Gambia Monthly Economic Bulletin October 2009

The Gambia Monthly Economic Bulletin- October 2009

THE GAMBIA MONTHLY ECONOMIC BULLETIN1 October 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

1

The Gambia Monthly 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, Amie Khan and Yaya Drammeh, Senior Economists and Ceesay Chiel, 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]) 1

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

3

The Gambia Monthly Economic Bulletin- October 2009

____________________________________________________________ Contents

Page

Items ISPEFG Project/ Research Team and Document History Highlights

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 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

4

Projection of CPI inflation for the year 2009

2.4 2.5 2.6 2.7

Government Fiscal Performance Projections of Fiscal Outturn for 2009 Domestic Debt and Outstanding Treasury Bills Treasury Bills Yields 2.8 Money Supply 2.9 Performance of Commercial Banks 2.10 BOP, Foreign Exchange Reserves and Exchange Rates

4

8-11 8 10 12-25 12 14 16 17 19 21 22 23 24 25

The Gambia Monthly Economic Bulletin- October 2009

ISPEFG Project and Monthly Report Research Team

Project Supervisor

Honorable Mr. Serign Cham, Permanent Secretary

Project Coordinator

Mr. Momodou Cham

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

Mr. Tamsir Cham Mr. Momodou Taal Ms. Amie Khan Mr. Yaya Drammeh Ms. Ceesay Chilel 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: 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. 1. 2. 3. 4. 5. 6. 7. 8.

5

The Gambia Monthly Economic Bulletin- October 2009 HIGHLIGHTS 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 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$72.50 per barrel in August 2009, and stood at US$67.69 per barrel in September 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

•

Annual point-to-point CPI inflation decelerated significantly to 2.3% (food 2.6% and non-food 1.9%) in Sep 2009 from 6.3% (food 8.1% and non-food 4%) in Sep 2008. On the contrary, the 12month average inflation rate accelerated to 5.6% in Sept 2009 from 4.3% a year ago.

•

Among other groups in Sept 2009, housing and utilities recorded an annual inflation of 2.4%, restaurants and hotels 2.2% and miscellaneous goods and services 4.7%.

6

The Gambia Monthly Economic Bulletin- October 2009 Government Fiscal Performance

•

In Jan-Sep 2009 total revenue and grants increased by 15.6% aided by 16.1% increase in taxes, marginal decline by 0.9% in non-tax revenues and 46.2% increase in grants.

•

In Jan- Sep 2009, total expenditures and net lending increased by 22.3% over Jan- Sep 2008 due to 13% increase in current expenditure and 54.4% increase of capital expenditure and net lending over Jan- Sep 2008.

•

Overall, there was a fiscal deficit of D321 million (amounting to 1.3% of GDP), and basic deficit of D8.5 million in Jan-Sep 2009, compared to a lower fiscal deficit of D109 million (amounting to 0.5% of GDP) and basic surplus of D143.6 million in Jan- Sep 2008. Domestic Debt and Treasury Bills Yields •

At the end of Sept 2009, outstanding domestic debt stood at D5.9 billion (23.7% of GDP), down from the outstanding domestic debt at D6.1 billion (27% of GDP) a year ago.

•

The share of Treasury bills increased from 79.6% at end-Sep 2008 to 84.5% at end-Sep 2009, share of Sukuk Al-Salam remained unchanged at 2%, that of Govt bonds increased marginally from 4.1% to 4.2%, while that of NIB T.Bills declined from 14.2% to 9.2% over the period.

•

Yields on treasury bills fluctuated widely in recent months. Despite stability in deposit rates and significant decline of CPI inflation from 7% in January 2009 to 2.3% in Sep 2009, Average yields on the 91-day and 364-dat treasury bills remained unchanged at 10.4% and 14.3% respectively and yield of 182-day bills declined marginally from 12.1% in Jan 2009 to 11.7% in Sep 2009.

Money Supply and Bank Credits

•

Annual growth rate of money supply (M2) increased 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 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 Jan-June 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.

