of African Economies

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The Gambia Monthly Economic Bulletin- May 2009 1.2 World Commodity Prices and Inflation As a result of the sharp downturn in global demand, commodity prices, especially for energy, declined significantly since the last quarter of 2008. Inflationary pressures had subsided in the major advanced economies. There are also significant declines of housing prices in some advanced countries, showing signs of deflation. Inflation will continue to retreat due to the combination of lower commodity prices and increasing economic slackness, with deflation risks growing in advanced economies. IMF forecasts indicate that G-7 deflation vulnerability has risen above its previous peak, reflecting high risks in Japan and the United States and moderate risks in several euro area members— including Germany, Italy and France. Inflationary pressures also subsided in the low and income economies. Although commodity prices recorded some increase in January 2009, they declined again since Feb 2009 (Table-2). 1.3 Trends of International Crude Oil Prices During 2008 Brent crude oil prices ruled very high until July 2008 when prices increased to $147 per barrel. However, due to global financial crisis and economic slowdown oil prices started declining thereafter. A recent report from the Paris based International Energy Agency (IEA) has projected that the world oil demand in 2009 will decline by half a million barrels per day (bpd). In their last meeting, the OPEC has decided not to have any cut in oil supply. Accordingly, oil prices are expected to remain soft in the rest of the year 2009. In March-April 2009 Brent crude oil prices ranged around US$47 per barrel. Given weakness in the Chinese demand and negative growth in the US and EU and OPEC’s decision to have no supply cuts, global crude oil prices were projected to remain soft and rule around $51 per barrel in 2009. However, since April 2009 petroleum prices started rising and increased to US$60 per barrel in May 2009. Trends of Monthly Brent Crude Oil Prices (US$/ barrel)

120 100 80 60 40 20

an -9 9 J ul -9 9 J an -0 0 J ul -0 Ja 0 n0 1 J ul -0 1 J an -0 2 J ul -0 2 J an -0 3 J ul -0 3 J a n0 4 J u l-0 4 J an -0 5 J ul -0 5 J a n0 6 J ul -0 6 J a n0 7 J u l-0 7 J an -0 8 J ul -0 8 J a n0 9

0

J

US$ per Barrel

140

Months and Years 1999-2009 Series1

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The Gambia Monthly Economic Bulletin- May 2009 Table-2 Trends of World Commodity Prices

Commodity Energy Coal, Australia Crude oil, Brent Crude oil, Dubai Natural gas Index Natural gas, Europe Agriculture Coffee, Arabica Tea, Mombasa auctions Coconut oil Groundnut oil Soybean oil Barley Maize Rice, Thailand, 25% Wheat, US, HRW Wheat US SRW Fishmeal Meat, beef Meat, chicken Meat, sheep Shrimp, Mexico Sugar, world Raw Materials Logs, Cameroon Plywood Sawnwood, Cameroon Cotton Memphis Rubber RSS1, US Fertilizers DAP Phosphate rock Potassium chloride Urea Metals and Minerals Aluminum Copper Gold Steel cr coilsheet Steel hr coilsheet Steel, rebar Steel wire rod Tin Zinc

Unit $/mt $/bbl $/bbl 2000=1 00 $/mmbt u

Jan-Mar 2008

Quarterly averages Apr-Jun Jul-Sep Oct-Dec 2008 2008 2008

Jan-Mar 2009

Monthly averages Feb Mar Apr 2009 2009 2009

114.00 96.67 91.30 235.3

138.65 122.39 116.67 286.0

162.80 115.60 113.47 284.1

92.97 55.89 53.67 266.2

71.93 44.98 44.56 198.3

75.38 43.24 43.14 187.4

61.00 46.84 45.58 177.7

63.56 50.85 50.18 144.7

10.86

12.40

14.62

15.75

11.94

11.04

10.90

8.51

328.5 221.8 1,379 2,007 1,384 216.8 220.4 182.2 411.8 384.1 1,126 282.1 158.8 453.6 1,103 28.42

315.1 221.6 1,499 2,328 1,466 239.1 259.0 n.a. 346.5 277.8 1,185 332.7 167.9 493.2 1,109 27.01

321.2 252.8 1,246 2,417 1,353 216.6 244.7 669.5 317.7 241.5 1,198 372.4 177.1 477.3 1,048 31.14

267.8 190.8 772 1,773 830 129.5 168.4 449.9 228.1 182.7 1,023 268.0 174.7 410.0 1,014 26.28

283.9 214.9 677 1,283 755 116.3 166.9 469.4 231.6 187.4 1,013 245.2 173.5 378.5 976 28.85

285.5 211.8 673 1,293 748 112.5 163.4 472.8 224.7 183.4 1,001 236.2 173.8 380.3 970 29.26

283.3 213.8 625 1,214 727 114.8 164.6 471.5 230.9 183.7 1,030 247.7 171.9 374.6 970 29.54

297.4 222.5 747 1,188 800 110.9 168.5 446.0 233.6 182.6 1,038 255.5 171.1 396.1 970 30.09

530.8 640.4 1,035.5 174.2 292.6

554.4 647.3 1,052.3 171.6 311.7

548.5 648.6 974.5 170.0 329.1

473.8 645.5 770.8 130.1 202.8

426.8 572.8 689.2 129.8 165.8

421.9 573.0 690.2 131.4 165.8

388.2 570.8 679.9 123.3 161.8

382.5 567.7 684.3 135.6 183.6

$/mt $/mt $/mt $/mt

860.2 234.4 367.7 357.6

1,191.6 367.5 511.1 575.7

1,153.7 409.2 635.0 745.4

663.3 371.3 766.7 292.2

362.2 193.3 865.2 267.3

367.9 157.5 872.5 273.3

367.6 157.5 870.0 265.4

335.4 125.5 745.0 245.2

$/mt $/mt $/toz $/mt $/mt $/mt $/mt ¢/kg ¢/kg

2,743 7,796 927 763 700 639 754 1,778 243.0

2,940 8,443 896 900 833 838 950 2,265 211.3

2,787 7,680 870 1,100 1,000 934 1,135 2,051 177.0

1,821 3,905 795 1,100 1,000 630 1,200 1,310 118.5

1,360 3,428 909 1,033 933 473 1,200 1,103 117.2

1,330 3,315 943 1,100 1,000 485 1,200 1,104 111.2

1,336 3,750 924 900 800 470 1,200 1,068 121.7

1,421 4,407 890 700 600 425 1,100 1,174 137.9

¢/kg ¢/kg $/mt $/mt $/mt $/mt $/mt $/mt $/mt $/mt $/mt ¢/kg ¢/kg ¢/kg ¢/kg ¢/kg $/cum ¢/sheets $/cum ¢/kg ¢/kg

Source: World Bank Pink Sheet May 2009

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The Gambia Monthly Economic Bulletin- May 2009 2. Current State of the Gambian Economy 2.1 Overall and Sectoral GDP Growth Rates •

The sharp decline in global economic activity had also adverse impact on the Gambian economy in 2008 leading to decline of exports and remittances and decline of manufacturing production and wholesale and retail trade.

•

However, thanks to bumper crops contributed by favorable monsoon at home and high international prices of food grains, and very good performance by electricity, telecom and financial sectors, the real GDP growth at constant 2004 factor cost improved from 6.1% in 2007 to 7.2% in 2008 (Table-2.1 and Figure-2.1).

Figure 2.1 Trends of Sectoral Growth Rates 1998-2009 40.0 Growth Rate (%)

30.0 20.0 10.0 0.0 -10.0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

-20.0 -30.0 Year 1998-2009 GDP

Agriculture

20

Industry

Services

The Gambia Monthly Economic Bulletin- May 2009

•

As per the Provisional Estimates of the GBOS, the 7.2% growth in real GDP in 2008 was supported by a spectacular growth of 28.4% in agriculture value added and a marginal growth of 0.7% by industry while services value added declined by (-) 0.6% due to poor performance by trade and public administration.

•

Share of agriculture increased from 26.3 percent in 2007 to 31.5 percent in 2008, while share of industry declined from 15.1 percent in 2007 to 14.2 percent in 2008 and share of services declined from 58.6 percent in 2007 to 54.3 percent in 2008. Increase of agricultural share was contributed by increase in share of crops, while decline of services share was mainly due to decline of share of wholesale and retail trade.

•

Agriculture is expected to perform well in 2009, but due to higher base in 2008 the agricultural growth will be moderate in 2009. It is projected that real GDP growth rate in 2009 is likely to be around 4.5% aided by 6% growth in agriculture, 2% in industry and 4.4% in services. However, the general increase in civil servant salaries, introduction of work efforts’ incentives and donors’ commitment to provide financial support to Gambia under PRGF and to help Gambia to mitigate adverse impact would boost both consumer spending and investment and might enhance economic growth in the range of 5%.

