Gambia Monthly Economic Report March 2009
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The Gambia Monthly Economic Bulletin- March 2009
THE GAMBIA MONTHLY ECONOMIC BULLETIN1
March 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. This Bulletin has been prepared by Tarun Das, Macroeconomic Adviser; in association with Tamsir Cham, Director and Ami Khan and Momodou Taal, Principal Economists in the Economic Management and Planning Unit (EMPU) of the Department of State for Financial and Economic Affairs (DOSFEA); with key inputs from the Debt Management Adviser, Fiscal/Financial Adviser, the Gambian Bureau of Statistics (GBOS), the Central Bank of Gambia (CBG) and the Gambian Revenue Authority (GRA). Any questions and feedback can be addressed to: either Tarun Das ([email protected]) or Tamsir Cham ([email protected]).
1
The Gambia Monthly Economic Bulletin- March 2009
At a Glance- March 2009 Economic Indicators
Latest Reference Period
Status in the latest reference period in 2009
Status in the Corresponding period in 2008
Outlook for 2009
1. Inflation, Money Supply, Interest Rates CPI inflation (%) Brent crude oil price (US$/ brl) Money supplyGrowth rate (%)
Feb 2009 Mar 2009 Jan 2009
Overall 7.0 Food 8.8 Non-food 4.8 Average US$45
Overall 5.0 Food 8.1 Non-food 1.2 Average US$104
19.3
3.9
Expected to rise in March-July 2009 & decline thereafter May rise to US$52 in April-May 2009 Money supply growth may be around 16%
2. Government fiscal operations - Percentage change over previous period Revenue Tax Revenue Nontax Revenue Grants Exp & Net Lending Current Exp. Interest Capital Exp. Net Lending Overall fiscal bal. Primary Balance
Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09
-3.9 2.2 -47.9 107.0 -5.2 27.1 16.1 -38.6 -65.4 -156.0 52.2
18.4 17.4 31.5 13.2 4.1 -6.9 -52.6 51.2 -37.1 773.3 11.3
Can be considered to be on track as per Budget estimates. Better performance by revenue items (except for grants) in Jan-Feb 2009 compared with Jan-Feb 2008. Fiscal surplus due to decline of interest payments in Jan-Feb 2009.
3. Government fiscal operations as percentage of GDP at current market prices Rev. and grants Exp & Net Lending Interest Overall fiscal bal. Primary Balance
Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09
3.0 2.6 0.3 0.4 0.7
2.8 2.8 0.6 0.1 0.7
As % of GDP at current market prices, revenues and expenditures are ontrack.
4. Outstanding Domestic Public Debt in Million Dalasi Treasury bills Sukuk Al-Salam Govt Bonds Non-int. bearing Treasury Notes Total
Feb 2009 Feb 2009 Feb 2009 Feb 2009
4696 92 250 873
4749 71 250 415
Feb 2009
5911
5485
2
Outstanding treasury bills are expected to decline.
The Gambia Monthly Economic Bulletin- March 2009
At a Glance- March 2009 Continued Economic Indicators
Latest Reference Period
Status in the latest reference period in 2009
Status in the Corresponding period in 2008
Outlook for 2009
5. Composition of Outstanding Domestic Public Debt (Percentage share in total) Treasury bills Sukuk Al-Salam Govt Bonds Non-int. bearing Treasury Notes Total
Feb 2009 Feb 2009 Feb 2009 Feb 2009
79.5 1.5 4.2 14.8
86.6 1.3 4.6 7.6
Feb 2009
100
100
Share of non-interest bearing Treasury notes is expected to decline.
6. Composition of Interest Bearing Domestic Debt By Holders (in percentage) Central Bank Banks Parastatals Other Non Banks Total
Feb 2008 Feb 2008 Feb 2008 Feb 2008 Feb 2008
8 63 15 14 100
8 56 18 18 100
Likely to remain stable.
7. Composition of Interest Bearing Domestic Debt By Instruments (in percentage) Treasury Bills Sukuk Al Salaam Govt Bonds Total dom. Debt
Feb 2008 Feb 2008 Feb 2008 Feb 2008
93 2 5 100
94 1 5 100
Expected stable.
to
remain
8. Maturity Composition of Treasury Bills (in Percentage) 91-days 182-days 364-days
Feb 2008 Feb 2008 Feb 2008
15 16 69
11 22 67
9. Yields of Treasury Bills (in Percentage) 91-days 182-days 364-days
Feb 2008 Feb 2008 Feb 2008
11.1 12.8 14.4
10.9 11.9 13.7
Yields may come down when CPI inflation decelerates.