•

Dalasi depreciated by 7.9% on the overall nominal exchange rate index of currencies compared to an appreciation of 1.6% a year ago. During Dec 2008 to end-Sep 2009, the Dalasi depreciated against the British £, US$, CFA Franc and euro by 7.1%, 17.5%, 9.4% and 8.2% respectively.

7

The Gambia Monthly Economic Bulletin- October 2009

At a Glance- October 2009 Economic Indicators

Latest Reference Period

Real GDP (MP) Growth rate (%)

Calendar year 2009

CPI inflation (%)

Sep 2009

Brent crude oil price (US$/ brl)

Sept 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$67.69

Status in the Corresponding period in the previous year Overall 6.3 Agriculture 26.6 Industry (-) 1.2 Services 4.2 Overall 6.3 Food 8.1 Non-food 4.0 Average US$100

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$70 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-Sep 2009

15.6

(-) 0.6

Jan-Sep 2009

22.3

10.4

Jan-Sep 2009

(-) 1.3

(-) 0.5

Jan-Sep 2009

Negligible

0.6

Jan-Sep 2009

2.3

3.1

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 (%)

Sep 2009

23.7

27.0

Likely to decline in 2009.

10.4

8.9

Yields may come down as CPI inflation has started decelerating.

11.7

11.0

Sep 2009

14.3 20.7

13.1 11.1

End-Sep 2009

13.7

11.3

Sep 2009

16.0

15%

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

Overall BOP Balance (Mln D) Current A/C Balance (Mln D) Capital-Fin. A/C Balance (Mln D) Rate of changeOverall Nominal Eff. Exchange Rate (%)

Sep 2009 Sep 2009

Overall fiscal performance in 2009 is not expected to be better than in 2008 due to expenditure overruns, although revenue performance in 2009 has been better than in 2008. .

Sep 2009

1. Global Economic Outlook 8

Money growth rate is likely to remain high. Likely to increase Kept unchanged in the MPC meeting held on 30-10-2009 BOP is likely to improve in the second half.

Dalasi is expected to depreciate against major currencies in 2009.

The Gambia Monthly Economic Bulletin- October 2009 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. 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. 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- October 2009

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

10

the

recovery,

October

2009,

The Gambia Monthly Economic Bulletin- October 2009 1.2 World Commodity Prices and Inflation 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.

11

The Gambia Monthly Economic Bulletin- October 2009 Table-1.2 Trends of World Commodity Prices Commodity Energy Coal, Australia Crude oil, average Crude oil, Brent Crude oil, Dubai Natural gas, Europe Natural gas, US Beverages Cocoa Coffee, Arabica Tea, Mombasa auctions Food Coconut oil Copra Groundnut oil Palm oil Soybean oil Soybeans Barley Maize Rice, Thailand, 35% Sorghum Wheat, US, HRW Wheat, US SRW Bananas EU Fishmeal Meat, beef Meat, chicken Meat, sheep Oranges Shrimp, Mexico Sugar EU 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 Iron ore Lead Nickel Silver Steel cr coilsheet Steel rebar Steel wire rod Tin Zinc

Jul-Sep 2008

Unit $/mt $/bbl $/bbl $/bbl $/mmbtu $/mmbtu

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

Monthly averages Jul Aug Sep 2009 2009 2009

Jul-Sep 2009

162.80 115.68 115.60 113.47 14.62 9.03

92.97 56.00 55.89 53.67 15.75 6.40

71.93 44.11 44.98 44.56 11.94 4.57

66.48 59.19 59.13 58.93 8.18 3.70

71.31 68.21 68.37 68.07 6.91 3.17

73.80 64.67 64.91 64.97 6.67 3.39

72.50 71.63 72.50 71.32 6.92 3.15

67.64 68.35 67.69 67.91 7.13 2.96

¢/kg ¢/kg ¢/kg

282.6 321.2 252.8

224.1 267.8 190.8

259.7 283.9 214.9

258.7 320.2 228.0

295.5 322.7 283.1

277.5 310.6 267.3

295.7 330.2 281.4

313.3 327.5 300.7

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

1,246 817 2,417 928 1,353 566 216.6 244.7 n.a. 214.7 317.7 241.5 1,123 1,198 372.4 177.1 477.3 1,163 1,048 74.70 31.14