Table-2.1: Sectoral Growth Rates and Shares in GDP in the Gambia in 2005-2009 (in %) Items GDP at 2004 FC

Sectoral GDP Growth Rates (in percentage) 2006 2007 2008 2009 Actual Actual Actual Proj. 6.6 6.1 7.2 4.5

Sectoral Shares in GDP (in percentage) 2006 2007 2008 2009 Actual Actual Actual Proj. 100.0

100.0

100.0

100.0

3.9

3.9

28.4

6.0

26.9

26.3

31.5

32.0

-- Crops

4.1

4.3

45.7

7.4

16.0

15.7

21.3

21.9

-- Livestock

3.0

4.0

3.0

3.1

8.5

8.4

8.0

7.9

-- Forestry

3.0

-4.0

1.0

2.7

0.6

0.6

0.5

0.5

1.8 16.6

1.7 15.1

1.7 14.2

Agriculture and allied

-- Fishing Industry -- Mining and quarrying -- Manufacturing -- Electricity, gas, water

7.3

3.2

3.5

3.5

18.5 7.7

-3.1 6.9

0.7 6.0

2.0 7.5

1.7

1.7

1.7

-0.5

1.4

-2.5

-2.2

5.6

5.3

4.8

4.5

1.6 13.8 1.7

6.0

17.0

15.0

10.0

0.8

0.9

1.0

1.0

40.0

-9.8

0.0

2.5

10.4 7.1

-0.6 -12.9

4.4 -1.8

7.3 58.6

6.8 54.3

6.6

5.7 -1.5

8.6 56.4 24.5

24.6

20.0

-- Hotels/ restaurants

0.9

1.7

3.0

3.0

2.5

2.4

2.3

2.3

-- Transport / storage

5.7

8.5

6.0

4.4

3.6

3.7

3.6

3.6

-- Telecom

18.0

25.0

10.0

10.0

9.4

11.1

11.4

12.0

-- Financial

18.2

12.8

14.5

12.0

8.2

8.7

9.3

10.0

-- Real est., business

6.9

3.1

3.0

4.1

3.7

3.5

3.4

3.4

-- Public administration

0.0

8.0

0.0

2.0

2.1

2.1

2.0

1.9

-- Other service

11.1

4.5

2.4

3.1

2.4

2.4

2.3

2.2

-- Construction Services -- Wholesale/retail trade

54.2 18.8

Source: Gambian Bureau of Statistics (GBOS) for the years 2006-2008 and projections for 2009 by the Macroeconomic Adviser.

21

The Gambia Monthly Economic Bulletin- May 2009 2.2 Growth Rates of Selected Indicators for Trade and Transport Table 2.2 presents growth rates for selected indicators in transport and communications sectors during the years 2005 to 2008. It is evidenced by the table that the Gambian economy was adversely affected to some extent by the global financial crisis and economic slowdown in 2008. However, there was mixed performance for the ports traffic. (1) While the growth rate of ports cargo unloaded decelerated, that of ports cargo loaded and total cargo handled at the Banjul seaport improved in 2008 indicating some improvements in re-exports. (2) There were significant imports of rice, cement and petroleum products in 2008, whereas sugar and vehicles imports declined and there was no imports of flour as a result of bumper agricultural production at home. (3) Both the cargo and passengers handled at the Banjul airport declined in 2008. The tourist arrivals to the Gambia also declined in 2008. (4) Growth rates of vehicles registered and fixed telephone connections decelerated marginally in 2008. Table 2.2 Growth rates of selected indicators for transport and communications (%) Items

2005

2006

2007

(1) Ports cargo unloaded 4.4 2.7 11.8 (2) Ports cargo loaded -11.6 41.1 -9.8 (3) Total cargo handled at ports 2.8 6.0 9.3 (4) Quantity of rice imports 53.3 -77.5 166.8 (5) Quantity of flour imports 15.8 21.2 -10.9 (6) Quantity of sugar imports -37.1 -5.8 83.4 (7) Quantity of cement imports 31.9 -26.2 19.3 (8) Quantity of POL imports -13.0 26.9 -8.2 (9) Total cargo handled by air -25.7 14.0 -31.1 (10)Total mail handled by air -1.8 -13.9 65.6 (11)Total Airflights -8.2 7.2 -6.4 (12)Arriving passengers -0.3 14.7 19.0 (13)Originating passengers 6.2 3.3 14.8 (14)Total air passengers 3.0 8.7 16.9 (15)Total tourist arrivals 19.8 15.7 14.3 (16)Vehicles imported -18.6 480.5 18.4 (17)Total licensed vehicles 2.5 2.9 2.8 (18)Fixed telephone subscribers 4.8 20.5 4.8 Source: Gambian Bureau of Statistics (GBOS)

22

2008 9.5 20.9 10.6 30.9 -100.0 -10.8 28.7 6.5 -3.2 -53.8 -5.4 -21.9 -15.7 -18.9 -5.0 -27.0 2.5 4.5

The Gambia Monthly Economic Bulletin- May 2009 2.3 Consumer Price Index and Inflation •

As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflation accelerated from 1.4% April 2008 to 6.3% in April 2009. The 12-month average inflation rate accelerated marginally to 5.5% in April 2009 from 5.4% a year ago.

•

Food and drinks (with weights of 55.2% in overall CPI) recorded average inflation of 7.7% in April 2009, up from 1.7% a year ago, and contributed 70.8% to overall inflation in April 2009.

•

Non-food items (with weights of 44.8% in overall CPI) recorded annual inflation of 4.5% in April 2009 compared to 1% a year ago and contributed 29.2% to inflation.

•

Among other groups, in April 2009, clothing and textiles recorded annual inflation of 4.6%, housing and utilities 5.4%, restaurants and hotels 6.8% and transport 4.2%. Table-2.3 CPI Inflation Rates in April 2009 (in percentage)

Items

Weights Wi (%)

April2008 Index 113.21 116.61 104.19 106.19 115.38 111.50 101.00 115.14 101.54 103.94

Apriil-2009 Index

Inflation (%)

6.3 125.6 7.7 105.78 1.5 111.08 4.6 121.64 5.4 114.97 3.1 101.77 0.8 119.95 4.2 101.98 0.4 104.67 0.7 Education 1.5 101.87 102.25 0.4 Hotels 0.4 108.86 116.24 6.8 Misc. 5.9 112.46 125.37 11.5 non-food 44.8 109.08 114.03 4.5 Source of basic data: Gambian Bureau of Statistics (GBOS). Overall Food Tobacco Clothing Utilities Furnishing Health Transport Telecom Recreation

100.0 55.2 0.7 11.3 3.4 5.2 1.0 4.4 3.0 8.0

120.36

3

Wi (CPIi1 – CPIi0)

Contributio n3 (%)

700.9 496.3 1.1 55.1 21.3 18.2 0.8 21.2 1.3 5.8 0.6 2.7 76.5 221.7

100.0 70.8 0.2 7.9 3.0 2.6 0.1 3.0 0.2 0.8 0.1 0.4 10.9 29.2

Contribution of an item to overall inflation is estimated by the following formula: Contribution of Item (i) = Wi (CPIi1 – CPIi0) / ∑ Wi (CPIi1 – CPIi0) expressed as a percentage. where CPIi1 = Consumer Price Index for Item (i) in the current period CPIi0 = Consumer Price Index for Item (i) in the previous period Wi = Weights for Item (i) and W = Total weights = Σ Wi For example, contribution of food is estimated as 100 X 525.0 / 746.7 = 70.3%.

23

The Gambia Monthly Economic Bulletin- May 2009

Sub-group wise inflation in April 2009 (%) Misc. Education Telecom Health

Series1

Utilities Tobacco Overall 0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Contribution to Inflation in April 2009 (%) Transport 3%

Others 13%

Furnishing 3% Utilities 3% Clothing 8%

Food 70%

18.0 16.0 14.0 12.0 10.0 All

8.0

Food

6.0 4.0 2.0 0.0 07Ja

Mar May J ul

Sp

Nv

08- Mar May J ul Ja

24

Sp

Nv

09Ja

Mar

The Gambia Monthly Economic Bulletin- May 2009

2.4 Factors affecting inflation and Anti-inflationary Measures •

Due to combined result of various fiscal and monetary measures undertaken by the government and the Central Bank of Gambia, the 12-month average CPI inflation rate moderated to 4.5% in 2008, compared to 5.4% in 2007, despite a significant rise of international prices of food and petroleum products and substantial increase of salaries of civil services at home in 2008.

•

Hardening of international prices of food products and petroleum oil, and disruptions in the supply of foodstuffs from the neighboring countries put pressures on consumer prices in the Gambia since 2007.

•

Government responded by reducing the sales tax on rice imports from 15% to 5% in July 2007 and eliminating it altogether in May 2008.

•

To compensate for revenue loss, the authorities increased other taxes (on car parts and used vehicles). Pump prices of petroleum products were increased in May 2008 by 10– 24% to remove an implicit budget subsidy that had emerged in the preceding months and to bring them in line with import costs.

•

To check effective demand and inflationary pressures on the economy the CBG raised the bank rate from 9% to 10% in June 2007 and raised its rediscount rate from 14% to 15% in June 2007 and further to 16% in October 2008.

