Gambia Monthly Economic Bulletin November 2009

The Gambia Monthly Economic Bulletin- November 2009

THE GAMBIA MONTHLY ECONOMIC BULLETIN1 November 2009

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

1

The Gambia Monthly Economic Bulletin provides an update on the recent economic developments and policies in the Republic of the Gambia. The Bulletin is prepared, under the overall guidance of the Honorable Permanent Secretary Mr. Serign Cham, by a research team comprising Tamsir Cham, Director; Momodou Taal and Yaya Drammeh, Principal Economists; Amie Khan, Senior Economist and Ceesay Chiel, Economist in the Economic Management and Planning Unit (EMPU) and Tarun Das, Macroeconomic Adviser (ISPEFG); with key inputs from the Debt Management Adviser, Fiscal/Financial Adviser, ISPEFG, Ministry of Finance and Economic Affairs (MOFEA), 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]) 1

The Gambia Monthly Economic Bulletin- November 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 2

The Gambia Monthly Economic Bulletin- November 2009 Poverty Ratio (% of people Percent 59 7 out of 59 countries below One-US$) (2000) Source: http://www.nationmaster.com

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The Gambia Monthly Economic Bulletin- November 2009

Contents

Page

Items ISPEFG Project/ Research Team and Document History Highlights

4 5-6

At a Glance

7

1. Global Economic Outlook 1.1 Global recovery is uneven, weak, slow and painful 1.2 Global Commodity Prices and Inflation

8-14 8 13

2. Current State of the Gambian Economy 2.1 Overall and Sectoral GDP Growth Rates 2.2 Consumer Price Index (CPI) and Inflation 2.3 Projection of CPI inflation for the year 2009

15-36 15 17 19

2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14

Government Fiscal Performance Projections of Fiscal Outturn for 2009 Domestic Debt and Outstanding Treasury Bills Treasury Bills Yields Money Supply Performance of Commercial Banks Commercial Banks’ Assets Commercial Banks’ Liabilities Interest Rates and Central Bank’s Policy Rates BOP, Foreign Exchange Reserves and Exchange Rates Exchange Rates

4

20 22 24 25 26 27 28 29 30 31 36

The Gambia Monthly Economic Bulletin- November 2009

ISPEFG Project and Monthly Bulletin Research Team

Project Supervisor

Honorable Mr. Serign Cham, Permanent Secretary

Project Coordinator

Mr. Momodou Cham

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

Dr. Tamsir Cham Mr. Momodou Taal Mr. Yaya Drammeh Ms. Amie Khan Ms. Ceesay Chilel Mr. Adam Aikuta Mr. Dan Mambule Mwanje Dr. Tarun Das

Document History: This report is an update of the following reports prepared by the Research Team: The Gambia Quarterly Economic Bulletin, pp.1-30, 31 March 2009. The Gambia Monthly Economic Abstract, pp.1-16, 31 March 2009. The Gambia Monthly Economic Bulletin, pp.1-40, 30 April 2009. The Gambia Monthly Economic Abstract, pp.1-16, 30 April 2009. The Gambia Monthly Economic Bulletin, pp.1-39, 31 May 2009. The Gambia Monthly Economic Abstract, pp.1-15, 31 May 2009. The Gambia Monthly Economic Bulletin, Part-1, pp.01-22, June 2009. The Gambia Monthly Economic Bulletin, Part-2, pp.23-46, June 2009. 9. The Gambia Monthly Economic Abstract, pp.1-16, June 2009. 10. The Gambia Monthly Economic Bulletin, Part-1, pp.01-22, July 2009. 11. The Gambia Monthly Economic Bulletin, Part-2, pp.23-46, July 2009. 12. The Gambia Monthly Economic Abstract, pp.1-16, July 2009. 13. The Gambia Monthly Economic Abstract, pp.1-16, August 2009. 14. The Gambia Monthly Economic Abstract, pp.1-16, September 2009. 15. The Gambia Monthly Economic Bulletin, pp.1-25, October 2009. 1. 2. 3. 4. 5. 6. 7. 8.

HIGHLIGHTS

5

The Gambia Monthly Economic Bulletin- November 2009 Impact of Global Financial Crisis and Economic Slowdown

•

As per the IMF projections made in the WEO October 2009, global output is expected to contract by about 1% in 2009 followed by a positive growth of 3% in 2010. IMF concludes that although the global economy has started to pull out of the unprecedented recession witnessed since the World War-II, recovery is uneven, slow, and jobless. In African developing economies, growth is projected to slow down significantly from 5.2 percent in 2008 to 2 percent in 2009. Global Food and Oil Prices

•

Due to sluggish demand and economic slowdown, there were significant decline of world commodity prices including food and petroleum since August 2008. However, since March 2009 commodity prices have started rising again in response to some increase in global demand, but commodity prices still rule much below the peaks reached in 2008.

•

At the beginning of 2009, 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$73.19 per barrel in October 2009. Recent forward markets project oil prices around $74 for 2010, which is not much above current price. 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 a decline in exports, remittances, foreign investment, tourist arrivals, manufacturing production and wholesale and retail trade in 2008.

•

However, thanks to bumper crops contributed by favorable monsoon at home and very good performance by electricity, telecom and financial sectors, the real GDP growth at constant market prices improved from 6% in 2007 to 6.3% in 2008, supported by a spectacular growth of 26.6% in agriculture GDP and a growth of 4.2% in services GDP despite decline by 1.2% in industrial GDP.

•

Even though the Gambian economy was relatively insulated from the first round effects of the global financial crisis, its spread to the real sectors of the global economy had adverse impact on the Gambian manufacturing production, selected services and trade sectors. In particular, exports, retail trade, tourism and foreign direct investment (FDI) declined since the second half of 2008 due to weak global demand.

•

Due to fall in tourist’s income and foreign investment and deceleration of agricultural growth, real GDP growth rate in 2009 is expected to decelerate to 5%, aided by a growth of 5.5% in agriculture production, 3.5% in industry and 5.7% in services production.

CPI Inflation

•

As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflation decelerated significantly from 6.5% (Food 8.6% and Non-Food 3.9%) in October 2008 to 2.3% (Food 2.6% and Non-Food 1.9%) (in October 2009. On the contrary, the 12-month average inflation rate accelerated from 4.3% in October 2008 to 5.3% in October 2009.

•

Among other groups in October 2009, housing and utilities recorded an annual inflation of 2.1%, restaurants and hotels 1.8% and miscellaneous goods and services 5%.

6

The Gambia Monthly Economic Bulletin- November 2009 Government Fiscal Performance

•

Government’s fiscal performance was better in Jan-Oct 2009 than Jan-Oct 2008. During Jan-Oct 2009, total domestic revenue increased by 14.3% over Jan-Oct 2008 aided by 14.5% increase in taxes and 12.5% increase in non-tax revenues; while total expenditures and net lending increased by 23.8% aided by 17.5% increase in current expenditure and 40.9% increase of capital expenditure and net lending.

•

Overall, there was a fiscal deficit of D556 million in Jan-Oct 2009, up from D377 million in Jan-Oct 2007, but basic balance and basic primary balance improved to D181 million and D806 million respectively in Jan-Oct 2009 from D65 million and D660 million respectively in Jan-Oct 2008.

Domestic Debt and Treasury Bills Yields •

At the end of Oct 2009, outstanding domestic debt stood at D6 billion (24% of GDP), the same as the outstanding domestic debt at D6 billion (26.6% of GDP) a year ago.

•

The share of Treasury bills increased from 79.2% at end-Oct 2008 to 84.7% at end-Oct 2009, while share of Sukuk Al-Salam declined from 2.1% to 2%, that of Govt. bonds remained unchanged at 4.2%, and that of NIB treasury bills declined from 14.5% to 9.1% over the period.

•

Yields on treasury bills fluctuated widely in recent months. As expected, the higher the maturity of treasury bills, the higher is the yield. However, despite stability in deposit rates and significant decline of annual point-to-point CPI inflation rate from 7% in Jan 2009 to 2.3% in Oct 2009, average yields on the 91-day bills increased from 10.5% in Jan 2009 to 10.8% in Oct 2009, yield on 182-day bills in Oct 2009 at 12.1% was the same as in Jan 2009, and yield on 364 day bills declined marginally from 14.4% in Jan 2009 to 14.2% in Oct 2009.

Money Supply and Bank Credits

•

Annual growth rate of money supply (M2) accelerated from 11.1% in Sep 2008 to 20.7% in Sep 2009, aided by 4% growth in currency, 20.1% growth in demand deposits, 17.8% growth in savings deposits and 40.7% growth in time deposits. On the demand side, growth was mainly due to 32.7% growth in net foreign assets, while net domestic assets increased by only 12.7%.

•

Domestic credit increased from D5.8 billion in Sept 2008 to D6.9 billion in Sept 2009, supported by 21.3% growth in government borrowing, 82.9% growth in credits to public entities and 13.3% growth in credits to the private sector, over a year ago.

Balance of Payments, Foreign Exchange Reserves and Exchange Rate

•

Preliminary BOP estimates the CBG for Jan-June 2009 indicated a lower overall deficit at D348.44 million compared to D376.5 million in Jan-June 2008. The current account recorded a surplus of D163.48 million in Jan-June 2009 compared to a deficit of D276.1 million in Jan-June 2008. The capital and financial account balance worsened to deficit of D511.92 million in JanJune 2009 from a deficit D100.4 million in Jan-June 2008.

•

Gross official reserves, including SDR allocation from the International Monetary Fund (IMF), as at end-September stood at US$141.3 million, equivalent to 6.0 months of import cover.

•

At end-Nov 2009, Dalasi has depreciated by ----% against British Pound, by ----% against US$, by ----% against CHF, by ----% against Euro and by ----% against CFA over end-Nov 2008.