10. Annual Growth Rate of Money Supply (Percentage) Broad Money supply (M3) Reserve Money
Jan-2009
19.3
3.9
Jan-2009
12.7
0.1
3
Broad money growth rate is likely to decelerate.
The Gambia Monthly Economic Bulletin- March 2009
At a Glance- March 2009 Continued Economic Indicators
Latest Reference Period
Status in the latest reference period in 2009
Status in the Corresponding period in 2008
Outlook for 2009
11. CBG Policy Rates and Banks’ Lending rates (Percentage per annum) CBG Bank rate Rediscount rate Bank lending rate
Mar 2009 Mar 2009 Mar 2009
10 16 18 to 27
10 15 18 to 27
Banks’ lending rates may decline if the credit rating system is strengthened.
12. Share of Banks Foreign Assets/ Liabilities in Total Assets/ Liabilities (%) Foreign assets Foreign liabilities
Jan 2009 Jan 2009
9.2 3.1
14.4 4..1
Likely to remain stable
13. Balance of Payments (billion Dalasi) Goods A/C Balance Goods exports Goods imports Overall BOP Balance
2008
(-) 5.27
(-) 4.27
2008 2008 2008
2.16 7.41 (-) 1.30
2.27 6.54 0.80
Likely to remain under pressure. Likely to deteriorate further in 2009.
14. Inter-bank Exchange Rate- End Period Mid-Market Rates Dalasi per unit of foreign currency US$ UK £ Euro CHF CFA (5000)
Mar 2009 Mar 2009 Mar 2009 Mar 2009 Mar 2009
26.14 37.25 34.15 22.59 257.18
19.46 40.87 30.82 19.15 239.16
Dalasi is likely to depreciate against major currencies.
15. Foreign Exchange Reserves (US$ Million) FER Inter-bank FE transactions
End-Jan 2009 Jan 2009
116.8
140.4
1300
1700
4
Likely to remain under pressure.
The Gambia Monthly Economic Bulletin- March 2009 1. Global Economic Outlook 1.1 A Tough Year Ahead It is well known that the global economy is now passing through a severe financial crisis and economic slowdown. As per the latest estimates made by the International Monetary Fund, world economic growth has decelerated from 5.2% in 2007 to 3.4% in 2008 and is expected to grow just at 0.5% in 2009, with the downturn led by advanced economies. Activity in the advanced economies is expected to contract by 2% in 2009, the first annual contraction in the postwar period. Developing economies are expected to grow at 3.3% in 2009, down from 6.3% in 2008, while Sub-Saharan Africa is expected to grow at 3.5% in 2009, down from 5.4% in 2008 Unemployment rates are rising across the major economies, especially in the United States and Europe. Based on the expectation that housing prices will turn around sometime in 2009, and there will be continued efforts by the governments and central banks to continue with the expansionary fiscal and monetary stimulus, the global economy is projected to experience a gradual recovery in 2010, with global growth picking up to 3% and SubSaharan African growth to 5% in 2010. 1.2 World Commodity Prices As a result of the sharp downturn in global demand, commodity prices, especially for energy, declined significantly since the last quarter of 2008. Inflationary pressures had subsided in the major advanced economies. Some advanced countries are showing signs of deflation. Inflationary pressures also subsided in the low and income economies. However, commodity prices recorded some increase in January 2009, but declined again in February 2009. 1.3 Petroleum Prices During 2008 Brent crude oil prices ruled very high until July 2008 when prices increased to $147 per barrel. However, due to global financial crisis and economic slowdown oil prices started declining thereafter. In March 2009 crude oil prices ranged around US$45 per barrel. Given weakness in the Chinese demand and negative growth in the US and EU, global oil prices are likely to remain soft in 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, high food grains prices and very good performance by electricity, telecom and financial sectors, the real GDP growth at constant 2004 factor cost improved from 6.1% in 2007 to 7.2% in 2008, supported by a spectacular growth of 28.4% in agriculture value added and a marginal growth of 0.7% by industry while
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The Gambia Monthly Economic Bulletin- March 2009 services value added declined by (-) 0.6% due to poor performance by trade and public administration. •
Agriculture is expected to perform well in 2009, but due to higher base in 2008 the agricultural growth will be moderate in 2009. It is projected that real GDP growth rate in 2009 is likely to be around 4.5% aided by a growth of 6% in agriculture, 2% in industry and 4.4% in services.