•

In March 2008, in response to tight monetary conditions and against a backdrop of falling inflation, the CBG reduced the statutory minimum reserve requirement of banks from 16% to 14%.

•

Appreciation of the dalasi helped cushion the impact on inflation to some extent in 2008, but this exchange rate advantage has been lost in 2009 due to Dalasi depreciation.

25

The Gambia Monthly Economic Bulletin- May 2009 CPI Inflation in Gambia (%)

2006

Feb 2.8 2.1 5.0 7.0 Mar 3.8 4.2 3.1 6.7 Apr 2.7 6.3 1.4 6.3 May 2.7 6.6 1.6

Jun 2.2 6.4 2.2

July 1.5 6.3 3.8

26

2007

2008

Nov Dec

Sep Oct

J un J uly Aug

4.0 2.0 5.1 7.0

Apr May

Jan

J an Feb Mar

2006 2007 2008 2009

8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

2009

The Gambia Monthly Economic Bulletin- May 2009

27

The Gambia Monthly Economic Bulletin- May 2009 2.5 Projection of CPI inflation during May-December 2009 Two alternative projections of inflation rates during the remainder of the year 2009 have been done under the following assumptions: (1) Alternative-1: It is assumed that the variation of CPI for a month over the previous month in 2009 will be the average variation of the CPI for the respective month over the previous month during last two years (2008 and 2007). For example, CPI for May 2009 is estimated by the following formula: Projected CPI for May 2009 = Actual CPI for April 2009 + (May 2008 CPI + May 2007 CPI – April 2008 CPI – April 2007 CPI)/ 2. CPI for the subsequent months is projected by the similar formula. (2) Alternative-2: It is assumed that the variation of CPI for a month over the previous month in 2009 will be the same as the variation of the CPI for the respective month over the previous month in 2008. For example, CPI for April 2009 is estimated by the following formula: Projected CPI for May 2009 = Actual CPI for April 2009 + (May 2008 CPI – April 2008 CPI). CPI for the subsequent months is projected by the similar formula. (3) Alternative-3: Average of inflation rates under Allternatives 1 and 2. Results are presented in Table 2.5 which indicates that inflation is expected to decelerate continuously during the remaining month of the year 2009 and the year-end inflation is expected to range around 4.7 percent. Table-2.5: Projections of CPI inflation during May-December 2009 (in percentage) Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4

2007

2008

106.86 107.01 109.36 111.64 112.05 111.98 111.95 112.09 111.86 111.95 112.13 112.26 107.7 111.9 112.0 112.1

112.31 112.34 112.73 113.21 113.83 114.48 116.21 117.65 118.96 119.29 119.54 119.93 112.5 113.8 117.6 119.6

2009Alt1 120.13 120.25 120.3 120.36 120.88 121.17 122.02 122.81 123.35 123.56 123.77 124.03

2009Alt2 120.13 120.25 120.3 120.36 120.98 121.63 123.36 124.80 126.11 126.44 126.69 127.08

2007 2.0 2.1 4.2 6.3 6.6 6.4 6.3 6.4 6.0 6.0 6.0 6.0

2008 5.1 5.0 3.1 1.4 1.6 2.2 3.8 5.0 6.3 6.6 6.6 6.8

2009Alt1 7.0 7.0 6.7 6.3 6.2 5.8 5.0 4.4 3.7 3.6 3.5 3.4 6.9 6.1 4.3 3.5

120.2 120.2 2.8 4.4 120.8 121.0 6.4 1.7 122.7 124.8 6.2 5.0 123.8 126.7 6.0 6.7 2.6 Government Financial Performance in Jan-April 2009

28

2009Alt2 7.0 7.0 6.7 6.3 6.3 6.2 6.2 6.1 6.0 6.0 6.0 6.0 6.9 6.3 6.1 6.0

Average

7.0 7.0 6.7 6,3 6.2 6.0 5.6 5.2 4.8 4.8 4.8 4.7 6.9 6.2 5.2 4.7

The Gambia Monthly Economic Bulletin- May 2009 •

Columns (5) and (6) of Table-2.6.1 present major item-wise revenue realization and expenditure of the government in the first four months of 2009 (i.e. Jan-April 2009) and JanApril 2008 respectively. Columns (7) and (8) indicate the percentage changes of major items of revenues and expenditure in Jan-April 2009 compared with those in Jan-April 2008.

•

It may be observed from the table that, in terms of percentage increases, the government’s fiscal performance has been significantly better in Jan-April 2009 than in Jan-April 2008.

•

In Jan-April 2008 total revenues and grants declined by 2.2%, as tax revenues increased by only 0.1% while non-tax revenues declined by 35.9% over Jan-Apr 2007. On contrast, JanApril 2009 has witnessed 16.2% increase in total revenue and grants aided by 16.5% increase in taxes, 4.7% increase in non-tax revenues and 30% increase in grants.

•

During Jan-Apr 2009, total expenditures and net lending has increased by 19.6% over JanApr 2008 due to 17.6% increase in personnel emoluments and 88% increase of capital expenditure while interest payments declined by 2.3% over Jan-Apr 2008.

•

Overall, there is a fiscal surplus of D43.9 million, and basic surplus of D230.3 million in JanApr 2009, despite significant increase of capital expenditure in Jan-Apr 2009. Table-2.6.1 Govt Financial Performance in Jan-Apr 2009 compared with Jan-Apr 2008

Items (1) Revenue and grants Domestic Revenue Tax Revenue Nontax Revenue Grants Exp & Net Lending Current Expenditure Personnel Emoluments Other Charges Interest External Domestic Cap Exp & Net Lending Capital Expenditure Net Lending Overall Bal Inc. grants Basic balance Basic Primary Bal Nominal GDP (IMP Prg)

2008 Actual Mln Dal. (2) 3644.6 3479 3161.3 317.7 165.6 4134.8 3011.4 905.5 1397.5 708.4 153.5 554.9 1123.4 1016.6 106.8 -495.1 -155.5 557.8 17959

2008 BE Mln Dal.

2009 BE Mln. Dal.

(3) 4,475.5 3,770.9 3,362.6 408.3 704.7 5,205.1 2,812.3 917.5 1,143.4 622.3 72.3 550.0 2,332.8 2,223.2 109.6 -729.5 259.3 881.6 17859

(4) 4582.2 3771.1 3390.5 380.5 811.1 5362.9 3838.0 1035.2 1957.5 845.3 147.3 698.0 1524.9 1468.2 56.7 -780.7 -267.7 577.6 19904

2009 Jan-Apr Actual (5) 1537.1 1449.8 1327.7 122.1 87.3 1493.2 1029.9 356.0 392.8 281.1 52.6 228.5 463.3 451.1 12.1 43.9 230.3 511.4 17959

2008 Jan-Apr Actual (6) 1323.0 1255.9 1139.3 116.6 67.2 1248.5 980.4 302.6 390.0 287.8 65.3 222.5 268.1 240.1 28.0 74.5 157.3 445.2 17859

% change over Prev. period 2009 2008 Jan-Apr Jan-Apr (7) (8) 16.2 -2.2 15.4 -4.9 16.5 0.1 4.7 -35.9 30.0 107.8 19.6 0.7 5.1 21.4 17.6 39.1 0.7 31.3 -2.3 -1.8 -19.5 -24.9 2.7 8.0 72.8 -38.0 87.9 -32.8 -56.7 -62.8 -41.0 -33.8 46.4 -61.5 14.9 -36.5 11.5 11.6

Notes: (1) Overall balance= (Revenue and grants) minus (expenditure and net lending). (2) Basic balance= Domestic revenue minus (expenditure and net lending) plus externally financed capital expenditure; (3) Basic primary balance= Basic balance plus interest payments

29

The Gambia Monthly Economic Bulletin- May 2009 •

Columns (2) and (3) of Table-2.6.2 present the major item-wise performance of revenues and expenditure in Jan-Apr 2009 and Jan-Apr 2008 respectively as percentages of the corresponding budget estimates for the full year. It is evidenced from the table that as percentages of the respective budget estimates, government revenue collections and expenditures have performed better in Jan-Apr 2009 than those in Jan-Apr 2008.

•

Columns (7) and (8) of Table-2.6.2 present the major item-wise performance of revenues and expenditure in Jan-Apr 2009 and Jan-Apr 2008 respectively, as percentages of the corresponding nominal GDP (IMF Program estimate) for the full year. It is observed from the table that, in terms of the percentages of GDP, the total reveues and expenditures have also performed better in Jan-Apr 2009 than those in Jan-Apr 2008.