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The Gambia Monthly Economic Bulletin- November 2009

At a Glance- October 2009 Economic Indicators

Latest Reference Period

Real GDP (MP) Growth rate (%)

Calendar year 2009

CPI inflation (%)

Oct 2009

Brent crude oil price (US$/ brl)

Oct 2009

Status in the latest reference period Overall 5.0 Agriculture 5.5 Industry 3.5 Services 5.7 Overall 2.3 Food 2.6 Non-food 1.9 Average US$73.19

Status in the Corresponding period in the previous year Overall 6.3 Agriculture 26.6 Industry (-) 1.2 Services 4.2 Overall 6.5 Food 8.6 Non-food 3.9 Average US$80

Outlook for 2009

Overall 5.0 Agriculture 5.5 Industry 3.5 Services 5.7 Expected to remain stable in the remaining months of the year May stabilize around US$74 by the end-2009

Growth rate (%) of Revenue & grants Growth rate (%) of Exp & Net Lending Overall fiscal bal. as % of GDP Basic Balance as % of GDP Primary Bas. Bal, as % of GDP

Jan-Oct 2009

20.9

(-) 3.9

Jan-Oct 2009

23.8

14.9

Jan-Oct 2009

(-) 2.2

(-) 1.7

Jan-Oct 2009

0.7

0.3

Jan-Oct 2009

3.2

2.9

Domestic debt as % of GDP Yield on 91-days TBs (%) Yield on 182days TBs (%) Yield on 364days TBs (%) GR of Money supply (M2) (%) Banks’ assets (Billion Dalasi) CBG policy rate (%) Overall BOP Balance (Mln D) Current A/C Balance (Mln D) Capital-Fin. A/C Balance (Mln D) Rate of changeOverall Nominal Effective Exch. Rate (%)

Oct 2009

24

26.6

Likely to decline in 2009.

Oct 2009

10.8

10.3

Oct 2009

12.1

11.4

Yields may come down as CPI inflation has started decelerating.

Oct 2009

14.2

13.6

Sep 2009

20.7

11.1

End-Sep 2009

13.7

11.3

Nov 2009

16.0

16%

Jan-June 2009

(-) 348.44

(-) 376.5

Jan-June 2009

163.48

(-) 276.1

Jan-June 2009

(-) 511.92

(-) 100.4

End-Sep 2009

(-) 7.9

1.6

8

Overall fiscal performance in 2009 is expected to be better than in 2008 due to better performance by revenue in 2009.

Money growth rate is likely to remain high. Likely to increase Kept unchanged by the MPC since Oct 2008 BOP is likely to improve in the second half.

Dalasi is expected to depreciate against major currencies in 2009.

The Gambia Monthly Economic Bulletin- November 2009 1. Global Economic Outlook 1.1 Global recession is ending but recovery is weak, slow and painful It is well known that the global economy is presently passing through a critical conjecture. It was adversely affected by three worst crises in fuel, food and financial sectors (called F-3 Crisis) in a single year in 2008 - the first massive F-3 crisis in the last 70 years since the great depression in 1930s. Both the advanced and developing countries have adopted various monetary and fiscal stimulus packages (such as cuts in central bank policy interest rates, continued provision of bank liquidity, credit easing, provision of public guarantees, bail outs and bank recapitalization etc.) to boost both investment and consumption, output and employment. In their latest World Economic Outlook (WEO)2 of October 2009, the International Monetary Fund (IMF) concludes that although the global economy has started to pull out of the unprecedented recession, recovery is expected to be weak and slow, and jobless for some time, as financial systems remain impaired, support from public policies will gradually have to be withdrawn, and households that suffered asset price busts will continue to rebuild savings. As per the IMF projections made in the WEO October 2009, global growth is expected to reach about 3 percent in 2010, following a contraction in activity of about 1 percent in 2009 (Table-1.1). During 2010–14, global growth is expected to be just above 4 percent, appreciably less than the 5 percent growth rates in the years just ahead of the crisis. Achieving this turnaround will depend on stepping up efforts by the governments of both developed and developing countries to heal the financial sector, while continuing to support demand with monetary and fiscal easing. In recent years African economies in general experienced an economic boom contributed by two favorable factors: namely (a) rising exports driven by high commodity prices, and (b) increasing inflows of remittances and foreign investment. The ongoing financial crisis and economic slowdown in the developed countries have led to reversal of these positive factors and imposed serious adverse impact on the African economies. Prospects of Sub-Saharan Africa Growth projections in Sub-Saharan Africa have been revised downward to 1.3 percent in 2009 while growth projection for 2010 remains unchanged at 4.1 percent (see Box 1.1 and Figure 1.1). Real GDP growth in Africa as a whole is projected to decline from an average of 6 percent in 2004– 08 to 1¾ percent in 2009, before accelerating to 4 percent in 2010. This growth performance, while disappointing in light of the experience of the mid-2000s, is still encouraging given the severity of the external shocks. An important factor behind this outcome has been that many governments in the region have been able to use fiscal balances as shock absorbers, sustaining domestic demand and helping contain employment losses.

Table-1.1 IMF WEO (Oct 2009) Projections (Annual Growth Rate in Percentage)

2

World Economic Outlook- Sustaining the Recovery, October 2009, IMF Washington D.C.

9

The Gambia Monthly Economic Bulletin- November 2009

Source: World Economic Outlook- Sustaining International Monetary Fund, Washington D.C.

10

the

recovery,

October

2009,

The Gambia Monthly Economic Bulletin- November 2009 Box 1.1 IMF Outlook for Sub-Saharan Africa Published on October 3, 2009 Expresses Cautious Optimism The International Monetary Fund (IMF) released the Regional Economic Outlook: Sub-Saharan Africa on October 3, 2009. Ms. Antoinette Monsio Sayeh, Director of the IMF's African Department summarized the report's main findings as follows: “The global economic crisis has hit sub-Saharan Africa hard, reducing economic growth to just 1 percent in 2009 after a period of sustained high economic growth. Oil exporters and middle income countries in the region have been particularly badly affected, and most low-income countries somewhat less so. In all SSA countries, however, the crisis will likely slow, if not reverse, progress on poverty reduction. Unemployment and under-employment, already endemic, have likely risen across the region. But playing-off the global economic recovery, we expect growth in sub-Saharan Africa to rise to 4 percent in 2010 and 5 percent in 2011. “In many countries the prudent macroeconomic policies pursued in recent years have provided some policy space to counter the effects of the slowdown. Accordingly, most countries have been able to maintain or even raise public spending, allowing fiscal deficits to widen temporarily. Where possible, monetary policy has also played a supportive role. “There are significant downside risks, however. Therefore, wherever possible, IMF staff recommends that fiscal and monetary policies remain supportive until the economic recovery is well-established. As the recovery gains strength, the emphasis of fiscal policy will need to shift from stabilization to medium-term considerations, including debt sustainability. In countries with binding financing constraints, the room for fiscal policy is more limited and the primary focus will need to remain on reducing macroeconomic imbalances. Financial sectors have been for the most part resilient, but prudential supervision will need to remain vigilant in the face of the impact of the economic slowdown on the quality of banks’ portfolios. “Scaled-up financial support from the IMF has buttressed countries’ policy response. The doubling of lending limits and more flexible policies have facilitated a rapid response to countries’ needs, and new IMF commitments to sub-Saharan Africa have reached over US$3 billion so far this year, compared to some US$1.1 billion for the whole of 2008 and only US$0.1 billion in 2007. Looking ahead, it will be critical that other development partners support this effort and those of other international financial institutions.” The full text of the October 2009 Regional Economic Outlook: Sub-Saharan Africa can be found on the IMF's website, www.imf.org. 11

The Gambia Monthly Economic Bulletin- November 2009

Figure 1.1 Sub-Saharan Africa: Projected GDP Growth, 2008–11

Source: IMF, African Department database. Note: The country borders or names in this map do not necessarily reflect the IMF’s official position.

12

The Gambia Monthly Economic Bulletin- November 2009

Box 1.2 IMF-World Bank Debt Sustainability Analysis for African Economies The objective of the IMF-World Bank debt sustainability framework, which was introduced in 2005, is to support low-income countries in their efforts to achieve their development goals without creating future debt problems (see The Debt Sustainability Framework for Low-Income Countries, Occasional Paper 266, IMF (2008). A debt sustainability analysis using the DSF looks at five debt burden indicators to evaluate the risk of external debt distress: the ratios of (i) present value (PV) of debt-to-GDP; (ii) PV of debt-to-exports; (iii) PV of debt-to-revenues; (iv) debt service-to-revenues; and (v) debt service-to-exports. The risk of debt distress is derived by reviewing the evolution of debt burden indicators compared to their indicative policy-dependent debt-burden thresholds using a baseline scenario, alternative scenarios, and stress tests. The thresholds depend on the quality of a country’s policies and institutions as measured by the three-year average of the World Bank’s Country Policy and Institutional Assessment (CPIA) index.

13

The Gambia Monthly Economic Bulletin- November 2009

1.2 World Commodity Prices Inflation pressures to remain low. The global recession has caused a large drop in inflation and rising concern about mild deflation. However, the decline in inflation pressures has been limited among some emerging economies. Inflation in advanced economies is projected to be close to zero in 2009 and to accelerate very modestly to about 1 percent in 2010, largely reflecting rising commodity prices. Prices for many manufactured goods will probably continue to decline for some time. Fortunately, inflation expectations have generally remained well anchored, providing some protection against sustained large price declines. In emerging economies, inflation is forecast to hover around 5 percent in 2009–2010, down from more than 9 percent in 2008. Only China, a few of the ASEAN-5 and most emerging European economies are projected to see inflation fall appreciably below 5 percent. Low potential growth and inflation will slow the process of deleveraging, adding to contractionary forces.

Commodity Prices Commodity prices have rebounded ahead of the recovery (Table 1.2). The recent rally in commodity prices was strong and broad-based, reflecting improved market sentiment, U.S. dollar depreciation, and commodity-specific supply-demand conditions. Oil prices have responded strongly to improved demand prospects but also to Organization of Petroleum Exporting Countries (OPEC) members’ strict observance of lower production quotas. Forward markets project oil prices at $74.50 for 2010, not much above current levels, with high excess capacity expected to buffer growing demand.