772 520 1,773 512 830 377 129.5 168.4 n.a. 151.0 228.1 182.7 944 1,023 268.0 174.7 410.0 842 1,014 51.97 26.28

677 447 1,283 577 755 394 116.3 166.9 n.a. 145.3 231.6 187.4 1,142 1,013 245.2 173.5 378.5 799 976 51.44 28.85

779 513 1,166 743 863 461 129.5 176.0 n.a. 155.8 250.5 195.6 1,288 1,097 262.8 174.1 428.7 870 970 53.76 33.89

711 469 1,133 679 856 455 122.0 151.3 n.a. 139.3 208.6 165.2 1,118 1,276 273.2 173.9 453.3 853 970 55.43 46.98

685 448 1,149 639 836 462 140.3 151.6 n.a. 133.8 224.9 175.6 1,147 1,207 273.4 177.5 453.7 715 970 55.63 40.63

747 492 1,131 723 886 474 122.2 152.0 n.a. 142.4 210.4 161.7 1,076 1,272 273.4 173.9 456.0 836 970 56.34 49.47

701 466 1,120 674 846 430 103.5 150.4 n.a. 141.8 190.4 158.4 1,130 1,348 272.7 170.1 450.1 1,007 970 54.30 50.84

$/cum ¢/sheets $/cum ¢/kg ¢/kg

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

394.8 565.8 721.2 142.4 187.0

414.9 561.5 779.0 149.9 221.0

408.6 561.9 776.0 142.2 191.4

413.8 562.0 785.6 152.5 223.1

422.3 560.7 775.5 154.9 248.7

$/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

293.3 90.0 655.5 243.7

318.6 90.0 432.5 247.1

316.8 90.0 428.9 233.9

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

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

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

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

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

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

1,668 5,216 934 101.0 167.9 15,985 1,339 700 500 870 1,404 157.9

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

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

2. Current State of the Gambian Economy 2.1 Overall and Sectoral GDP Growth Rates 12

The Gambia Monthly Economic Bulletin- October 2009

•

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)

13

The Gambia Monthly Economic Bulletin- October 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 Agriculture and allied

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

-- 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.

14

The Gambia Monthly Economic Bulletin- October 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 6.3% in Sept 2008 to 2.3% in Sept 2009, while the 12month average inflation rate accelerated to 5.6% in Sept 2009 from 4.3% a year ago.

•

Food and drinks (with weights of 55.2% in overall CPI) recorded an annual point-to-point inflation rate of 2.6% in Sept 2009, down from 8.1% a year ago, and contributed 68.1% to overall inflation in Sept 2009.

•

Non-food items (with weights of 44.8% in overall CPI) recorded annual inflation rate of 1.9% in Sept 2009, down from 4% a year ago and contributed 31.9% to overall inflation.

•

Among other groups in Sept 2009, housing and utilities recorded an annual inflation of 2.4%, restaurants and hotels 2.2% and miscellaneous goods and services 4.7%.

Table-2.2 CPI Inflation Rates in September 2009 (in percentage) Weights Sept-2008 Sept-2009 Inflation Contributio Wi (CPIi1 – Wi (%) Index Index (%) CPIi0) n3 (%) Overall 100.0 118.96 121.75 2.3 265.8 100.0 Food 55.2 124.11 127.39 2.6 181.1 68.1 Tobacco 0.7 104.64 106.4 1.7 1.2 0.5 Clothing 11.3 110.46 111.82 1.2 15.3 5.8 Utilities 3.4 119.76 122.64 2.4 9.8 3.7 Furnishing 5.2 113.38 115.7 2.0 12.2 4.6 Health 1.0 101.10 101.8 0.7 0.7 0.3 Transport 4.4 119.97 119.97 0.0 0.0 0.0 Telecom 3.0 101.55 102.02 0.5 1.4 0.5 Recreation 8.0 104.13 105.07 0.9 7.5 2.8 Education 1.5 101.87 102.99 1.1 1.7 0.6 Hotels 0.4 114.52 117.08 2.2 0.9 0.3 Misc. 5.9 121.01 126.75 4.7 34.0 12.8 non-food 44.8 112.68 114.82 1.9 95.9 31.9 Source of basic data: Gambian Bureau of Statistics (GBOS). Items

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 181.1 / 265.8 = 68.1%.