•

The revenue and expenditure ratios to GDP are also observed to be on track in Jan-Apr 2009 as compared with the 2009 budget estimates (given in column-5). Table-2 .6.2 Govt Financial Performance in Jan-Apr 2009 compared with Jan-Apr 2008 Items

(1) Revenue and grants Domestic Revenue Tax Revenue Nontax Revenue Grants Exp & Net Lending Current Expenditure Personnel Emoluments Other Charges Interest External Domestic Cap Exp & Net Lending Capital Expenditure Net Lending

Overall Bal Inc.grants4 Basic balance5 Basic Prim. Balance6

2009 Jan-Apr as % of Budget (2) 33.5 38.4 39.2 32.1 10.8 27.8 26.8 34.4 20.1 33.3 35.7 32.7 30.4 30.7 21.4 -5.6

2008 Jan-Apr as % of Budget (3) 29.6 33.3 33.9 28.6 9.5 24.9 36.5 33.0 34.1 46.3 90.4 40.5 11.5 10.8 25.6 -13.8

2008 Jan-Apr as % of actual (4)

36.3 36.1 36.0 36.7 40.5 30.2 32.6 33.4 27.9 40.6 42.6 40.1 23.9 23.6 26.3 -15.2

2009 BE Full Year as % of GDP (5) 23.0 18.9 17.0 1.9 4.1 26.9 19.3 5.2 9.8 4.2 0.7 3.5 7.7 7.4 0.3 -3.9

2008 AC Full Year as % of GDP (6) 20.3 19.4 17.6 1.8 0.9 23.0 16.8 5.0 7.8 3.9 0.9 3.1 6.3 5.7 0.6 -2.7

2009 Jan-Apr as % of GDP (7) 7.7 7.3 6.7 0.6 0.4 7.5 5.2 1.8 2.0 1.4 0.3 1.1 2.3 2.3 0.1 0.2

2008 Jan-Apr as % of GDP (8) 7.4 7.0 6.4 0.7 0.4 7.0 5.5 1.7 2.2 1.6 0.4 1.2 1.5 1.3 0.2 0.4

-86.0

60.7

-0.9

1.2

0.9

50.5

-101.2 80.5

-1.3

88.6

2.9

3.1

2.6

2.5

Source: Economic Planning and Management Unit (EMPU), DODFEA.

Column (2) of the Table-2.6.3 below presents detailed item-wise revenues and expenditure in Jan-Apr 2009. We have estimated the ratios of actual realization for any item in Jan-Apr to the final outturn for the item during the complete year for the last five years viz. 2004, 2005, 2006, 4

(1) Overall balance= (Revenue and grants) minus (expenditure and net lending). (2) Basic balance= Domestic revenue minus (expenditure and net lending) plus externally financed capital expenditure; 6 (3) Basic primary balance= Basic balance plus interest payments 5

30

The Gambia Monthly Economic Bulletin- May 2009 2007 and 2009. Item-wise average ratios (as percentage to the actual outturn for the year) for these five years are presented in column (3) of the Table-2.6.3. Taking these ratios as norms for the seasonality, expected revenue and expenditure outcomes for the full year 2009 are estimated by the following formula and are presented in column (4). Expected outturn for an item in 2009 = 100 X (actual realization in Jan-Apr 2009) / average realization ratio (in percentage) in Jan-Apr during the last five years (2004-2008) Comparison of the expected outcome with the budget estimates given in Column (5) leads to the following conclusions: (a) Total domestic revenue and tax revenue targets as given in the Appropriation Budget for 2009 are expected to be exceeded by actual collections in 2009. (b) However, there is likely to be shortfall in grants realization unless the subsequent disbursements are significantly augmented. (c) There is also expected shortfall in non-tax revenues. (d) There is likely to be expenditure overrun of capital expenditure, while actual current expenditure is expected to show some surplus over the budgeted expenditure. (e) Overall, it is expected to have a fiscal deficit of D569 million (amounting to 2.9% of nominal GDP (IMF Program estimate) compared to budget estimate of fiscal deficit at D780.7 million (amounting to 3.9 percent of GDP). 2.6.3 Government Financial and Fiscal Performance in Jan-Apr 2009 and Expected Outturn for 2009 Items

2009Ja-Apr Actual

2009 Ratio of Jan-Apr performance in Avera 2009 Budget Annual Outturn (in Percentage) ge Proj. Esti2004Out20042005200620072008mate 2009 turn7 Ja-Ap Ja-Ap Ja-Ap Ja-Ap Ja-Ap (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 1.Rev & grants (2+5) 1537.1 39.4 34.4 33.2 36.9 36.5 4677.3 4582.2 2.Dom. Revenue (3+4) 1449.8 34.9 32.4 33.8 38.1 36.3 4080.3 3771.1 3.Tax Rev (3.1+3.2) 1327.7 35.1 32.5 34.2 37.3 36.2 3762.0 3390.6 3.1 Direct Tax (a to e) 430.2 36.5 33.3 33.1 40.9 36.8 1180.3 (a) Personal 171.2 31.6 34.1 30.9 30.3 33.7 32.1 533.1 (b) Corporate 200.3 37.6 30.3 32.4 44.4 38.0 36.5 548.2 (c) Capital Gains 8.8 38.7 32.1 25.5 49.6 28.9 34.9 25.2 (d) Payroll 32.6 75.6 77.0 76.7 0.0 65.1 58.9 55.5 (e) Other 17.2 89.4 92.2 95.9 95.8 93.3 18.5 .. 2.6.3 Government Financial and Fiscal Performance in Jan-Apr 2009 and Expected Outturn for 2009 2009 Items 2009 Ratio of Jan-Apr performance in Avera 2009 Budget Ja-Apr Annual Outturn (in Percentage) ge Proj. EstiActual 20042004Out2005200620072008mate 2009 turn8 Ja-Apr Ja-Apr Ja-Apr Ja-Apr Ja-Apr (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 3.2 Indirect Tax 897.5 34.6 32.1 34.7 35.8 35.9 2581.6 (3.2.1+3.2.2) 7

Expected outturn for an item in 2009 = 100 X (actual realization in 2009-Q1) / average realization ratio (in percentage) during the last five years (2004-2008)

31

The Gambia Monthly Economic Bulletin- May 2009 3.2.1 Dom Tax on G&S 220.5 34.9 34.7 34.3 39.7 40.0 613.6 (a) Stamp Duties 6.3 41.8 21.3 39.2 31.9 64.5 39.7 15.9 (b) Excise Duties 56.0 29.1 26.3 30.9 35.6 38.4 32.1 174.5 (c) Dom Sales Tax 158.2 35.5 36.7 35.1 41.5 38.2 37.4 423.1 3.2.2 Tax on Ext Trade 677.0 34.5 31.3 34.8 34.5 34.0 1968.1 (a+b) (a) Duty (i+ii) 419.0 34.8 33.0 39.8 33.6 34.7 1167.9 (i) Oil 258.4 40.6 31.2 48.4 32.1 32.1 36.9 701.0 (ii) Non-oil 160.6 32.9 33.6 34.9 34.4 36.1 34.4 466.9 (b) Sale tax on imp (i+ii) 258.0 34.2 29.6 28.9 35.5 33.1 800.2 (i) Oil 35.0 33.5 30.2 31.0 33.7 33.0 32.3 108.3 (ii) Non-oil 223.0 34.3 29.5 28.3 35.9 33.2 32.2 691.8 4. Nontax Rev (a to d) 122.1 32.7 31.8 31.0 43.7 36.7 318.3 (a) Govt Charges 56.9 36.8 46.0 41.7 58.0 56.2 47.7 119.1 (b) NTR from CRD 1.8 .. 43.4 46.8 40.1 32.8 40.8 4.4 (c) NTR from CED 35.2 .. 33.8 25.6 31.8 33.8 31.2 112.7 (d) Others 28.2 .. .. 25.0 51.5 26.5 34.3 82.1 5. Grants 87.3 59.5 58.6 23.1 16.6 40.5 39.7 597.0 6. Exp & Net Lend (7+8) 1760.5 40.5 39.7 31.5 34.1 29.6 5246.2 7. Cur. .Exp (7.1 to 7.3) 1029.9 29.2 36.9 33.5 31.2 31.7 3194.7 7.1 Pers. Emoluments 356.0 33.8 35.3 31.8 32.0 30.8 32.7 1087.5 7.2 Other Charges 392.8 26.8 39.6 31.8 27.2 27.9 30.7 1281.0 7.3 Interest (a+b) 281.1 28.7 35.9 36.7 36.0 40.3 826.2 (a) External 52.6 37.0 41.8 33.3 37.7 42.6 38.5 165.0 (b) Domestic 228.5 25.7 34.3 37.8 35.3 39.7 34.6 661.2 8. Cap Exp & Net Lend. 730.6 55.3 41.1 28.2 41.3 23.9 2051.5 8.1 Capital Exp. (a+b) 718.5 54.6 40.3 29.4 36.7 23.6 2006.0 (a) Ext. Financed (i+ii) 541.0 58.4 40.5 30.0 42.1 29.7 40.1 1558.0 (i) Loans 340.0 53.6 37.9 30.9 50.5 24.4 961.0 (ii) Grants 201.0 69.8 55.1 23.1 16.6 40.5 597.0 (b) GLF Capital 177.5 14.0 36.3 17.4 15.0 17.6 20.0 448.0 8.2 Net lending 12.1 7.5 0.0 0.0 99.7 26.3 26.7 45.5 9. Overall fis. bal (1-6) -223.4 47.7 57.6 26.1 405.9 -12.7 -568.9 10. Basic balance 317.6 0.0 1149.2 49.3 66.6 -63.4 989.1 11. Basic Primary Bal. 598.7 0.0 0.0 0.0 19.6 95.7 1815.4 Memorandum Items: As percentage of IMF Program Nominal GDP (equal to D19904 million) 12. Overall fis. bal (1-6) -1.1 -2.9 13. Basic balance 1.6 5.0 14. Basic Primary Bal. 3.0 9.1