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The Gambia Monthly Economic Bulletin- November 2009 Table-1.2 Trends of World Commodity Prices Commodity

Unit

Jul-Sep 2008

Quarterly averages Oct-Dec Jan-Mar Apr-Jun 2008 2009 2009

Jul-Sep 2009

Monthly averages Aug Sep Oct 2009 2009 2009

Energy

Crude oil, Brent Crude oil, Dubai Natural gas, Europe Natural gas, US Beverages and Food Cocoa Coffee, Arabica Tea, Colombo auctions Tea, Kolkata auctions Tea, Mombasa auct. Coconut oil Copra Groundnut oil Palm oil Soybean oil Soybeans Barley Maize Rice, Thailand, 5% Rice, Thailand, 25% Wheat, Canada Bananas EU Fishmeal Meat, beef Meat, chicken Meat, sheep Oranges Shrimp, Mexico Sugar EU

$/bbl $/bbl $/mmbtu $/mmbtu

115.60 113.47 14.62 9.03

55.89 53.67 15.75 6.40

44.98 44.56 11.94 4.57

59.13 58.93 8.18 3.70

68.37 68.07 6.91 3.17

72.50 71.32 6.92 3.15

67.69 67.91 7.13 2.96

73.19 73.28 7.60 4.02

¢/kg ¢/kg ¢/kg

282.6 321.2 303.2

224.1 267.8 208.8

259.7 283.9 261.7

258.7 320.2 299.1

295.5 322.7 356.1

295.7 330.2 345.8

313.3 327.5 376.4

336.0 340.8 353.4

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

260.9 252.8 1,246 817 2,417 928 1,353 566 216.6 244.7 703.0 669.5 390.2 1,123 1,198 372.4 177.1 477.3 1,163 1,048 74.70

220.2 190.8 772 520 1,773 512 830 377 129.5 168.4 564.4 449.9 322.1 944 1,023 268.0 174.7 410.0 842 1,014 51.97

177.4 214.9 677 447 1,283 577 755 394 116.3 166.9 586.3 469.4 321.9 1,142 1,013 245.2 173.5 378.5 799 976 51.44

271.3 228.0 779 513 1,166 743 863 461 129.5 176.0 552.4 458.7 325.6 1,288 1,097 262.8 174.1 428.7 870 970 53.76

273.0 281.7 711 469 1,133 679 856 454 122.0 151.3 539.0 441.4 271.2 1,118 1,276 273.2 173.9 453.3 861 970 55.43

270.5 281.4 747 492 1,131 723 886 470 122.2 152.0 526.3 432.8 266.0 1,076 1,272 273.4 173.9 456.0 836 970 56.34

274.2 296.5 701 466 1,120 674 846 430 103.5 150.4 518.8 428.0 259.3 1,130 1,348 272.7 170.1 450.1 1,031 970 54.30

293.1 261.3 704 469 1,144 679 901 481 130.7 167.3 490.3 410.3 274.1 1,080 1,443 264.8 166.1 445.8 1,163 970 55.25

$/cum ¢/sheet $/cum ¢/kg ¢/kg

548.5 648.6 974.5 170.0 329.1

473.8 645.5 770.8 129.4 202.8

426.8 572.8 689.2 122.4 165.8

394.8 565.8 721.2 137.5 187.0

414.9 561.5 779.0 148.8 221.0

413.8 562.0 785.6 152.5 223.1

422.3 560.7 775.5 153.9 248.7

444.5 559.3 790.0 151.4 264.8

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

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

303.6 113.3 726.7 241.1

309.6 90.0 505.6 241.6

318.6 90.0 432.5 247.1

316.8 90.0 428.9 233.9

300.1 90.0 438.9 239.0

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

2,787 7,680 870 140.6 191.2 18,961 1,495 1,100 1,000 934 1,135 2,051 177.0

1,821 3,905 795 140.6 124.5 10,843 1,020 1,100 1,000 630 1,200 1,310 118.5

1,360 3,428 909 101.0 115.7 10,471 1,265 1,033 933 473 1,200 1,103 117.2

1,485 4,663 922 101.0 149.9 12,920 1,376 700 600 450 1,007 1,351 147.3

1,812 5,859 960 101.0 192.8 17,700 1,477 700 600 500 857 1,459 176.1

1,934 6,165 949 101.0 190.0 19,642 1,443 700 600 500 850 1,487 182.2

1,834 6,196 997 101.0 220.5 17,473 1,648 700 600 500 850 1,487 188.4

1,879 6,288 1,043 101.0 224.1 18,525 1,726 700 600 580 850 1,501 207.2

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 Iron ore Lead Nickel Silver Steel cr coilsheet Steel hr coilsheet Steel rebar Steel wire rod Tin Zinc

Source: World Bank Pink Sheet November 2009

15

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

The sharp decline in global economic activity had 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 market prices improved from 6% in 2007 to 6.3% in 2008 (Table-2.1 and Figure-2.1).

•

As per the Preliminary Estimates of the GBOS, real GDP growth in 2009 at constant market prices is expected to be 5% supported by a growth of 5.5% in agricultural production, 3.5% by industrial production and 5.7% in services production.

•

Share of agriculture increased from 21.6% in 2007 to 25.3% in 2009, while share of industry declined from 14.7% to 13.2% and that of services declined from 63.7% to 61.5% during the same period. 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, and transport and communications.

GDP Composition(%) in 2009 Others Business 7% 11%

Transport 12% Hotels 4%

Agriculture 26% Mining 2% Manufacturing Trade 26%

6% Utilities 2% Construction 4%

Figure-2.1: Trends of sectoral growth rates during 2000-2009 (in percentage) 16

The Gambia Monthly Economic Bulletin- November 2009

30.0 20.0 10.0 0.0 -10.0

2000 2001 2002 2003 2004 2005 2006 2007 2008

2009

-20.0 -30.0 GDPMP

Agriculture

Industry

Services

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

2006 Actual 3.1

Sectoral GDP Growth Rates (in percentage) 2007 2008 2009 2009 Actual Actual Estd. IMF-Proj 6.0 6.3 5.0 3.6

Sectoral Shares in GDP (in percentage) 2006 2007 2008 2009 Actual Actual Actual Estd. 100.0 100.0 100.0 100

-14.3

-1.9

26.6

5.5

4.0

23.1

21.6

25.3

25.3

-26.3

-15.2

55.2

5.5

4.0

11.8

9.5

13.6

13.7

-- Livestock

2.4

11.9

4.3

4.5

4.0

8.8

9.4

9.0

9.0

-- Forestry

3.0

-4.0

1.0

0.7

3.0

0.7

0.6

0.6

0.5

-- Fishing

7.8

18.0

3.5

11.3

3.0

1.9

2.1

2.0

2.1

4.5 1.2

2.5 -14.1

-1.2 8.8

3.5 8.8

2.6 2.0

15.1 2.4

14.7 1.9

13.4 1.9

13.2 2.0

-- Manufacturing

4.1

3.9

-8.3

0.4

4.0

7.0

7.0

5.9

5.6

-- Electricity, gas, water

8.7

59.1

1.7

10.0

5.0

1.1

1.6

1.5

1.6

-- Construction

6.0

-4.3

5.0

3.0

5.0

4.6

4.2

4.1

4.0

10.0 16.1

8.3 9.7

4.2 -2.3

5.7 1.0

2.4 2.7

61.8 28.2

63.7 29.5

61.3 26.6

61.5 25.5

-- Hotels/ restaurants

15.7

14.3

2.9

3.0

-10.0

3.6

3.9

3.7

3.6

-- Transport / telecom

2.7

7.0

-8.0

8.0

3.5

12.8

13.0

11.0

11.3

-- Financial

5.7

-0.9

28.2

3.0

1.0

7.5

7.0

8.3

8.2

-- Real est., business

-3.9

1.4

0.0

2.5

1.0

3.4

3.3

3.0

3.0

-- Public administration

11.1

12.9

42.1

2.0

5.0

2.6

2.8

3.7

3.6

-- Other service

11.0

17.8

27.0

37.1

3.0

3.7

4.1

4.9

6.3

Agriculture and allied -- Crops

Industry -- Mining and quarrying

Services -- Wholesale/retail trade

Source: Gambian Bureau of Statistics (GBOS) for the years 2006-2009 and IMF projections for 2009 by the IMF Mission to the Gambia in May 2009.

17

The Gambia Monthly Economic Bulletin- November 2009 2.2 Consumer Price Index and Inflation •

As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflation decelerated significantly from 6.5% in October 2008 to 2.3% in October 2009. On the contrary, the 12-month average inflation rate accelerated from 4.3% in October 2008 to 5.3% in October 2009.

•

Food and drinks (with weights of 55.2% in overall CPI) recorded an annual point-to-point inflation rate of 2.6% in October 2009, down from 8.6% a year ago, and contributed 67.2% to overall inflation in October 2009.

•

Non-food items (with weights of 44.8% in overall CPI) recorded annual inflation rate of 1.9% in Oct 2009, down from 3.9% a year ago and contributed 32.8% to overall inflation.

•

Among other groups in October 2009, housing and utilities recorded an annual inflation of 2.1%, restaurants and hotels 1.8% and miscellaneous goods and services 5%.

Table-2.2 CPI Inflation Rates in October 2009 (in percentage) Oct-2008 Oct-2009 Inflation Contributio Wi (CPIi1 – Index Index (%) CPIi0) n3 (%) Overall 119.29 121.99 2.3 261.1 100.0 Food 124.58 127.76 2.6 175.6 67.2 Tobacco 104.69 106.48 1.7 1.2 0.5 Clothing 110.68 111.82 1.0 12.8 4.9 Utilities 120.10 122.64 2.1 8.6 3.3 Furnishing 113.53 115.98 2.2 12.8 4.9 Health 101.11 101.8 0.7 0.7 0.3 Transport 119.17 119.97 0.7 3.5 1.4 Telecom 101.92 102.02 0.1 0.3 0.1 Recreation 104.15 105.07 0.9 7.4 2.8 Education 101.90 102.99 1.1 1.6 0.6 Hotels 115.10 117.2 1.8 0.8 0.3 Misc. 121.13 127.15 5.0 35.7 13.7 Non-food 112.88 114.92 1.9 91.4 32.8 Source of basic data: Gambian Bureau of Statistics (GBOS). Items

Weights Wi (%) 100.0 55.2 0.7 11.3 3.4 5.2 1.0 4.4 3.0 8.0 1.5 0.4 5.9 44.8

3

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 175.6 / 261.1 = 67.2%.