15

The Gambia Monthly Economic Bulletin- October 2009

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

Series1

Utilities Tobacco Overall 0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Contributionto Inflationin Sept 2009 (%) Recreation 3% Furnishing 4% Utilities

Others 15%

4% Clothing 6%

Food 68%

25.0 20.0 15.0 10.0 5.0 0.0

Food

Non -Food

All

16

The Gambia Monthly Economic Bulletin- October 2009 2.3 Projection of CPI inflation during October-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, Oct 2009 CPI is estimated by the following formula: Projected CPI for Oct 2009 = Sept 2009 CPI + (Oct 2008 CPI + Oct 2007 CPI – Sept 2008 CPI – Sept 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 Oct 2009 is estimated by the following formula: Projected CPI for Oct 2009 = Actual CPI for Sept 2009 + (Oct 2008 CPI – Sept 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

120.84 121.15 121.75 121.96 122.18 122.44

120.84 121.15 121.75 122.08 122.33 122.72

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

120.2 120.5 121.2 122.4

2.8 6.4 6.2 6.0

4.4 1.7 5.0 6.7

4.0 3.0 2.3 2.2 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 2.3 2.2 6.9 5.8 3.1 2.3

17

7.0

The Gambia Monthly Economic Bulletin- October 2009 5.4

Average

18

4.5

4.5

4.5

4.5

The Gambia Monthly Economic Bulletin- October 2009 2.4 Government Fiscal Performance in Jan-Sept 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 three quarters (i.e. Jan-Sep) of 2007, 2008 and 2009 respectively. Column (8) indicates annual percentage changes of major items of revenues and expenditure in Jan-Sep 2009 over those in Jan-Sept 2008 (column 7). • It may be observed from the table that, the government’s fiscal performance has been mixed in Jan-Sep 2009 compared to Jan-Sep 2008, and it is still under pressure. In Jan-Sep 2008 total revenues and grants declined by 0.5%, as tax revenues increased marginally by 0.3% while non-tax revenues declined by 18.2% over Jan-Sep 2007. On contrast, Jan-Sep 2009 has witnessed an increase in total revenue and grants by 15.6% aided by 16.1% increase in taxes, marginal decline by 0.9% in non-tax revenues and 46.2% increase in grants. • During Jan- Sep 2009, total expenditures and net lending has increased by 22.3% over Jan- Sep 2008 due to 13% increase in current expenditure and 54.4% increase of capital expenditure and net lending over Jan- Sep 2008. • Overall, there is a fiscal deficit of D321 million, and basic deficit of D8.5 million in JanSep 2009, compared to a lower fiscal deficit of D109 million and basic surplus of D143.6 million in Jan- Sep 2008. Table-2.4.1 Govt Financial Performance in Jan-Sep 2009 compared with Jan-Sep 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-Sep Actual Mln Dal.