8

380.5

811.1 5362.9 3838.0 1035.2 1957.5 845.3 147.3 698 1524.9 1468.2

56.7 -780.7 -267.7 577.6 -3.9 -1.3 2.9

Expected outturn for an item in 2009 = 100 X (actual realization in 2009-Q1) / average realization ratio (in percentage) during the last five years (2004-2008)

32

The Gambia Monthly Economic Bulletin- May 2009 2.7 External Debt As per the latest Joint Fund-Bank Debt Sustainability Analysis (DSA)9, the stock of external debt declined substantially at end-2007 following HIPC and MDRI debt relief. At the end of 2006, prior to completion point, the stock of nominal external public debt was US$676.7 million (133.1 percent of GDP). Multilateral creditors accounted for 84 percent of this debt, with IDA as the largest creditor (39 percent of total outstanding debt). At end-2007, post-completion point, the stock of external public debt fell to US$299.4 million (46.0 percent of GDP). In January 2008, Paris Club creditors agreed to cancel outstanding claims (US$13 million in PV terms at end-2006) on The Gambia. Bilateral agreements have been signed with Paris Club creditors and Kuwait. Agreements on the delivery of debt relief have also been reached with the EU/EC, OPEC Fund for International Development (OFID), the Islamic Development Bank (IsDB), and the International Fund for Agricultural Development (IFAD) but are still pending with the Economic Community of West African States (ECOWAS), Saudi Arabia, Taiwan Province of China, Libya, China, and India. The current DSA concludes that The Gambia remains at a high risk of debt distress after HIPC and MDRI debt relief due to the high level of debt as well as the country’s vulnerability to shocks. The World Bank’s Country Policy and Institutional Assessment (CPIA), classifies The Gambia as a “poor performer” based on an average of the ratings for the preceding three years and the table below presents the policy-dependent debt burden thresholds. The PV of debt-to-GDP and the PV of debt-to-revenue ratios remain comfortable. Debt service payments remain manageable throughout the projection period, rising no higher than 10 percent of exports and revenue. But, the PV of debt-to-exports ratio breaches the debt-burden threshold for a protracted period. Given continuing risks, the staffs urge authorities to prepare a medium-term debt management strategy (including the debt of public enterprises and contingent liabilities). Staffs also recommend that the authorities continue to rely on a combination of grants and highly concessional borrowing in external financing and exercise restraint in contracting new loans. The major risks to The Gambia’s debt sustainability include lower than expected economic and export growth, higher than expected new borrowing, and a deterioration in fiscal balance. In light of these risks, staffs underline the importance of sustained policy and governance reforms. Table2.7: Policy Dependent Debt Burden Thresholds under Debt Sustainability Analysis Indicators NPV of External Debt to GDP Ratio (%) NPV of External Debt to Exports Ratio (%) NPV of External Debt to Revenue Ratio (%) Debt service to Exports Ratio (%) Debt Service to Revenue Ratio (%)

Strong Performer 50 200 300 25 35

Moderate Performer 40 150 250 20 30

Weak Performer 30 100 200 15 25

The Gambia 2008 22 117 117 9 9

2.8 Domestic Debt and Treasury Bills Outstanding 9

Joint IMF/World Bank Debt Sustainability Analysis, Prepared by the Staffs of the International Monetary Fund and the International Development Association, Approved by Emilio Sacerdoti and Dominique Desruelle (IMF) and Sudhir Shetty and Carlos Alberto Braga (IDA), February 3, 2009.

33

The Gambia Monthly Economic Bulletin- May 2009 •

At the end of April 2009, outstanding domestic debt stood at D5.7 billion (amounting to 28.4% of GDP), down by 5.9% from the outstanding domestic debt at D6 billion (amounting to 33.5% of GDP) a year ago.

•

The share of Treasury bills increased from 80.3% at the end of April 2008 to 84.4% at the end of April 2009, share of Sukuk Al-Salam from 1.1% to 1.5% and that of Government bonds increased from 4.2% to 4.4% over the period.

•

On contrary, the share of Non-interest bearing Treasury Notes declined from 14.5% to 9.7% over the period

Type of debt

Table-2.8.1: Outstanding Domestic Public Debt as on 30 April 2009 Million Dalasi Composition (in % change in percentage) April 09 30-Apr-08 30-Apr-09 30-Apr-08 30-Apr-09 over April 2008

Treasury bills

4826

-1.0 34.6 0.0 -37.4 -5.9

4776

Sukuk Al-Salam

64

86

Government Bonds

250

250

NIB Treasury Notes

873

547

Total

6013

5659

80.3

84.4

1.1

1.5

4.2

4.4

14.5

9.7

100

100

Memo Item: Domestic debt as % of nominal GDP (As per IMF Program, nominal GDP equals D17959 for 2008 and D19904 for 2009) As % of nominal 33.5 28.4 GDP

Domestic Debt Sustainability As per the analysis made by the CBG, the Gambia’s domestic debt is unsustainable. Out of three sustainability indicators given in Table-2.8.2, only one indicator viz. debt to revenue ratio is satisfied. However, debt to GDP ratio may be satisfied during 2009. Table-2.8.2 Primary Benchmarks for Domestic Debt Sustainability Ratios (%) Item Threshold 2006 2007 2008 2009 Projected 1. Debt service to 28-63 142 124 118 91 revenue ratio 2. Debt to GDP ratio 20-25 33 30 27 31 3. Debt to revenue ratio

92-167

180

158

166

147

Note: (1) Debt service the sum of interest payments plus the amortization (i.e. repayment of principal) including the rollover of treasury Bills. (2) There are no internationally agreed levels of thresholds. The thresholds used here are those used by the Debt Relief International (DRI) for many HIPC countries.

Source: The Central Bank of Gambia (CBG)

34

The Gambia Monthly Economic Bulletin- May 2009 2.9 Treasury Bills Yields •

Yields on treasury bills fluctuated widely in recent months. Despite significant decline of CPI inflation from 7% in January 2009 to 6.3% in April 2009, Average yield on the 91-day increased from 10.5% in Jan 2009 to 12% in April 2009, yield of 182-day bills increased from 12.1% to 13% and that of 364-day bills increased from 14.4% to 14.6% over the period.

•

This implies that the margins of yields over inflation rates are increasing over time and need to be corrected by adopting appropriate monetary policies.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table 2.9 Interest Rates (yields on treasury bills in percentage per annum) 2008 2009 2007 3-M 6-M 12-M 3-M 6-M 12-M 3-M 6-M 10.5 12.7 13.6 10.6 11.4 13.6 10.5 12.1 12.0 13.4 13.8 10.9 11.9 13.7 11.1 12.8 12.6 13.4 13.7 11.0 12.1 13.6 11.4 12.7 13.0 13.4 13.8 10.9 11.9 13.3 12.0 13.0 12.8 13.3 13.8 10.2 11.3 13.0 12.6 13.1 13.9 10.0 11.2 13.3 12.5 13.2 13.9 9.6 10.6 12.6 12.6 12.9 13.6 8.8 10.2 12.1 11.6 12.2 12.9 8.9 11.0 13.1 10.6 11.7 12.5 10.3 11.4 13.6 10.5 11.5 12.5 10.1 13.4 13.7 10.4 11.6 13.6 9.9 12.5 14.0

Trends of Yields of Treasury Bills during 2007-2009

35

12-M 14.4 14.4 14.4 14.6

The Gambia Monthly Economic Bulletin- May 2009 2.10 Money Supply in April 2009 •

Annual growth rate of broad money supply (M3) accelerated from 3.7% in April 2008 to 18.8% in April 2009.

•

On the supply side, 18.8% growth in money supply in April 2009 was supported by 17.8% growth in currency, 19.6% growth in demand deposits, 11.6% growth in savings deposits and 29.1% growth in time deposits.

•

On the demand side, growth was mainly due to 31.9% growth in domestic credits, while net foreign assets increased by only 1.6% over a year ago.