18

The Gambia Monthly Economic Bulletin- November 2009

19

The Gambia Monthly Economic Bulletin- November 2009 2.3 Projection of CPI inflation during November-December 2009 We have made three alternative projections of inflation rates for the remainder months of the year, on the basis of the following assumptions: (1) Alternative-1: It is assumed that the CPI variation for a month over the previous month in 2009 will be the average CPI variation for the month over the previous month in last two years (2008 and 2007). Thus, Nov 2009 CPI is estimated by the following formula: Projected CPI for Nov 2009 = Oct 2009 CPI + (Nov 2008 CPI + Nov 2007 CPI – Oct 2008 CPI – Oct 2007 CPI)/ 2. For the subsequent months, CPI 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 that for the respective month over the previous month in 2008. For example, CPI for Nov 2009 is estimated by the following formula: Projected CPI for Nov 2009 = Actual CPI for Oct 2009 + (Nov 2008 CPI – Oct 2008 CPI). For the subsequent months, CPI is projected by the similar formula. (3) Alternative-3: Average of inflation rates under Alternatives 1 and 2. Results are presented in Table 2.3 which indicates that inflation is expected to remain stable and low around 2.2% during the remaining months of the year 2009 and the year-end 12month average inflation rate is expected to be 4.5%, the same as in last year. Table-2.3: Projections of CPI inflation during October-December 2009 (in percentage) Jan

2007 Index 106.86

2008 Index 112.31

Feb

107.01

112.34

Mar

109.36

112.73

Apr May

111.64

113.21

112.0 5 111.9 8

113.8 3 114.4 8

111.95 112.09 111.86 111.95 112.13 112.26 107.7

116.21 117.65 118.96 119.29 119.54 119.93 112.5

111.9

113.8

112.0 112.1

117.6 119.6

Jun July Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4

2009Alt1

2009Alt2

2007 Inf. rate 2.0

2008 Inf. rate 5.1

2009Alt1 7.0

2009Alt2 7.0

2009 Alt3

120.1 3 120.2 5 120.3 0

120.1 3 120.2 5 120.3 0

2.1

5.0

7.0

7.0

7.0

4.2

3.1

6.7

6.7

6.7

120.36 120.51

120.36 120.51

6.3 6.6

1.4 1.6

6.3 5.9

6.3 5.9

6.3 5.9

120.61

120.61

6.4

2.2

5.4

5.4

5.4

120.84 121.15 121.75 121.99 122.21 122.47

120.84 121.15 121.75 121.99 122.24 122.63

6.3 6.4 6.0 6.0 6.0 6.0

3.8 5.0 6.3 6.6 6.6 6.8

120.2 120.5 121.2 122.2

120.2 120.5 121.2 122.3

2.8 6.4 6.2 6.0

4.4 1.7 5.0 6.7

4.0 3.0 2.3 2.3 2.2 2.1 6.9 5.8 3.1 2.2

4.0 3.0 2.3 2.3 2.3 2.3 6.9 5.8 3.1 2.3

4.0 3.0 2.3 2.3 2.2 2.2 6.9 5.8 3.1 2.2

20

7.0

The Gambia Monthly Economic Bulletin- November 2009 5.4

Average

21

4.5

4.5

4.5

4.5

The Gambia Monthly Economic Bulletin- November 2009 2.4 Government Fiscal Performance in Jan-Oct 2009 • Columns (4), (5) and (6) of Table-2.4.1 present major item-wise revenue realization and expenditure of the government in the first ten months (i.e. Jan-Oct) of 2007, 2008 and 2009 respectively. Columns (7) and (8) indicate annual percentage changes of major items of revenues and expenditure in Jan-Oct 2008 and Jan-Oct 2009 respectively over those in the corresponding period of the previous year. • It is observed from the table that the government’s fiscal performance was better in JanOct 2009 than Jan-Oct 2008. In Jan-Oct 2008 total domestic revenues declined by 3.3%, as tax revenues and non-tax revenues declined by 0.2% and 25.7% respectively over Jan-Oct 2007. On contrast, Jan-Oct 2009 witnessed an increase in total domestic revenue by 14.3% aided by 14.5% increase in taxes and 12.5% increase in non-tax revenues. • During Jan-Oct 2009, total expenditures and net lending has increased by 23.8% over Jan-Oct 2008 due to 17.5% increase in current expenditure and 40.9% increase of capital expenditure and net lending over Jan-Oct 2008. • Overall, there is a fiscal deficit of D556 million in Jan-Oct 2009, higher than fiscal deficit of D377 million in Jan-Oct 2007, but basic balance and basic primary balance improved to D181 million and D806 million respectively in Jan-Oct 2009 from D65 million and D660 million respectively in Jan-Oct 2008. Table-2.4.1 Govt Financial Performance in Jan-Oct 2009 compared with Jan-Oct 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 (GBOS)

2008 Actual Mln Dal.

2009 Budget Estimate Mln. Dal.

2007 Jan-Oct Actual Mln Dal.

2008 Jan-Oct Actual Mln Dal.

2009 Jan-Oct Actual Mln Dal.

(2) 3645 3479 3161 318 166 4135 3011 906 1398 708 154 555 1123 1017 107 -490 -156 553

(3) 4582 3771 3391 380 811 5363 3838 1035 1958 845 147 698 1525 1468 57 -781 -268 577 25023

(4) 3178.9 3013.5 2638.1 375.4 165.4 2987.8 2106.4 538.1 880.8 687.5 214.1 473.3 881.4 805.7 75.7 191.1 893.2 1580.7 20413

(5) 3055.1 2912.9 2633.8 279.1 142.3 3432.5 2509.0 768.7 1145.9 594.3 123.5 470.8 923.6 846.0 77.6 -377.4 65.2 659.5

(6) 3694.0 3330.3 3016.3 314.1 363.6 4250.0 2948.5 933.3 1390.7 624.4 131.1 493.3 1301.6 1228.9 72.7 -556.1 181.2 805.6 25023

22590

22590

% change In JanOct 2008 over JanOct 2007 (7) -3.9 -3.3 -0.2 -25.7 -14.0 14.9 19.1 42.9 30.1 -13.6 -42.3 -0.5 4.8 5.0 2.5 -297.5 -92.7 -58.3 10.7

% change In JanOct 2009 over JanOct 2008 (8) 20.9 14.3 14.5 12.5 155.6 23.8 17.5 21.4 21.4 5.1 6.2 4.8 40.9 45.3 -6.3 47.4 177.9 22.2 10.8

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

22

The Gambia Monthly Economic Bulletin- November 2009 • Column (2) of Table-2.4.2 indicates the item-wise actual fiscal performance in 2008 as percentage of GDP and the column (3) indicates the item-wise budget estimates in 2009 as percentage of GDP. It is observed from these columns that 2009 budget estimates assume better performance of grants and expenditure as percentages of GDP. Overall fiscal deficit for 2009 is budgeted at 3.1% of GDP compared to 2.2% of GDP recorded in 2008. • Columns (4), (5) and (6) of Table-2.4.2 present the major item-wise performance of revenues and expenditure in Jan-Oct of 2007, 2008 and 2009 respectively, as percentages of the corresponding nominal GDP (as estimated by GBOS) for the full year. It is observed from the table that, in terms of the percentages of GDP, the total revenues and expenditures have performed better in Jan-Oct 2009 than those in Jan-Oct 2008. • The revenue and expenditure ratios to GDP are also observed to be on track in Jan-Oct 2009 (column-6) as compared with the 2009 budget estimates (column-3). Table-2.4.2 Govt Financial Performance in Jan-Oct 2009 compared with Jan-Oct 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

2008 Actual as % of GDP (2) 16.1 15.4 14.0 1.4 0.7 18.3 13.3 4.0 6.2 3.1 0.7 2.5 5.0 4.5 0.5 -2.2

2009 Budget as % of GDP (3) 18.3 15.1 13.5 1.5 3.2 21.4 15.3 4.1 7.8 3.4 0.6 2.8 6.1 5.9 0.2 -3.1

2007 Jan-Oct as % of GDP (4)

-0.7

-1.1

2.4

2.3

4.4 7.7

15.6 14.8 12.9 1.8 0.8 14.6 10.3 2.6 4.3 3.4 1.0 2.3 4.3 3.9 0.4 0.9

2008 Jan-Oct as % of GDP (5) 13.5 12.9 11.7 1.2 0.6 15.2 11.1 3.4 5.1 2.6 0.5 2.1 4.1 3.7 0.3 -1.7

2009 Jan-Oct as % of GDP (6) 14.8 13.3 12.1 1.3 1.5 17.0 11.8 3.7 5.6 2.5 0.5 2.0 5.2 4.9 0.3 -2.2

2008 Jan-Oct as % of Outturn (7) 83.8 83.7 83.3 87.8 85.9 83.0 83.3 84.9 82.0 83.9 80.5 84.8 82.2 83.2 72.6 77.0

2009 Jan-Oct as % of Budget (8) 80.6 88.3 89.0 82.5 44.8 79.2 76.8 90.2 71.0 73.9 89.0 70.7 85.4 83.7 128.3 71.2

0.3

0.7

-41.9

-67.7

2.9

3.2

119.3

139.5

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

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

23

The Gambia Monthly Economic Bulletin- November 2009

2.5 Projection of Fiscal Outturn for the Year 2009 Column (2) of the Table-2.5.3 below presents detailed item-wise revenues and expenditure in Jan-Oct 2009. The ratios of actual realization for any item in Jan-Oct to the final outturn for the item during the complete year for the last five years viz. 2004, 2005, 2006, 2007 and 2009 are presented in columns (3) to (7) respectively. Item-wise average ratios for these five years are presented in column (8) of the Table-2.5.3. Taking these ratios as norms to take care of monthly seasonality over the year, expected revenue and expenditure outcomes for the full year 2009 are estimated by the following formula and are presented in column (9). Expected outturn for an item in 2009 = 100 X (actual realization in Jan-Oct 2009) / average realization ratio (in percentage) in Jan-Oct in the last five years (2004-2008) Comparison of the expected outcome given in Column (9) with the budget estimates given in Column (10) 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 realized by actual collections in 2009. (b) It is understood that Table 2.5.3 does not fully capture the inflows of grants, which have already been over realized as compared to budget estimates. This underestimation of grants, as given in Table 2.5.3, will not affect the fiscal balance or basic balance as the grants balance each other on revenue and expenditure sides. (c) There is likely to be marginal shortfall in non-tax revenues. (d) Both current and capital expenditure will be within budgeted targets. (e) Overall, it is expected to have a fiscal deficit of D839 million (amounting to 3.4% of nominal GDP) compared to budget estimate of fiscal deficit at D780.7 million (amounting to 3.1 percent of GDP). However, basic primary balance is likely to be 3% of GDP, higher than the budget estimate at 2.3% of GDP. 2.5.3 Government Fiscal Performance in Jan-Oct 2009 and Expected Outturn for 2009 Items