2008 Jan-Sep Actual Mln Dal.

2009 Jan-Sep 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) 2823.9 2747.7 2389.3 358.4 76.2 2645.8 1906.1 488.0 779.7 638.4 202.1 436.3 739.7 664.1 75.7 178.2 687.2 1325.5 20413

(5) 2810.7 2690.3 2397.2 293.1 120.4 2919.7 2262.4 681.9 1033.3 547.2 111.6 435.5 657.3 586.2 71.1 -109.0 143.6 690.8

(6) 3249.8 3073.8 2783.3 290.5 176.0 3571.0 2556.1 787.7 1181.9 586.5 126.7 459.8 1014.9 905.8 109.1 -321.2 -8.5 578.0 25023

22590

22590

% change In JanSep 2008 over JanSep 2007 (7) -0.5 -2.1 0.3 -18.2 58.0 10.4 18.7 39.7 32.5 -14.3 -44.8 -0.2 -11.1 -11.7 -6.1 -161.2 -79.1 -47.9 10.7

% change In JanSep 2009 over JanSep 2008 (8) 15.6 14.3 16.1 -0.9 46.2 22.3 13.0 15.5 14.4 7.2 13.5 5.6 54.4 54.5 53.5 194.6 -105.9 -16.3 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

19

The Gambia Monthly Economic Bulletin- October 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-Sep 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-Sep 2009 than those in Jan-Sep 2008. • The revenue and expenditure ratios to GDP are also observed to be on track in Jan-Sep 2009 (column-6) as compared with the 2009 budget estimates (column-3). Table-2.4.2 Govt Financial Performance in Jan-Sep 2009 compared with Jan-Sep 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-Sep as % of GDP (4)

-0.7

-1.1

2.4

2.3

3.4 6.5

13.8 13.5 11.7 1.8 0.4 13.0 9.3 2.4 3.8 3.1 1.0 2.1 3.6 3.3 0.4 0.9

2008 Jan-Sep as % of GDP (5) 12.4 11.9 10.6 1.3 0.5 12.9 10.0 3.0 4.6 2.4 0.5 1.9 2.9 2.6 0.3 -0.5

2009 Jan-Sep as % of GDP (6) 13.0 12.3 11.1 1.2 0.7 14.3 10.2 3.1 4.7 2.3 0.5 1.8 4.1 3.6 0.4 -1.3

2008 Jan-Sep as % of Outturn (7) 77.1 77.3 75.8 92.3 72.7 70.6 75.1 75.3 73.9 77.2 72.7 78.5 58.5 57.7 66.6 22.2

2009 Jan-Sep as % of Budget (8) 70.9 81.5 82.1 76.4 21.7 66.6 66.6 76.1 60.4 69.4 86.0 65.9 66.6 61.7 192.5 41.1

0.6

0.0

-92.3

3.2

3.1

2.3

124.9

100.1

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

20

The Gambia Monthly Economic Bulletin- October 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-Sep 2009. The ratios of actual realization for any item in Jan-Sep 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 seasonality, 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-June 2009) / average realization ratio (in percentage) in Jan-June in the last five years (2004-2008) Comparison of the expected outcome 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 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) There is likely to be expenditure overrun of capital expenditure, while actual current expenditure is expected to show some surplus over the budgeted current expenditure. (e) Overall, it is expected to have a fiscal deficit of D1082 million (amounting to 4.3% of nominal GDP) compared to budget estimate of fiscal deficit at D780.7 million (amounting to 3.1 percent of GDP). However, basic balance is likely to show some surplus. 2.5.3 Government Fiscal Performance in Jan-Sep 2009 and Expected Outturn for 2009 Items

2009Ratio of Jan-Sep performance in Ave. 2009 JanAnnual Outturn (in Percentage) ratio Proj. Sep 2004Out20042005200620072008Actual 2009 turn7 Ja-Sp Ja-Sp Ja-Sp Ja-Sp Ja-Sp (1) (2) (3) (4) (5) (6) (7) (8) (9) 1.Rev & grants (2+5) 3249.6 77.4 75.5 76.7 77.1 75.0 4610.1 2.Dom. Revenue (3+4) 3073.6 75.3 75.0 76.0 79.2 76.8 4013.1 3.Tax Rev (3.1+3.2) 2783.2 75.6 76.1 76.3 78.3 76.2 3639.9 3.1 Direct Tax (a to e) 831.7 80.2 74.7 81.0 83.2 82.1 1023.3 (a) Personal 331.9 79.8 81.1 78.1 77.3 77.6 78.8 421.3 (b) Corporate 423.9 79.8 69.5 81.8 86.3 93.1 82.1 516.3 (c) Capital Gains 20.9 82.6 81.2 81.4 84.1 42.5 74.4 28.1 (d) Payroll 36.9 91.9 94.3 95.1 96.7 93.4 94.3 39.1 (e) Other 18.1 97.6 97.2 99.4 98.9 98.3 18.4 2.5.3 Government Fiscal Performance in Jan-Sep 2009 and Expected Outturn for 2009 Items 2009 Ratio of Jan-Apr performance in Ave. 2009