•

Domestic credit increased from D5.1 billion in April 2008 to D6.7 billion in April 2009, supported by 46% growth in government borrowing, 103.3% growth in credits to public entities and 24.1% growth in credits to the private sector, over a year ago. Table-2.10: Money Supply in April 2009

Components

1.Broad Money Supply (M3) (2+3) 2.Narrow Money (2.1+2.2) 2.1 Currency 2.2 Demand deposits (a+b) (a) Private sector (b) Official 3.Quasi money (3.1+3.2) 3.1 Savings deposits (a+b) (a) Private sector (b) Official 3.2 Time deposits (a+b) (a) Private sector (b) Official Demands for money (1+2) 1.Net foreign assets (1.1+1.2) 1.1 Monetary Authorities 1.2 Commercial banks 2.Net Domestic Assets (2.1+2.2) 2.1 Domestic credit (a) Credits to government (b) Credits to public entities (c) Credits to private sector (d) Credits to forex bureau 2.2 Other items, net

Apr 2007 Mill.D.

Apr 2008 Mill.D.

Apr 2009 Mill.D.

Apr 2008 % Share

Apr 2009 % Share

Apr 2008 % change over Ap07

Apr 2009 % change over Ap08

8008.72

8306.73

9869.66

100.0

100.0

3.7

18.8

4258.97 1822.92 2436.05 2249.21 186.84 3749.75 2636.74 2633.12 3.62 1113.01 826.53 286.48 8008.72 4860.16 2557.55 2302.61 3148.56

4041.47 1534.52 2506.95 2248.46 258.49 4265.26 2529.54 2514.65 14.89 1735.72 1272.75 462.97 8306.73 3327.63 2616.82 710.81 4979.1

4805.75 1807.69 2998.06 2616.33 381.74 5063.91 2822.76 2790.85 31.91 2241.15 1657.06 584.094 9869.66 3379.89 2590.39 789.5 6489.77

48.7 18.5 30.2 27.1 3.1 51.3 30.5 30.3 0.2 20.9 15.3 5.6 100.0 40.1 31.5 8.6 59.9

48.7 18.3 30.4 26.5 3.9 51.3 28.6 28.3 0.3 22.7 16.8 5.9 100.0 34.2 26.2 8.0 65.8

-5.1 -15.8 2.9 0.0 38.3 13.7 -4.1 -4.5 311.3 55.9 54.0 61.6 3.7 -31.5 2.3 -69.1 58.1

18.9 17.8 19.6 16.4 47.7 18.7 11.6 11.0 114.3 29.1 30.2 26.2 18.8 1.6 -1.0 11.1 30.3

4032.49 1435.24 240.04 2173.92 183.29 -883.93

5053.83 1843.84 272.56 2754.14 183.29 -74.73

6665.28 2692.67 554.18 3418.43 0 -175.51

60.8 22.2 3.3 33.2 2.2 -0.9

67.5 27.3 5.6 34.6 0.0 -1.8

25.3 28.5 13.5 26.7 0.0 -91.5

31.9 46.0 103.3 24.1 -100.0 134.9

Source: Economic Research and Statistics Department of CBG.

36

The Gambia Monthly Economic Bulletin- May 2009 2.11 Sectoral Distribution of Bank Credits Bank credits increased by 40.2% in March 2009 over March 2008. There was significant increase across all sectors. While credits to agriculture increased by 66.2%, manufacturing credits increased by 76.9%, building credits by 39.3%, transport credits by 27.4% and distributive trade credits by 27.5% in March 2009 over March 2008. Credits to financial institutions and other commercial credits also registered significant increases, while tourism credits recorded the lowest increase by 16.5% among all the sectors. As regards composition of bank credits, trade had the largest share (23%), followed by other commercial credits (17%), miscellaneous sectors (16%), building (11%), transport (9%), agriculture (8%), tourism (7%), manufacturing (5%), and financial institutions (4%) in 2008. Sectors

Agriculture Fishing Manufacturing Building Transportation Trade Tourism Financial Inst. Other comm. Others Total credits

Outstanding credits (Million Dalasi) March-2008 March 2009 178.507 296.65 16.268 19.156 99.959 176.846 286.313 398.95 253.027 322.375 679.72 866.5 214.237 249.526 84.225 135.869 529.002 657.543 327.238 617.467 2668.496 3740.882

37

Annual GR in Mar 2009 (%) 66.2 17.8 76.9 39.3 27.4 27.5 16.5 61.3 24.3 88.7 40.2

Composition of bank credits (in percentage) Mar-2008 Mar-2009 6.7 7.9 0.6 0.5 3.7 4.7 10.7 10.7 9.5 8.6 25.5 23.2 8.0 6.7 3.2 3.6 19.8 17.6 12.3 16.5 100.0 100.0

The Gambia Monthly Economic Bulletin- May 2009 2.12 Commercial Banks’ Assets •

The banking industry remains sound. Total industry assets increased by 21% on yearon-year basis from D9.4 billion at end-April 2008 to D11 billion at end-April 2009.

•

Gambian banks do not have large exposure to foreign assets or foreign liabilities. At end-April 2009, foreign assets constituted only 8.9% of total assets (foreign exchange 1.7%, balances abroad 6.3% and foreign investment 0.9%), down from 10.3% a year ago (foreign exchange 1.9%, balances abroad 7.5% and foreign investment 0.9%).

•

At end-April 2009, loans and advances to the public sector increased by almost 3.5 times, while those to the private sector increased by 18.8% over April-2008.

•

At end-April 2009, investments in government Treasury Bills by the banks increased by 2.3% while banks’ other investment increased by almost 12.5%.

•

The risk-weighted capital adequacy ratio stood at 35.9% in Dec 2008, well above the statutory requirement of 8%.

•

Non-performing loans rose from 7.3% in Sep 2008 to 9.5% in Dec 2008, but declined to 7.1% in March 2009 and were adequately provisioned in compliance with the statutory norms and requirements.

•

However, commercial banks’ Return on Assets (ROA) declined from 2.10% in March 2008 to 1.43% in 2009.

Table-2.12: Commercial Banks Assets at the end-April 2009 (Million Dalasi) Assets

1. Notes and coins 2. Foreign exchange 3. Local Bank balance ii. CBG iii. Banks locally 4. Balances abroad 5. Bills purchased 6. Loans and advances i. Public sector ii. Private sector 7. Investments i. Govt Treasury Bills ii. Others iii Foreign Investments 8. Fixed assets 9. Guarantees 10. Other assets 11. Total assets (1 to 10) 12. Net Balance (11-9)

April 2007 Million Dalasi 130.6 187.6 846.7 833.1 13.7 2,074.5 7.7 2,157.3 103.1 2,054.2 2,228.0 2,054.6 78.8 94.6 402.1 1,104.5 603.0 9,742.0 8,637.5

April 2008 Million Dalasi 173.5 201.8 879.5 850.1 29.4 785.6 21.9 2,668.1 135.7 2,532.5 3,150.8 2,892.8 160.6 97.4 609.7 1,071.9 867.6 10,430.5 9,358.6

April 2009 Million Dalasi 165.1 216.8 954.0 951.8 2.2 798.0 185.5 3,478.7 469.5 3,009.2 3,250.9 2,960.4 180.9 109.6 889.7 1,641.2 1,040.1 12,620.1 10,978.9

Source: Central Bank of Gambia.

38

Composition (%) April April 2008 2009 1.7 1.9 8.4 8.2 0.3 7.5 0.2 25.6 1.3 24.3 30.2 27.7 1.5 0.9 5.8 10.3 8.3 100.0 89.7

1.3 1.7 7.6 7.5 0.0 6.3 1.5 27.6 3.7 23.8 25.8 23.5 1.4 0.9 7.1 13.0 8.2 100.0 87.0

% ch. in Apr-08 over Apr-07 32.9 7.6 3.9 2.0 115.2 -62.1 183.7 23.7 31.5 23.3 41.4 40.8 103.7 2.9 51.6 -2.9 43.9 7.1 8.3

% ch. In Apr-09 over Apr-08 -4.8 7.4 8.5 12.0 -92.6 1.6 746.0 30.4 246.1 18.8 3.2 2.3 12.6 12.5 45.9 53.1 19.9 21.0 17.3

The Gambia Monthly Economic Bulletin- May 2009 2.13 Commercial Banks’ Liabilities •

As mentioned earlier, Gambian banks do not have large exposure to foreign liabilities. At end-April 2009, external sector related liabilities constituted only 1.8% of total liabilities (non-residents deposits 1.5%, balances with banks abroad 0.1% and external debt 0.2%), down from 3.6% a year ago (non-residents deposits 1.2%, balances with banks abroad 1.2% and external debt 1.2%).

•

In April 2009 banks’ total deposits increased by 19% over April 2008, aided by a growth of 19.6% in demand deposits, 11.6% in savings deposits and 29.1% in time deposits.

•

In April 2009 banks capital and reserves increased by 21.3%, bank balances increased by 39% while borrowings declined by 38.8% over April 2008.