2009Ratio of Jan-Oct performance in Ave. 2009 JanAnnual Outturn (in Percentage) ratio Proj. Oct 2004Out20042005200620072008Actual 2009 turn7 Ja-Oc Ja-Oc Ja-Oc Ja-Oc Ja-Oc (1) (2) (3) (4) (5) (6) (7) (8) (9) 1.Rev & grants (2+5) 3694.0 84.0 82.2 83.7 86.8 82.4 4358.7 2.Dom. Revenue (3+4) 3330.3 83.0 81.8 83.3 86.9 84.1 3959.0 3.Tax Rev (3.1+3.2) 3016.3 83.6 83.3 84.2 86.4 83.7 3589.2 3.1 Direct Tax (a to e) 878.8 87.4 83.2 88.3 91.2 88.2 994.9 (a) Personal 359.2 85.8 87.3 85.9 85.9 85.3 86.0 417.5 (b) Corporate 441.6 87.9 79.9 89.2 94.5 97.0 89.7 492.4 (c) Capital Gains 22.5 87.9 87.9 85.3 89.8 54.7 81.1 27.7 (d) Payroll 37.3 96.2 96.5 96.4 98.1 94.3 96.3 38.7 (e) Other 18.3 97.9 97.5 99.4 99.0 98.5 18.6 2.5.3 Government Fiscal Performance in Jan-Oct 2009 and Expected Outturn for 2009 Items 2009 Ratio of Jan-Oct performance in Ave. 2009 JanAnnual Outturn (in Percentage) ratio Proj. Oct 2004Out20042005200620072008Actual 2009 turn8 Ja-Oc Ja-Oc Ja-Oc Ja-Oc Ja-Oc 7

2009 Budget Estimate

(10) 4582.2 3771.1 3390.6

2009 Budget Estimate

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

24

The Gambia Monthly Economic Bulletin- November 2009 (1) (2) (3) (4) (5) (6) (7) (8) (9) 3.2 Indirect Tax 2137.4 82.2 83.3 82.4 84.5 81.3 2594.4 3.2.1 Dom Tax on G&S 488.0 80.8 85.1 81.5 84.1 84.2 590.6 (a) Stamp Duties 13.7 90.6 88.3 93.3 93.7 86.6 90.5 15.2 (b) Excise Duties 122.8 78.0 72.7 79.6 81.5 82.1 78.8 155.8 (c) Dom Sales Tax 351.6 80.7 87.0 81.5 84.8 84.8 83.8 419.7 3.2.2 Tax on Ext Trade 1649.4 82.5 82.8 82.7 84.6 79.9 2003.7 (a) Duty (i+ii) 977.3 83.7 82.6 83.7 84.7 77.3 1188.7 (i) Oil 550.5 87.4 79.3 85.0 89.0 69.1 81.9 671.8 (ii) Non-oil 426.8 82.5 83.8 82.9 82.3 81.4 82.6 516.9 (b) Sale tax on imp (i+ii) 672.1 81.0 83.0 81.6 84.6 82.6 815.1 (i) Oil 115.3 81.9 83.9 83.1 82.0 86.3 83.4 138.2 (ii) Non-oil 556.8 80.8 82.8 81.2 85.2 81.3 82.3 676.9 4. Nontax Rev (a to d) 314.1 77.7 71.9 73.2 90.3 87.8 80.2 369.7 (a) Govt Charges 128.3 81.5 86.9 78.3 95.7 95.9 87.7 146.4 (b) NTR from CRD 4.5 92.3 88.3 93.0 92.3 91.5 4.9 (c) NTR from CED 86.7 83.3 83.0 84.2 83.5 103.8 (d) Others 94.6 75.0 80.0 80.0 87.5 90.0 82.5 114.7 5. Grants 363.6 88.5 87.2 91.6 85.1 58.2 82.1 399.7 6. Exp & Net Lend (7+8) 4250.0 5198.0 82.6 85.9 84.6 82.2 81.4 7. Cur. .Exp (7.1 to 7.3) 2948.5 76.0 81.4 81.0 81.4 81.1 3705.2 7.1 Pers. Emoluments 933.3 80.7 80.9 76.5 79.1 78.2 79.1 1180.3 7.2 Other Charges 1390.7 78.0 79.5 79.7 80.7 82.0 80.0 1738.8 7.3 Interest (a+b) 624.4 71.9 82.9 85.5 84.3 83.3 786.1 (a) External 131.1 89.6 89.3 86.7 92.7 80.4 87.7 165.0 (b) Domestic 493.3 65.7 81.1 85.2 81.0 84.1 79.4 621.1 8. Cap Exp & Net Lend. 1301.6 91.3 93.2 90.3 84.1 82.2 1492.8 8.1 Capital Exp. (a+b) 1228.9 90.6 92.4 89.9 82.8 83.2 1412.6 (a) Ext. Financed (i+ii) 737.3 93.4 92.6 91.2 90.0 87.6 810.4 (i) Loans 373.6 95.3 93.8 91.2 91.6 88.4 91.0 410.7 (ii) Grants 363.6 89.2 86.1 91.6 85.1 85.9 91.0 399.7 (b) GLF Capital 491.6 80.0 89.3 80.0 80.0 78.9 81.6 602.1 8.2 Net lending 72.7 90.0 90.0 100.0 100.0 72.7 90.5 80.3 9. Overall fis. bal (1-6) -556.1 -839.3 10. Basic balance 181.2 -28.9 11. Basic Primary Bal. 805.6 757.2 Memorandum Items: As percentage of IMF Program Nominal GDP (equal to D19904 million) 12. Fiscal bal (1-6) -2.2 -3.4 13. Basic balance 0.7 -0.1 14. Basic Primary 3.2 3.0 Balance

8

(10)

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 -3.1 -1.1 2.3

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

25

The Gambia Monthly Economic Bulletin- November 2009 2.6 Domestic Debt and Treasury Bills Outstanding •

At the end of October 2009, outstanding domestic debt stood at D6 billion (amounting to 24% of GDP), the same as the outstanding domestic debt at D6 billion (amounting to 26.6% of GDP) a year ago. • The share of Treasury bills increased from 79.2% at the end of October 2008 to 84.7% at the end of October 2009, share of Sukuk Al-Salam declined marginally from 2.1% to 2%, that of Government bonds remained unchanged at 4.2%, while that of NIB treasury bills declined from 14.5% to 9.1% over the period. Table-2.6-A Outstanding Domestic Public Debt as on 31 October 2009

Type of debt

Treasury bills Sukuk Al-Salam Government Bonds

Million Dalasi 31 Oct 2008

31 Oct 2009

4,761 127

5,087 123

250

250

NIB Treasury Notes

873

547

Total

6,011

6,006

22590

25023

26.6

24.0

Nominal GDP (GBOS) As % of nominal GDP

% change in Oct 2009 over Oct 2008 6.8 -3.1 0.0 -37.4 -0.1

Composition (in percentage) 31 Oct 31 Oct 2008 2009 79.2 84.7 2.1

2.0

4.2

4.2

14.5

9.1

100

100

Domestic Debt Sustainability As per the analysis made by the CBG, the current level of Gambia’s domestic debt is unsustainable. Out of three sustainability indicators given in Table-2.6.B, only one indicator viz. debt to revenue ratio is satisfied. However, debt to GDP ratio may be satisfied during 2009. Table-2.6-B 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 30 3. Debt to revenue 92-167 180 158 166 147 ratio Note: (1) Debt service is 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: Central Bank of Gambia

26

The Gambia Monthly Economic Bulletin- November 2009 2.7 Treasury Bills Yields •

Yields on treasury bills fluctuated widely in recent months. As expected, the higher the maturity of treasury bills, the higher is the yield. However, despite stability in deposit rates and significant decline of annual point-to-point CPI inflation rate from 7% in Jan 2009 to 2.3% in Oct 2009, average yields on the 91-day bills increased from 10.5% in Jan 2009 to 10.8% in Oct 2009, yield on 182-day bills in Oct 2009 at 12.1% was the same as in Jan 2009, and yield on 364 day bills declined marginally from 14.4% in Jan 2009 to 14.2% in Oct 2009.

•

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

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

Table-2.7 Average yields on treasury bills (in percentage per annum) 2008 2009 2007 91-D 162-D 364-D 91-D 162-D 364-D 91-D 182-D 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 12.0 13.0 13.0 13.4 13.8 10.9 11.9 13.3 12.5 13.8 12.8 13.3 13.8 10.2 11.3 13.0 13.0 13.8 12.6 13.1 13.9 10.0 11.2 13.3 11.5 12.0 12.5 13.2 13.9 9.6 10.6 12.6 10.2 11.2 12.6 12.9 13.6 8.8 10.2 12.1 10.4 11.7 11.6 12.2 12.9 8.9 11.0 13.1 10.8 12.1 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

27

364-D 14.4 14.4 14.4

14.6 15.3 15.6 14.4 13.3 14.3 14.2

The Gambia Monthly Economic Bulletin- November 2009 2.8. Money Supply •

Broad money supply (M2) recorded an annual growth of 20.7%, compared to 11.1 percent a year ago. While quasi money increased by a faster pace of 27.1 percent, narrow money increased by 14.2 percent. Reserve money grew by 2.7 percent, higher than an increase of 0.9 percent recorded a year ago.

•

On the supply side, 20.7% growth in broad money supply in Sept 2009 was supported by 4% growth in currency, 20.1% growth in demand deposits, 17.8% growth in savings deposits and 40.7% growth in time deposits.

•

On the demand side, growth was mainly due to 32.7% growth in net foreign assets, while net domestic assets increased by only 12.7% over a year ago.