7

2009 Budget Estimate

(10) 4582.2 3771.1 3390.6

2009

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)

21

The Gambia Monthly Economic Bulletin- October 2009 JanSep Actual

Annual Outturn (in Percentage) 2004Ja-Sp (3) 73.9 73.4 82.7 68.3 73.8 74.0 75.1 80.3 73.4 72.6 73.9 72.4 72.5 75.0 87.1

2005Ja-Sp (4) 76.8 78.5 78.2 66.3 80.5 76.2 77.8 75.4 78.8 74.5 74.2 74.6 67.8 83.6 83.0 76.0 55.0 80.8

2006Ja-Sp (5) 74.3 73.7 89.5 67.3 74.9 74.5 75.7 77.2 74.9 73.1 75.4 72.4 71.8 76.9 83.9 64.7 89.0

2007Ja-Sp (6) 76.3 77.4 88.2 70.1 79.8 75.9 75.3 77.9 73.9 76.5 75.9 76.6 86.2 93.5 82.3 74.4 84.4 39.2

2008Ja-Sp (7) 72.9 75.5 85.2 75.1 74.8 71.7 70.2 63.6 73.5 73.2 78.7 71.3 82.9 90.1 87.0 75.0 77.9 49.3

ratio 20042009

Proj. Outturn8

(1) (2) (8) (9) 3.2 Indirect Tax 1951.5 2616.6 3.2.1 Dom Tax on G&S 448.0 597.2 (a) Stamp Duties 12.8 84.8 15.1 (b) Excise Duties 109.4 69.4 157.6 (c) Dom Sales Tax 325.8 76.8 424.5 3.2.2 Tax on Ext Trade 1503.5 2019.4 (a) Duty (i+ii) 891.0 1189.9 (i) Oil 504.9 74.9 674.5 (ii) Non-oil 386.1 74.9 515.4 (b) Sale tax on imp (i+ii) 612.5 829.6 (i) Oil 104.1 75.6 137.7 (ii) Non-oil 508.4 73.5 691.9 4. Nontax Rev (a to d) 290.4 76.3 373.2 (a) Govt Charges 139.1 83.8 166.0 (b) NTR from CRD 2.4 84.1 2.9 (c) NTR from CED 78.2 75.1 104.1 (d) Others 70.7 70.5 100.3 5. Grants 176.0 69.1 597.0 6. Exp & Net Lend (7+8) 3571.2 5691.5 75.5 78.9 79.0 72.8 69.0 7. Cur. .Exp (7.1 to 7.3) 2556.1 67.7 75.6 74.9 73.7 73.1 3529.8 7.1 Pers. Emoluments 787.7 73.3 72.8 69.0 71.7 69.4 71.2 1105.7 7.2 Other Charges 1181.9 69.4 72.6 73.2 71.5 73.9 72.1 1638.9 7.3 Interest (a+b) 586.5 63.1 78.9 80.8 78.3 76.7 785.1 (a) External 126.7 71.2 84.1 81.7 87.5 72.7 79.4 165.0 (b) Domestic 459.8 60.3 77.4 80.5 74.7 77.8 74.1 620.1 8. Cap Exp & Net Lend. 1015.1 85.6 83.6 85.6 70.6 57.5 2161.7 8.1 Capital Exp. (a+b) 906.0 85.0 82.8 85.0 68.3 57.7 2006.0 (a) Ext. Financed (i+ii) 517.5 88.9 83.2 86.4 75.0 73.8 81.5 1558.0 (i) Loans 341.5 89.6 83.9 86.0 86.9 74.4 961.0 (ii) Grants 176.0 87.3 79.2 89.0 39.2 72.7 597.0 (b) GLF Capital 388.5 51.4 77.1 58.3 41.0 41.7 53.9 448.0 8.2 Net lending 109.1 49.4 44.6 100.0 100.0 56.3 70.1 155.7 -1081.5 9. Overall fis. bal (1-6) -321.6 10. Basic balance 195.9 476.5 11. Basic Primary Bal. 782.4 1261.7 Memorandum Items: As percentage of IMF Program Nominal GDP (equal to D19904 million) 12. Fiscal bal (1-6) -1.3 -4.3 13. Basic balance 0.8 1.9 14. Basic Primary 3.1 5.0 Balance