•

At end April 2009, direct contingent liabilities (i.e. guarantees) of banks increased by 53.1% over end- April 2008 and constituted 13% of total liabilities

Table-2.13: Commercial Banks Liabilities at the end-April 2009 (Million Dalasi) LIABILITIES

1. Capital and reserves 2. Demand deposits i Residents ii Non residents iii Government entities 3. Savings deposits i Residents ii Non residents iii Government entities 4. Time deposits i Residents ii Non residents iii Government entities Total deposits 5. Bank Balances i HO & branches ii Other banks abroad 6. Borrowings from i CBG ii Other banks locally iii HO & branches iv Other banks abroad v. Other sources 7. Guarantees 8. Other liabilities 9. Total liabilities (1 to 8) 10. Net balance (9-7)

April 2007 Million Dalasi 1,053.8

April 2008 Million Dalasi 1,238.0

April 2009 Million Dalasi 1,501.5

2,436.1 2,146.9 102.3 186.8 2,636.7 2,558.7 74.4 3.6 1,113.0 811.7 14.8 286.5 6,185.8 23.6 23.6 30.5 30.5 1,104.5 1,343.8 9,742.0 8,637.5

2,506.9 2,217.6 30.8 258.5 2,529.5 2,445.8 68.9 14.9 1,735.7 1,255.5 17.2 463.0 6,772.2 136.2 8.6 127.6 237.8 114.2 123.6 1,071.9 974.3 10,430.5 9,358.6

2,998.1 2,588.0 28.4 381.7 2,822.8 2,718.8 72.1 31.9 2,241.2 1,567.9 89.2 584.1 8,062.0 189.4 179.0 10.4 145.5 125.1 20.4 1,641.2 1,080.5 12,620.1 10,978.9

Composition (%) April April 2008 2009 11.9

11.9

24.0 21.3 0.3 2.5 24.3 23.4 0.7 0.1 16.6 12.0 0.2 4.4 64.9 1.3 0.1 1.2 2.3 0.0 0.0 1.1 1.2 0.0 10.3 9.3 100.0 89.7

23.8 20.5 0.2 3.0 22.4 21.5 0.6 0.3 17.8 12.4 0.7 4.6 63.9 1.5 1.4 0.1 1.2 0.0 0.0 1.0 0.2 0.0 13.0 8.6 100.0 87.0

% ch. in April -08 over Ap-07 17.5

Source : Central Bank of The Gambia (CBG)

39

2.9 3.3 -69.9 38.3 -4.1 -4.4 -7.4 311.6 55.9 54.7 16.1 61.6 9.5 477.4 -63.7 678.6

% change in April-09 over Ap-2008 21.3 19.6 16.7 -8.1 47.7 11.6 11.2 4.7 114.3 29.1 24.9 417.6 26.2 19.0 39.0 1989.6 -91.9 -38.8

274.0

9.5 -83.5

-2.9 -27.5 7.1 8.3

53.1 10.9 21.0 17.3

The Gambia Monthly Economic Bulletin- May 2009

2.14 Interest Rates and Central Bank Policy Rates Interest rate on government treasury bills declined from 31% in 2003 to 14.9% in 2006 and further to 13.7 per cent in 2007. It ranged in between 13.1% to 14.7% during 2008. The bank rate of the Central bank declined from 29% in 2003 to 9% in 2007, but was raised to 10% at the end of 2007 to check effective demand and inflationary pressures on the economy. The Central bank rediscount rate declined from 34% in 2003 to 14% in 2004. In order to counter emerging inflationary pressures, the CBG raised its rediscount rate from 14% to 15% in June 2007, In response to tight monetary conditions and against a backdrop of falling inflation, the CBG reduced the statutory minimum reserve requirement of banks from 16% to 14% in March 2008. Given the acceleration in inflation and the weakening of the Dalasi, the MPC decided to increase the Rediscount Rate by one percentage point to 16.0% in October 2008. Despite significant fall of the yields on treasury bills in recent years, maximum short-term deposit rates and commercial banks’ lending rates remain very high, and there exist wide interest rate spreads. Successful disinflation allowed the weighted yield on treasury bills to fall from over 25% in early 2005 to 14.6% in January 2009. By contrast, commercial banks’ lending rates remained sticky above 20% due to high operating costs and risks of bank credits. Appropriate monetary policies are necessary to reduce the maximum short-term deposit rates and the lending rates.

Table-2.14: Trends of Nominal Interest rates (per cent per annum, end period) Items Bank lending rare- min Bank lending rare- max Deposit rate (SB) min Deposit rate (SB) max Time dep (3 months) min Time dep (3 months) max Time dep (6 months) min Time dep (6 months) max Time dep (12 month) min Time dep (12 month) max Govt treasury bills CBG Bank Rate CBG Rediscount Rate Bank lending rate Deposit rate (SB) Time deposits (3 months) Time deposits (6 months) Time deposits (12 month) Inflation (GDP-Deflator) CPI-Inflation Real GDP-Growth Rate Exchange rate change (%)

2000 18 24 8 10 9.5 12.5 10 12.5 11 12.5 12 10 15

2001 2002 2003 2004 2005 18 17 21 21 21 24 24 36.5 36.5 30 8 8 8 10 5 10 10 17 17 10 9.5 6 7 8 5 12.5 13 22 22 14 10 6 8 8 7 12.5 13 22 22 15 11 7 10 12 7 12.5 13 22 23 13 15 20 31 30 16 13 18 29 28 14 18 23 34 33 19 Range = Maximum – Minimum 6 6 7 15.5 15.5 9 2 2 2 9 7 5 3 3 7 15 14 9 2.5 2.5 7 14 14 8 1.5 1.5 6 12 11 6 Some important factors influencing interest rates 3.6 15.2 16.1 23.8 17.6 4.2 0.9 4.5 8.6 17.0 14.3 5.0 5.5 5.8 0.7 2.4 -0.7 2.0 12.2 22.7 27.0 43.2 5.3 -4.8

Source: Central Bank of Gambia (CBG)

40

2006 18 28 5 7 5 8.5 6 13 6 13 12.8 9 14

2007 18 27 5 7 5 12.9 6 12.9 7 12.9 13.7 10 15

2008 18 27 4 7 5 13.6 6 13.6 7 13.6 13.6 10 16

10 2 3.5 7 7

9 2 7.9 6.9 5.9

9 3 8.6 7.6 6.6

2.0 2.1 6.6 -1.8

5.0 5.4 6.3 -11.4

4.1 4.9 7.2 -9.8

The Gambia Monthly Economic Bulletin- May 2009 2.15 Balance of Payments (BOP) and Foreign Exchange Reserves Central Bank of Gambia has prepared the provisional BOP estimates for the year 2008 in conformity with the IMF Balance of Payments (BOP) Statistics. Although these are not strictly comparable with the final IMF estimates, which make some changes as per their concepts and definitions and also on the basis of leads and lags in foreign exchange transactions, an analysis of the provisional estimates leads to the following observations: (a) The overall BOP outcome for 2008 is not as bad as they were anticipated earlier. Year end foreign exchange reserves at US$125.2 million were still equivalent to 5.7 months of c.i.f. imports compared to US159.4 million equivalent to 6.2 months at the end of 2007. (b) BOP estimates indicate an overall deficit of D767.3 billion (-) $34.2 million), amounting to (-) 3.4 percent of GDP in 2008 compared to an estimated surplus of D741.7 million ($29.8 million), amounting to 3.6 percent of GDP in 2007, reflecting the deterioration in both the current and the capital and financial accounts. (c) The goods account deficit improved from a deficit of D3.52 billion, amounting to 17.2 percent of GDP in 2007 to a deficit of D2.92 billion, amounting to 12,.8 percent of GDP in 2008, or a decline by 17.14%. (d) Exports of goods are estimated at D3.18 billion (amounting to 14 percent of GDP) in 2008 compared to D3.29 billion (amounting to 16.1 percent of GDP) or a decline by only 3.4%. However, due to appreciation of average exchange rate of dalasi per US$, goods exports in terms of US$ increased from US$132.2 million in 2007 to US$141.6 in 2008. (e) The c.i.f. import bill declined by 10.1% from D7.43 billion, amounting to 36.4 percent of GDP, in 2007 to D6.67 billion, amounting to 29.3 percent of GDP, in 2008. (f) Current account deficit including official transfer declined from (-)D1.46 billion, amounting to 7.2 percent of GDP, in 2007 to (-) D1.11 billion, amounting to 4.9 percent of GDP in 2008. Foreign Exchange Reserves •

Reflecting the widening of the current account deficit, gross external reserves stood at US$116.8 million at end-January 2009 compared to US$140.4 million in January 2008.

•

Volume of transactions in the inter-bank foreign exchange market in the year to endJanuary 2009 amounted to D35.1 billion (US$1.3 billion) compared to D37.8 billion (US$1.7 billion) a year ago.

41

The Gambia Monthly Economic Bulletin- May 2009 2.15 BOP Summary Table for 2007-2008 Items

2007

2008

2007

Million Dalasi 1

2008

Million US$

2007

2008

AS % of GDP

Goods balance (1.1-1.2)

-4138

-3499

-166.3

-156.0

-20.3

-15.4

1.1

Exports of goods (a+b+c)

3289

3176

132.2

141.6

16.1

14.0

a.