•

Domestic credit increased from D5.8 billion in Sept 2008 to D6.9 billion in Sept 2009, supported by 21.3% growth in government borrowing, 82.9% growth in credits to public entities and 13.3% growth in credits to the private sector, over a year ago. Table-2.8 Money Supply and Demand in Sept 2009 Components

Sep 2008 Million Dalasi 8770 4360

1.Money Supply (M2) (2+3) 2.Narrow Money (2.1+2.2)

Sep Sep 2008 2009 % share Million Dalasi 10585 100 4979 50

Sep 2009 % share 100 47

Sep 2009 % change over Sep 2008 20.7 14.2

2.1 Currency

1599

1663

18

16

4.0

2.2 Demand deposits

2760

3315

31

31

20.1

3.Quasi money (3.1+3.2) 3.1 Savings deposits

4410 2617

5606 3083

50 30

53 29

27.1 17.8

3.2 Time deposits

1793

2523

20

24

40.7

Demands for money (1+2)

8770

10585

100

100

20.7

1.Net foreign assets (1.1+1.2)

3494

4637

40

44

32.7

1.1 Monetary Authorities

3087

3934

35

37

27.4

1.2 Commercial banks

407

703

5

7

72.8

2.Net Dom. Assets (2.1+2.2) 2.1 Domestic credit

5277 5835

5949 6909

60 67

56 65

12.7 18.4

(a) Credits to government

2132

2587

24

24

21.3

(b) Credits to public entities

482

881

5

8

82.9

(c) Credits to private sector (d) Credits to forex bureau 2.2 Other items, net

3038 183 -558

3442 0 -961

35 2 -6

33 0 -9

13.3 -100.0 72.2

Reserve Money

2572

2844

Source: Central Bank of Gambia

28

10.6

The Gambia Monthly Economic Bulletin- November 2009

2.9 Performance by Commercial Banks •

The Gambian banking industry consists of 13 banks with highly skewed distribution of assets. The industry continues to be dominated by three large banks which accounted for 64.4% of the total assets at the end of September 2009, although their share has declined from 67% a year ago.

•

The banking industry remains sound. Total industry assets increased by 17% on yearon-year basis from D11.3 billion at end-Sep 2008 to D13.2 billion at end-Sep 2009.

•

The Banking sector continues to function efficiently with sufficient capital and liquidity. The industry’s risk-weighted capital adequacy ratio stood at 34.84% in March 2009, and 33.22% in Sept 2009 significantly 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% in Sept 2009 compared to 9.95 percent a year ago, 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 0.9% in Sep 2008. ROA declined further to 0.49% at the end of Sep 2009.

•

In September 2009, distribution and trade sector accounted for 22 percent of total loans given by the commercial banks, followed by building accounting for 12 percent, transport 8 percent, tourism 7 percent, manufacturing 5 percent, and agriculture 3 percent. However, the notable sectoral increases of bank loans in September 2009 were for manufacturing, construction, tourism and fishing, while loans to agriculture recorded decline over last year’s lending.

•

As regards non-performing loans as a percentage of bank loans given to the sector, in September 2009 the fishing sector accounted for the highest non-performing loans (42% of total sector loans), followed by building (12.3%), distribution and trade (11.1%), financial sector (10.2%) and agriculture 4.3%. The manufacturing sector was the best performer as it had the least defaults. Table-2.9 Banks’ total loans and non-performing loans (NPL) by sectors in Sept 2009 Sectors

Total Loans Sep 2008 Million Dalasi

Total loans Sep 2009 Million Dalasi

Sep 2008 % share

Sep 2009 % share

Sep 2009 % change over Sep 2008

NPL Ml. D.

1. Agriculture 2. Fishing 3. Manufacturing 4. Building 5. Transport 6. Distribution 7. Tourism 8. Financial sector 9. Others 10. Total

148 17 117 342 281 831 195 125 1140 3196

136 25 195 512 355 931 293 126 1624 4197

5 1 4 11 9 26 6 4 36 100

3 1 5 12 8 22 7 3 39 100

-8.4 43.0 67.4 49.6 26.3 12.0 50.5 0.8 42.5 31.3

5.9 10.4 3.1 62.8 21.4 103.1 22.2 12.9 71.8 313.5

Source: Central Bank of Gambia 29

NPL as % of loans to the sector 4.3 42.0 1.6 12.3 6.0 11.1 7.6 10.2 4.4 7.5

The Gambia Monthly Economic Bulletin- November 2009

2.10 Commercial Banks’ Assets •

Total assets of the commercial banks increased by 17% on year-on-year basis from D11.3 billion at end-Sep 2008 to D13.2 billion at end-Sep 2009.

•

Gambian banks do not have large exposure to foreign assets or foreign liabilities. At end-Sept 2009, foreign assets constituted only 8.8% of total assets (foreign exchange 1.4%, balances abroad 6.4% and foreign investment 1%), up from 6.9% a year ago (foreign exchange 1.7%, balances abroad 4.3% and foreign investment 0%).

•

Gambian banks also do not have large contingent liabilities. At end-Sep 2009 contingent liabilities constituted 13.2% of total liabilities, compared to 10.3% a year ago.

•

At end-Sept 2009, loans and advances constituted 28.1% of total assets and the ratio remained fairly stable during 2009.

•

At end-Sept 2009, investments in government Treasury Bills by the banks increased by 0.7% and constituted 24.1% of their total assets. As expected, three large banks had the dominant share.

•

At end-Sept 2009, investments in government Treasury Bills by the banks constituted 24.1% of their total assets. As expected, three large banks had the dominant share.

•

At end-Sept 2009, loans and advances to the public sector increased by 118%, while those to the private sector increased by only 7.9% over end-Sept 2008.

Table-2.10: Commercial Banks Assets at the end-Sept 2009 (Million Dalasi) Assets (Million Dalasi) 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 Invest. 8. Fixed assets 9. Guarantees 10. Other assets 11. Total assets (1 to 10) 12. Net Balance (11-9) Memo: Foreign Assets

Sep-2007 126.9 144.4 957.1 947.7 9.4 1,095.8 15.0 2,152.8 107.0 2,045.8 2,797.4 2,591.6 151.9 53.9 485.2 1,147.4 747.0 9,668.8 8,521.5 1,294.0

Sep-2008 172.5 196.5 912.1 907.7 4.4 489.4 83.9 3,088.6 344.6 2,744.0 3,415.3 3,151.1 167.1 97.1 806.5 1,157.6 958.7 11,281.0 10,123.4 782.9

Sep-2009 194.0 186.7 1,013.3 933.0 80.3 846.4 112.1 3,711.7 750.6 2,961.1 3,421.2 3,174.3 117.3 129.6 979.2 1,824.5 908.2 13,197.3 11,372.8 1,162.7

% ch. Sp08 %ch. Sp09 Composition (%) Sep-2008 Sep-2009 over Sp07 over Sp08 1.5 1.5 35.9 12.5 1.7 1.4 36.1 -5.0 8.1 7.7 -4.7 11.1 8.0 7.1 -4.2 2.8 0.0 0.6 -52.6 1711.6 4.3 6.4 -55.3 72.9 0.7 0.8 461.1 33.6 27.4 28.1 43.5 20.2 3.1 5.7 221.9 117.9 24.3 22.4 34.1 7.9 30.3 25.9 22.1 0.2 27.9 24.1 21.6 0.7 1.5 0.9 10.0 -29.8 0.9 1.0 80.2 33.5 7.1 7.4 66.2 21.4 10.3 13.8 0.9 57.6 8.5 6.9 28.3 -5.3 100.0 100.0 16.7 17.0 89.7 86.2 18.8 12.3 6.9 8.8 -39.5 48.5

Source: Central Bank of Gambia.

30

The Gambia Monthly Economic Bulletin- November 2009

2.11 Commercial Banks’ Liabilities •

As mentioned earlier, Gambian banks do not have large exposure to foreign liabilities. At end-Sept 2009, external sector related liabilities constituted only 1.5% of total liabilities (non-residents deposits 1.2%, balances with banks abroad 0.1% and external debt 0.2%), down from 2.9% a year ago (non-residents deposits 1%, balances with banks abroad 0.8% and external debt 1%).

•

At end-Sep 2009 bank deposits increased by 19.2% over a year, aided by a growth of 18% in demand deposits, 12.1% in savings deposits and 31.2% in time deposits.

•

At end-Sep 2009 banks capital and reserves increased by 1.4% and bank balances increased by 113%, while borrowings declined by 38.4% over end-Sep 2008.

•

At end-Sep 2009, direct contingent liabilities (i.e. guarantees) of banks increased by 57.6% over end-Sep 2008 and constituted 13.8% of total liabilities.

Table-2.11: Commercial Banks Liabilities at the end-Sept 2009 (Million Dalasi) Liabilities (Million Dalasi) 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 iii. Banks locally 6. Borrowings from i Cent. bank of Gambia 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)

Memo: Foreign liabl.

Sep-2007 1,083.6 2,181.5 2,019.0 12.7 149.8 2,676.0 2,595.2 74.3 6.5 1,478.8 1,131.9 16.6 330.2 6,336.2 45.4 45.4 0.0 117.0 49.8 47.8 19.4 1,147.4 939.2 9,668.8 8,521.5

151.4

Sep-2008 1,494.2 2,759.7 2,446.3 21.9 291.5 2,617.2 2,524.1 81.0 12.2 1,794.0 1,329.9 16.9 447.1 7,170.8 135.5 6.5 87.0 42.0 241.0 123.5 117.5 1,157.6 1,081.9 11,281.0 10,123.4

324.2

Sep-2009 1,514.8 3,255.5 2,712.1 18.8 524.6 2,935.2 2,844.7 79.1 11.3 2,354.4 1,674.6 65.4 614.5 8,545.2 288.3 273.5 14.8 148.5 123.5 25.0 1,824.5 876.1 13,197.3 11,372.8

203.1

%ch. Sp08 %ch. Sp09 Composition (%) Sep-2008 Sep-2009 over Sp07 over Sp08 13.2 11.5 37.9 1.4 24.5 24.7 26.5 18.0 21.7 20.6 21.2 10.9 0.2 0.1 71.9 -14.1 2.6 4.0 94.5 80.0 23.2 22.2 -2.2 12.1 22.4 21.6 -2.7 12.7 0.7 0.6 9.1 -2.3 0.1 0.1 88.7 -6.9 15.9 17.8 21.3 31.2 11.8 12.7 17.5 25.9 0.1 0.5 1.6 287.1 4.0 4.7 35.4 37.4 63.6 64.7 13.2 19.2 1.2 2.2 198.2 112.8 0.1 2.1 -85.7 4120.0 0.8 0.1 414181.0 -82.9 0.4 0.0 2.1 1.1 106.0 -38.4 0.0 0.0 0.0 0.0 1.1 0.9 148.0 0.0 1.0 0.2 -78.7 0.0 0.0 10.3 13.8 0.9 57.6 9.6 6.6 15.2 -19.0 100.0 100.0 16.7 17.0 89.7 86.2 18.8 12.3