8

Budget Estimate

(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)

22

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

At the end of Sept 2009, outstanding domestic debt stood at D5.9 billion (amounting to 23.7% of GDP), down from the outstanding domestic debt at D6.1 billion (amounting to 27% of GDP) a year ago. • The share of Treasury bills increased from 79.6% at the end of Sep 2008 to 84.5% at the end of Sep 2009, share of Sukuk Al-Salam remained unchanged at 2%, that of Government bonds increased marginally from 4.1% to 4.2%, while that of NIB treasury bills declined from 14.2% to 9.2% over the period. Table-2.6-A Outstanding Domestic Public Debt as on 30 Sep 2009

Type of debt

Treasury bills Sukuk Al-Salam Government Bonds

Million Dalasi 30 Sep 2008

30 Sep 2009

4,860 122

5,005 120

250

250

NIB Treasury Notes

873

547

Total

6,105

5,922

22590

25023

27.0

23.7

Nominal GDP (GBOS) As % of nominal GDP

% change in June2009 over June 2008 3.0 -1.7 0.0 -37.4 -3.0

Composition (in percentage) 30 Sep 30 Sep 2008 2009 79.6 84.5 2.0

2.0

4.1

4.2

14.3

9.2

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

23

The Gambia Monthly Economic Bulletin- July 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 CPI inflation from 7% in January 2009 to 2.3% in Sep 2009, Average yields on the 91-day and 364-dat treasury bills remained unchanged at 10.4% and 14.3% respectively and yield of 182-day bills declined marginally from 12.1% in Jan 2009 to 11.7% in Sep 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. 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 162-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 10.6 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

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

Trends of Yields of Treasury Bills during 2007-2009 45 40 35 30 25 20 15 10 5 0

91-D

162-D

364-D

24

364-D 14.4 14.4 14.4

14.6 15.3 15.6 14.4 13.3 14.3

The Gambia Monthly Economic Bulletin- July 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

25

10.6

The Gambia Monthly Economic Bulletin- July 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 21% on yearon-year basis from D11.3 billion at end-Sep 2008 to D13.7 billion at end-Sep 2009.

•

Gambian banks do not have large exposure to foreign assets or foreign liabilities. 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 30% of total assets and the ratio remained fairly stable during 2009. 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.

•

At end-Sept 2009, investments in government Treasury Bills by the banks constituted about 26% of their total assets. As expected, three large banks had the dominant share.

•

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. Table-2.9 Banks’ total loans and non-performing loans (NPL) by sectors in Sept 2009 Sectors

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

Sep 2008 Million Dalasi

Sep 2009 Million Dalasi

Sep 2008 % share

Sep 2009 % share

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

26

Sep 2009 % change over Sep 2008 -8.4 43.0 67.4 49.6 26.3 12.0 50.5 0.8 42.5 31.3

NPL Ml. D. 5.9 10.4 3.1 62.8 21.4 103.1 22.2 12.9 71.8 313.5

NPL as % of Total 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- July 2009

2.10 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 Preliminary BOP estimates for the first half of 2009 (i.e. Jan-June 2009) indicated that the overall 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.

27

The Gambia Monthly Economic Bulletin- July 2009

28