266

330

10.7

14.7

1.3

1.5

b.

Exports of goods in trade statistics Re-exports

2781

2489

111.8

111.0

13.6

10.9

c.

Other goods

242

356

9.7

15.9

1.2

1.6

Imports of goods c.i.f

7427

6675

298.5

297.6

36.4

29.3

1.2

Services, net (2.1 to 2.7)

1663

1338

66.8

59.6

8.1

5.9

2.2

2

Travel

1869

1624

75.1

72.4

9.2

7.1

2.3

Communications

103

214

4.1

9.6

0.5

0.9

2.5

Construction

224

120

9.0

5.3

1.1

0.5

2.6

Information technology

2.7

Others business

3

-33

-71

-1.3

-3.2

-0.2

-0.3

-500

-550

-20.1

-24.5

-2.4

-2.4

Income, net (3.1 + 3.2)

-1111

-757

-44.6

-33.8

-5.4

-3.3

3.1

Investment income

-1129

-931

-45.4

-41.5

-5.5

-4.1

3.2

Compensation to labor

19

174

0.7

7.8

0.1

0.8

2123

1809

85.3

80.7

10.4

8.0

130

137

5.2

6.1

0.6

0.6

965

1196

38.8

53.3

4.7

5.3

1028

476

41.3

21.2

5.0

-1463

-1110

-58.8

-49.5

-1594

-1247

-64.1

-55.6

4 4.1

Transfers, net (4.1+4.2+4.3) Official transfer

4.2

Remittances

4.3

Other transfer

5 5.1 5.2 6 7

2007 2008 Annual % change 8.5 -15.4 7.6 -3.4 -17.2 24.1 9.2 29.5 8.1 188.4 11.4 -43.2 49.0 -60.3 4.5 6.7 -553. 4 -13.7

2.1

5.2 23.9 -53.6

-7.2

-4.9

-20.5

-24.2

-7.8

-5.5

-20.7

-21.8

-62.4 6.2

-43.3 -85.3 -18.2 -1379 29.3

-203. 5 -17.3

Current account balance Incl. official transfers (1+2+3+4) Excl. off. Transfer (5.1 4.1) Capital Account

43

24

1.7

1.1

0.2

0.1

2162

318

86.9

14.2

10.6

1.4

1902

1556

76.4

69.4

9.3

6.8

7.1 7.2

Other investment

112

-1430

4.5

-63.7

0.5

-6.3

7.3

Reserve change

148

192

6.0

8.5

0.7

0.8

Capital and Financial A/C (6+7) Overall BOP Balance (5.1+8)

2205

342

88.6

15.3

10.8

1.5

-17.6 -56.2 -128. 2 2.5

742

-767

29.8

-34.2

3.6

-3.4

139.8

Foreign Exchange Reserves Equivalent to months of imports c.i.f Ave. Exch. Rate (D/$)

4441

3673

159.4

125.2

21.8

16.1

20.1

6.2

5.7

6.2

5.7

24.88

22.43

20413

22754

820.5

1014.4

9

-14.8

-22.7 -45.4 96.6

Financial Account (7.1+7.2) Foreign direct investment

8

-10.5 47.5 -10.1 -19.6 -13.1 107.9 -46.4 115.2 10.0 -31.8 -17.5 836.0

GDP at cmp (Million Dalasi)

Source: Central Bank of Gambia (CBG)

42

-84.5

The Gambia Monthly Economic Bulletin- May 2009

•

2.16 Exchange Rate During the last one year, the Dalasi depreciated against major international currencies traded in the inter-bank market except the British Pound, reflecting the impact of the global financial crisis on remittances and tourism as well as increased demand for foreign exchange to meet the high cost of imports.

•

During 2009 also the Dalasi has depreciated against major currencies in every month until May 2009 over the corresponding month in 2008.

•

At the end of May 2009, Dalasi has appreciated marginally against British Pound by 0.1%, while it depreciated by 29.7%, 16.9% , 12.4% and 4.3% against US$, CHF, Euro and CFA respectively over May 2008.

Table-2.17 Inter-bank exchange rates - end of period mid-market rates (Dalasi per unit of foreign currency) Year

Month

UK

US$

CHF

Euro

2008 Jan 44.27 22.34 19.91 32.89 Feb 42.58 21.88 19.57 32.28 Mar 40.87 19.46 19.15 30.83 Apr 39.52 20.12 19.16 31.43 May 40.25 20.64 19.46 32.1 June 40.77 20.65 189.27 32.07 July 41.65 20.94 19.9 32.21 Aug 40.73 21.37 20.08 32.23 Sept 41.65 23.12 19.86 33.02 Oct 40.49 24.89 20.15 32.89 Nov 40.56 26.26 20.07 33.28 Dec 40.14 26.54 22.94 35.67 2009 Jan 37.25 26.07 20.85 33.52 Feb 37.38 26.11 22.04 33.6 Mar 38.18 26.38 23.31 35.22 Apr 38.94 26.56 22.8 35.07 May 40.20 26.78 22.75 36.09 Rate of appreciation (-) / depreciation (+) of Dalasi over the corresponding month in 2008 (%) 2009 Jan -15.9 16.7 4.7 1.9 Feb -12.2 19.3 12.6 4.1 Mar -6.6 35.6 21.7 14.2 Apr -1.5 32.0 19.0 11.6 May -0.1 29.7 16.9 12.4 Source: Central Bank of Gambia (CBG)

43

CFA (5000) 252.85 243.98 239.16 235.95 245.84 245.51 251.05 249.47 249.30 258.09 258.31 259.15 262.81 257.78 259.30 259.13 256.38

3.9 5.7 8.4 9.8 4.3

The Gambia Monthly Economic Bulletin- May 2009 3. Assessment of Quantitative Targets agreed with IMF under The Gambia’s three-year Poverty Reduction and Growth Facility (PRGF) arrangement was approved by the IMF’s Executive Board in February 2007. The third review was completed on September 8, 2008 and the Fourth Review was done in February 2009. The updated Letter of Intent (LOI) and Memorandum of Economic and Financial Policies (MEFP), and Technical Memorandum of Understanding (TMU) were signed jointly by the honorable Mousa Gibril BalaGaye, Secretary of State (Finance and Economic Affairs) and honorable Momodou Bamba Saho, Governor, Central Bank of Gambia on February 3, 2009. The MEFP reviewed progress in implementing the Government’s PRGF supported program in 2008, and set out the policies that the Government will pursue in 2009. The Government of Gambia committed that the program, as usual, will continue to be monitored based on agreed quantitative targets and a set of structural performance criteria and benchmarks indicated in the MEFP as per program reviews. The quantitative financial targets for end–March 2009 and end-September 2009 are performance criteria; and those for end–December 2008, end–June 2009, and end-December 2009 are indicative targets. The Performance criteria for end March 2009 and the actual performance is indicated in the following table 3.1. It may be observed from the table that all quantitative targets have been satisfied at the end of March 2009. Performance Targets

Stock endDec 2006

Target at end-Mar 2009

Status at end-Mar 2009

38.7

797.7

127.3

Basic balance (floor) defined as domestic revenue minus expenditure and net lending, excluding externally financed capital expenditure. Adjusted downward by the dalasi equivalent of the amount of external budget support in excess of the projected levels up to a cummulative maximum in of US$10 million in 2009

---

616.9

738.1

New external payments arrears of the central government (ceiling)

0.0

0.0

0.0

Net usable international reserves (floor) adjusted for privatization proceeds. Adjusted upward (downward) by the extent to which actual receipts exceed (fall short of) projected level of privatization receipts (Million US$)

94.9

92

95.6

New non-concessional debt contracted or guaranteed by the government with original maturity of more than one year (ceiling)

0.0

0.0

0.0

Outstanding stock of external public debt with original maturity of one year or less (ceiling)

0.0

0.0

0.0

Net domestic assets of the central bank (ceiling) adjusted for privatization proceeds (Million Dalasi)

44

The Gambia Monthly Economic Bulletin- May 2009

Bearing in mind the linkages of the key macroeconomic sectors of monetary, fiscal and external sectors, the net usable reserves target was set at $92 million for the first quarter of 2009. Similarly, the net domestic asset target was set at D797.7 for the same period. The Central Bank through pro-active, consistent and prudent use of various policy instruments, was able to meet all the agreed quantitative targets for end-March 2009. With regard to the performance of the monitored variables vis-à-vis their end-March 2009 target, the NUR totaled D2.5 billion (US$95.6 million) at end-march 2009 and was above the endmarch target (floor) by D108.8 million (US$3.6 million). Similarly, the NDA of the Central Bank amounting to D127.3 million was below target ceiling by D220.7 million. The target for basic fiscal balance (floor) was fixed at D616.7 million for the end of March 2009. Government achieves a basic balance of D738.1 million. Government did not default on the payment of debt services on any external debt. As agreed government did not contract or guarantee any new non-concessional external loan having maturity exceeding one year. There is also no non-concessional external debt outstanding having original maturity exceeding one year.

45