2.9

Source: Central Bank of Gambia

31

1.5

114.2

-37.4

The Gambia Monthly Economic Bulletin- November 2009

2.12 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 CBG 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. 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. The CBG rediscount rate declined from 34% in 2003 to 14% in 2004. In order to counter emerging inflationary pressures, the CBG raised its rediscount rate by one percentage point from 14% to 15% in June 2007, and further to 16.0% in October 2008. The rediscount rate has remained unchanged at 16% since then. 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 12.1% in October 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-2.12: 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

2000

2001

2005

2006

2007

2008

2009

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

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

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

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

18 27 4 7 5 15.5 6 15.5 6 15.5 14.2 10 16

Bank lending rate Deposit rate (SB) Time deposits (3 months) Time deposits (6 months) Time deposits (12 month)

6 2 3 2.5 1.5

10 2 3.5 7 7

9 2 7.9 6.9 5.9

9 3 8.6 7.6 6.6

9 3 9.5 9.5 9.5

Inflation (GDP-Deflator) CPI-Inflation Real GDP-Growth Rate Exch. Rate change (%)

3.6 0.9 5.5 12.2

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 7 15.5 15.5 9 2 2 9 7 5 3 7 15 14 9 2.5 7 14 14 8 1.5 6 12 11 6 Factors Influencing Interest Rates 14.9 15.0 22.9 13.6 3.9 4.5 8.6 17.0 14.3 5.0 5.7 0.7 2.4 2.1 -0.1 22.7 27.0 43.2 5.3 -4.8

2002

2003

2004

0.0 2.1 3.1 -1.8

2.0 5.4 6.3 -11.4

8.0 4.9 6.3 -9.8

4.7 4.5 5.0 15.9

Source: Central Bank of Gambia (CBG)

32

The Gambia Monthly Economic Bulletin- November 2009

2.13 BOP, Foreign Exchange Reserves and Exchange Rates (a) BOP Situation in 2008 (a) Overall BOP outcome in 2008 was not as bad as they were anticipated earlier. Year end foreign exchange reserves at US$125.2 million were still equal to 5.7 months of c.i.f. imports compared to US159.4 million equal to 6.2 months at end-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 a 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. 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. (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%.

(b) BOP Situation in 2009-Q1 •

Provisional BOP estimates for the first quarter of 2009 indicate an overall deficit of D468.9 million (US $17.9 million) compared to D7.42 million (US $0.34 million) in the first quarter of 2008. The current account deficit, including official transfers, amounted to D234.3 million compared to a surplus of D4.94 million a year ago. The capital and financial account widened from a deficit of D12.36 million in the first quarter of 2008 to D234.53 million in the first quarter of 2009.

(c) BOP Situation in 2009-Q2 BOP estimates by the CBG for the first half of 2009 (i.e. Jan-June 2009) indicated that the overall BOP deficit narrowed to D348.44 million in 2009 from D376.5 million in Jan-June 2008. The current account recorded a surplus of D163.48 million in Jan-June 2009 compared to a deficit of D276.1 million in Jan-June 2008. The capital and financial account balance worsened to deficit of D511.92 million in Jan-June 2009 from a deficit D100.4 million in Jan-June 2008 reflecting the decline in reinvested earnings and equity capital. The goods account balance improved from a deficit of D1.4 billion in Jan-June 2008 to D1.1 billion in Jan-June 2009 attributed to the surge in exports which more than offset the increase in imports. Exports, including re-exports rose to D2.2 billion in Jan-June 2009 compared to D1.4 billion Jan-June 2008. (d) Foreign Exchange Reserves and Exchange Rates Volume of transactions in the domestic foreign exchange market contracted to US$1.3 billion in the year to end-September 2009 from US$1.6 billion a year earlier. The domestic currency depreciated by 7.9 percent on the overall nominal exchange rate index of currencies compared to an appreciation of 1.6 percent in the preceding year. From December 2008 to end-September 2009, the Dalasi depreciated against the British Pound, US Dollar, CFA Franc and euro by 7.1 percent, 17.5 percent, 9.4 percent and 8.2 percent respectively. Gross official reserves, including Special Drawing Rights (SDR) allocation from the International Monetary Fund (IMF), as at end-September stood at US$141.3 million, equivalent to 6.0 months of import cover.

33

The Gambia Monthly Economic Bulletin- November 2009

1 1.1 a.

Table-2.13A: Quarterly BOP Summary Table 2008-2009Q2 In Million Dalasi (Million Dalasi) 20082008200820082008 Q1 Q2 Q3 Q4 Goods balance (1.1-627.8 -918.1 -761.3 -612.0 1.2) 2919. 1 Exports of goods 699.4 883.3 3175. 804.9 788.2 (a+b+c) 8

2009Q1 -683.9 934.5

69.0

125.1

80.3

56.0

330.4

239.1

b.

Exports of goods in trade stat Re-exports

639.6

571.8

542.0

735.7

2489.1

660.9

c.

Other goods

96.3

91.3

77.1

91.6

356.2

34.5

Imports of goods fob

1566.1

1400.2

1327. 2

1801. 3

6094. 9

1618. 4

542.4

57.0

-69.5

183.6

757.5

370.3

2.1

Services, net (2.1 to 2.7) Transport

-137.4

-96.3

-71.5

-128.9

-434.1

-123.6

2.2

Travel

800.9

196.3

143.9

483.0

1624.1

615.7

2.3

Communications

49.2

79.4

44.8

41.0

214.4

52.4

2.4

Insurance

-36.1

-38.8

-30.2

-41.0

-146.0

-38.0

2.5

Construction

3.2

55.9

2.5

14.3

120.0

12.9

2.6

Information technology

0.0

-2.0

-21.5

-47.4

-70.9

-23.6

2.7

Others business

-137.5

-137.5

-137.5

-137.5

-550.0

-125.5

Income

-233.1

-176.0

-176.8

-171.5

-757.4

-74.8

3.1

Investment income

-275.8

-219.6

-223.8

-212.2

-931.4

-115.2

3.2

Compensation to labor

42.7

43.6

47.0

40.7

174.0

40.3

456.9

450.0

499.5

403.0

42.7

40.5

29.0

25.0

1809. 3 137.2

154.1

4.1

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

4.2

Remittances

219.2

249.1

370.7

356.7

1195.8

290.2

4.3

Other transfer

195.0

160.4

99.7

21.3

476.4

-244.4

4.9

-281.0

-374.5

-503.0

-234.3

-234.5

1.2 2

3

4

5 6 7

Current account balance Capital Account Financial Account (7.1+7.2)

0.0

19.1

3.2

2.0

1109.6 24.4

-12.4

-107.2

26.5

411.0

317.9

108.3

0.0

7.1

Foreign direct investment

411.4

411.4

366.5

366.5

1555.7

262.7

7.2

Other investment

-865.0

-351.5

60.5

-273.6

1429.6

-311.1

7.3

Reserve change

441.2

-167.1

-400.5

318.2

191.8

-186.2

Capital and Financial A/C (6+7)

-12.4

-88.1

29.7

413.0

342.3

-234.5

-7.4

-369.1

-344.8

-89.9

-767.3

-468.9

4428.2

4059.1

3714. 3

3624. 4

3624. 4

3155. 5

8 9

Overall BOP Balance (5+8) Foreign Exchange Reserve

34

2009Q2

399.0 1331. 6 597.8 706.8 27.0 1730. 6 19.7 124.3 190.1 82.9 -42.8 14.8 23.6 124.5 -57.5 -98.9 41.4 834.6 151.9 434.2 248.5 397.8 0.0 277.4 262.7 484.2 -55.9 277.4 120.4 3275. 9

The Gambia Monthly Economic Bulletin- November 2009 Equi to months of imports

7.4

7.6

7.3

5.2

6.2

5.1

Ave.Exch.rate(D/$)

21.23

20.47

21.81

25.90

22.35

26.19

GDP at cmp (Million Dalasi)

18240

18240

18240

18240

18240

19529

35

4.9 26.8 1952 9

The Gambia Monthly Economic Bulletin- November 2009

b.

Table-2.13B: Quarterly BOP Summary Table 2008-2009Q2 In Million US dollar (Million US$) 20082008200820082008 Q1 Q2 Q3 Q4 Goods balance (1.1-35.9 -29.9 -28.8 -35.4 -130.6 1.2) Exports of goods 37.9 38.5 32.1 34.1 142.1 (a+b+c) Exports of goods in 3.2 6.1 3.7 2.2 14.8 trade stat Re-exports 30.1 27.9 24.9 28.4 111.4

c.

Other goods

1 1.1 a.

2009Q1 -26.1

-14.9

35.7

49.7

9.1

22.3

25.2

26.4 1.0 64.6 0.7

4.5

4.5

3.5

3.5

15.9

1.3

Imports of goods fob

73.8

68.4

60.9

69.5

272.7

61.8

25.5

2.8

-3.2

7.1

33.9

14.1

2.1

Services, net (2.1 to 2.7) Transport

-6.5

-4.7

-3.3

-5.0

-19.4

-4.7

2.2

Travel

37.7

9.6

6.6

18.6

72.7

23.5

2.3

Communications

2.3

3.9

2.1

1.6

9.6

2.0

2.4

Insurance

-1.7

-1.9

-1.4

-1.6

-6.5

-1.5

2.5

Construction

0.2

2.7

0.1

0.6

5.4

0.5

2.6

Information technology

0.0

-0.1

-1.0

-1.8

-3.2

-0.9

2.7

Others business

-6.5

-6.7

-6.3

-5.3

-24.6

-4.8

1.2 2

3

2009Q2

-4.6 7.1 3.1 -1.6 0.6 0.9 -4.6 -2.1 -3.7 1.5 31.1

Income

-11.0

-8.6

-8.1

-6.6

-33.9

-2.9

3.1

Investment income

-13.0

-10.7

-10.3

-8.2

-41.7

-4.4

3.2

Compensation to labor

2.0

2.1

2.2

1.6

7.8

1.5

21.5

22.0

22.9

15.6

80.9

5.9

4.1

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

2.0

2.0

1.3

1.0

6.1

4.1

4.2

Remittances

10.3

12.2

17.0

13.8

53.5

11.1

4.3

Other transfer

9.2

7.8

4.6

0.8

21.3

-9.3

Current account balance Capital Account

0.2

-13.7

-17.2

-19.4

-49.6

-8.9

0.0

0.9

0.1

0.1

1.1

0.0

-0.6

-5.2

1.2

15.9

14.2

-9.0

7.1

Financial Account (7.1+7.2) Foreign direct investment

19.4

20.1

16.8

14.1

69.6

10.0

7.2

Other investment

-40.7

-17.2

2.8

-10.6

-64.0

-11.9

7.3

Reserve change

20.8

-8.2

-18.4

12.3

8.6

-7.1

Capital and Financial A/C (6+7) Overall BOP Balance (5+8) Foreign Exchange Reserve Equi to months of imports Ave.Exch.rate(D/$)

-0.6

-4.3

1.4

15.9

15.3

-9.0

9.8 -18.1 -2.1 -10.4

-0.3

-18.0

-15.8

-3.5

-34.3

-17.9

4.5

208.6

198.3

170.3

139.9

162.1

120.5

122.2

7.4

7.6

7.3

5.2

6.2

5.1

4.9

21.2

20.5

21.8

25.9

22.4

26.2

GDP at cmp (Million US$)

859.2

891.1

836.3

704.2

816.0

745.7

26.8 728.7

4

5 6 7

8 9

36

5.7 16.2 9.3 14.8 0.0 -10.4

The Gambia Monthly Economic Bulletin- November 2009

b.

Table-2.13-C: Quarterly BOP Summary Table 2008-2009Q2 AS percentage of GDP at current market prices BOP as % of GDP 20082008200820082008 Q1 Q2 Q3 Q4 Goods balance (1.1-4.2 -3.4 -3.4 -5.0 -16.0 1.2) Exports of goods 4.4 4.3 3.8 4.8 17.4 (a+b+c) Exports of goods in 0.4 0.7 0.4 0.3 1.8 trade stat Re-exports 3.5 3.1 3.0 4.0 13.6

c.

Other goods

0.5

0.5

0.4

0.5

2.0

0.2

Imports of goods fob

8.6

7.7

7.3

9.9

33.4

8.3

3.0

0.3

-0.4

1.0

4.2

1.9

2.1

Services, net (2.1 to 2.7) Transport

-0.8

-0.5

-0.4

-0.7

-2.4

-0.6

2.2

Travel

4.4

1.1

0.8

2.6

8.9

3.2

2.3

Communications

0.3

0.4

0.2

0.2

1.2

0.3

2.4

Insurance

-0.2

-0.2

-0.2

-0.2

-0.8

-0.2

2.5

Construction

0.0

0.3

0.0

0.1

0.7

0.1

2.6

Information technology

0.0

0.0

-0.1

-0.3

-0.4

-0.1

2.7

Others business

-0.8

-0.8

-0.8

-0.8

-3.0

-0.6

1 1.1 a.

1.2 2

3

2009-Q1

2009Q2

-3.5

-2.0

4.8

6.8

1.2

3.1

3.4

3.6 0.1 8.9 0.1 -0.6 1.0 0.4 -0.2 0.1 0.1 -0.6 -0.3 -0.5 0.2 4.3

Income

-1.3

-1.0

-1.0

-0.9

-4.2

-0.4

3.1

Investment income

-1.5

-1.2

-1.2

-1.2

-5.1

-0.6

3.2

Compensation to labor

0.2

0.2

0.3

0.2

1.0

0.2

2.5

2.5

2.7

2.2

9.9

0.8

4.1

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

0.2

0.2

0.2

0.1

0.8

0.6

4.2

Remittances

1.2

1.4

2.0

2.0

6.6

1.5

4.3

Other transfer

1.1

0.9

0.5

0.1

2.6

-1.3

Current account balance Capital Account

0.0

-1.5

-2.1

-2.8

-6.1

-1.2

0.0

0.1

0.0

0.0

0.1

0.0

-0.1

-0.6

0.1

2.3

1.7

-1.2

7.1

Financial Account (7.1+7.2) Foreign direct investment

2.3

2.3

2.0

2.0

8.5

1.3

7.2

Other investment

-4.7

-1.9

0.3

-1.5

-7.8

-1.6

7.3

Reserve change

2.4

-0.9

-2.2

1.7

1.1

-1.0

Capital and Financial A/C (6+7) Overall BOP Balance (5+8) Foreign Exchange Reserve

-0.1

-0.5

0.2

2.3

1.9

-1.2

1.3 -2.5 -0.3 -1.4

0.0

-2.0

-1.9

-0.5

-4.2

-2.4

0.6

24.3

22.3

20.4

19.9

19.9

16.2

16.8

4

5 6 7

8 9

37

0.8 2.2 1.3 2.0 0.0 -1.4

The Gambia Monthly Economic Bulletin- November 2009

Table-2.13-D: Quarterly BOP Summary Table 2008-200Q1 Percentage change over same quarter of previous year (%)

Items 1 1.1 a. b. c. 1.2 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3 3.1 3.2 4 4.1 4.2 4.3 5 6 7 7.1 7.2 7.3 8 9

Goods balance (1.1-1.2) Exports of goods (a+b+c) Exports of goods in trade stat Re-exports Other goods Imports of goods fob Services, net (2.1 to 2.7) Transport Travel Communications Insurance Construction Information technology Others business Income Investment income Compensation to labor Transfers, net (4.1+4.2+4.3) Official transfer Remittances Other transfer Current account balance Capital Account Financial Account (7.1+7.2) Foreign direct investment Other investment Reserve change Capital and Financial A/C (6+7) Overall BOP Balance (5+8) Foreign Exchange Reserve Equi to months of imports Ave.Exch.rate(D/$) GDP at cmp

2009-Q1 (Dalasi) -10.2 16.1 246.6 3.3 -64.2 3.3 -31.7 -10.1 -23.1 6.5 5.5 297.2 -8.7 -67.9 -58.2 -5.5 -66.3 153.7 32.4 -225.3 -4833.9 1797.6 -36.1 -64.0 -142.2 1797.6

2009-Q1 (US$) -27.2 -5.9 181.0 -16.2 -71.0 -16.2 -44.7 -27.1 -37.7 -13.6 -14.5 222.0 -26.0 -74.0 -66.1 -23.4 -72.7 105.7 7.3 -201.6 -3937.4 1438.2 -48.2 -70.8 -134.2 1438.2

2009-Q2 (Dalasi) -34.8 68.9 377.8 23.6 -70.4 23.6 -65.4 29.2 -3.1 4.4 10.4 -73.5 -1260.1 -9.5 -67.3 -55.0 -5.1 85.5 275.1 74.3 54.9 -241.5 158.8 -36.1 37.7 -66.5 214.9

2009-Q2 (US$) -50.2 29.0 265.0 -5.6 -77.4 -5.6 -73.6 -1.3 -26.0 -20.2 -15.7 -79.7 -986.1 -30.8 -75.1 -65.6 -27.5 41.7 186.5 33.1 18.3 -208.1

6227.5 -28.7 -31.0 23.4 7.1

5029.2 -42.2 -31.0 23.4 -13.2

-132.6 -19.3 -34.7 30.9 7.1

-124.9 -38.4 -34.7 30.9 -18.2

2.14 Exchange Rate

38

97.7 -51.2 5.2 -74.4 140.5

The Gambia Monthly Economic Bulletin- November 2009 •

During Jan-April 2009, every month the Dalasi depreciated against major international currencies (viz. US$, CHF, EURO and CFA) traded in the inter-bank market except the UK£, reflecting the adverse impact of the global financial crisis on remittances and tourism and increased demand for foreign exchange to meet the high cost of imports. Since May 2009 Dalasi has also started depreciating against UK£.

•

At end-Nov 2009, Dalasi has depreciated by ----% against British Pound, by ----% against US$, by ----% against CHF, by ----% against Euro and by ----% against CFA over end-Nov 2008.

Table-2.14 Inter-bank end-period mid-market exchange rates (Dalasi per unit of foreign currency) Year

Month UK US$ CHF Euro CFA (5000) Jan 44.27 22.34 19.91 32.89 252.85 Feb 42.58 21.88 19.57 32.28 243.98 Mar 40.87 19.46 19.15 30.83 239.16 Apr 39.52 20.12 19.16 31.43 235.95 May 40.25 20.64 19.46 32.1 245.84 June 40.77 20.65 19.27 32.07 245.51 July 41.65 20.94 19.9 32.21 251.05 Aug 40.73 21.37 20.08 32.23 249.47 Sept 41.65 23.12 19.86 33.02 249.30 Oct 40.49 24.89 20.15 32.89 258.09 Nov 40.56 26.26 20.07 33.28 258.31 Dec 40.14 26.54 22.94 35.67 259.15 2009 Jan 37.25 26.07 20.85 33.52 262.81 Feb 37.38 26.11 22.04 33.6 257.78 Mar 38.18 26.38 23.31 35.22 259.30 Apr 39.05 26.80 23.00 35.32 262.17 May 41.40 26.74 22.40 37.00 265.98 June 43.13 26.87 21.96 37.04 272.87 July 43.31 26.79 24.42 38.06 277.53 Aug 43.80 26.63 24.36 37.68 281.45 Sep 42.99 26.95 25.47 38.61 283.58 Oct 43.48 26.91 26.07 39.61 297.13 Nov 26.64 Annual Rate of appreciation (-) / depreciation (+) of Dalasi (in % over same month in 2008) 2009 Jan -15.9 16.7 4.7 1.9 3.9 Feb -12.2 19.3 12.6 4.1 5.7 Mar -6.6 35.6 21.7 14.2 8.4 Apr -1.2 33.2 20.1 12.4 11.1 May 2.9 29.5 15.1 15.3 8.2 June 5.8 30.1 14.0 15.5 11.1 July 4.0 27.9 22.7 18.2 10.6 Aug 7.5 24.6 21.3 16.9 12.8 Sep 3.2 16.6 28.2 16.9 13.7 Oct 7.4 8.1 29.4 20.4 15.1 Nov 1.4 Source: Central Bank of Gambia (CBG) 2008

39