Figure 2.1 Trends of Sectoral Growth Rates 1998-2009 40.0 Growth Rate (%)
30.0 20.0 10.0 0.0 -10.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
-20.0 -30.0 Year 1998-2009 GDP
Agriculture
Industry
Services
Table-2.1: Trends of Sectoral Growth Rates and Shares in GDP2 In the Gambia in 2005-2009 (In percentage) I T E MS
GDP at 2004 FC
Sectoral Shares (%)
GDP Growth Rates (%)
2005 Actual 2.0
2006 Actual 6.6
2007 Actual 6.1
2008 Est. 7.2
2009 Proj. 4.5
2005 Actual 100.0
2006 Actual 100.0
2007 Actual 100.0
2008 Est. 100.0
2009 Proj. 100.0
Agriculture and allied
-0.8
3.9
3.9
28.4
6.0
29.1
28.4
27.8
33.4
33.9
Industry
6.2
18.5
-3.1
0.7
2.0
15.8
17.5
16.0
15.0
14.7
Services
3.2
5.7
10.4
-0.6
4.4
60.0
59.5
61.9
57.4
57.4
Source: Gambian Bureau of Statistics (GBOS) for the years 2005-2008 and projections for 2009 by the Macroeconomic Adviser.
2
Gross Domestic Product at Factor Cost at constant 2004 prices. 6
The Gambia Monthly Economic Bulletin- March 2009 2.2 Consumer Price Index and Inflation •
As measured by the Consumer Price Index (CPI), the annual point-to-point inflation accelerated from 5% in February 2008 to 7.0% in February 2009. However, the 12month average inflation rate decelerated to 4.5% from 5.7% a year ago.
•
Food items (with weights of 55.2% in overall CPI) recorded average inflation of 8.8% in Feb 2009 compared to 8.1% a year ago and contributed 72% to inflation in Feb 2009.
•
Non-food items (with weights of 44.8% in overall CPI) recorded annual inflation of 4.8% in February 2009 compared to 1.2% a year ago and contributed 28% to inflation.
•
Among other groups, in February 2009, clothing and textiles recorded annual inflation of 5.4%, housing and utilities 5.9%, restaurants 7.7% and transport 4.4%.
Items
3
Feb-2008
Feb-2009
Inflation (%)
Wi.(CPI1-CPI0)
Overall
Weights (%) 100.0
112.3
Food Tobacco Clothing Utilities Furnishing
55.2 0.7 11.3 3.4 5.2
115.5 103.8 105.3 114.4 110.6
Health Transport Telecom Recreation
1.0 4.4 3.0 8.0
101.0 114.9 101.1 103.6
Education Hotels Misc. non-food
1.5 0.4 5.9 44.8
101.9 107.6 112.3 108.6
120.25 125.57 105.68 110.98 121.18 114.87 101.77 119.93 101.95 104.5 102.24 115.89 124.28 113.79
7.0 8.8 1.8 5.4 5.9 3.9 0.8 4.4 0.9 0.9 0.4 7.7 10.7 4.8
777.3 558.7 1.3 64.1 23.1 22.6 0.8 22.2 2.6 7.5 0.6 3.0 71.0 233.4
Contributio n3 (%) 100.0 71.9 0.2 8.2 3.0 2.9 0.1 2.9 0.3 1.0 0.1 0.4 9.1 28.1
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 558.7 / 777.3 = 71.9%.
7
The Gambia Monthly Economic Bulletin- March 2009 2.3 Government Financial Performance in January-February 2009 • • • •
It may be observed from the following tables that the year 2009 has started with good performance of the government financial operations. As percentage of GDP at current market prices, revenues and expenditures in Jan-Feb 2009 are observed to be on track. In Jan-Feb 2009 revenue and grants increased by 18% aided by 17.4% increase by taxes, 31.5% increase by non-taxes and 13.2% increase by grants over Jan-Feb 2008. Total expenditures and net lending increased by only 4.1% in Jan-Feb 2009 over Jan-Feb 2008 due to decline of current expenditure and interest payments over Jan-Feb 2008. As percentages of the budget figures, government revenue collections and expenditures also performed better in Jan-Feb 2009 than those in Jan-Feb 2008. 2008 Actual Million Dal.
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 fiscal balance Primary Balance Nominal GDP
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 fiscal balance Primary Balance
2008 Budget Mln. Dal.
3644.6 4,475.5 3479 3,770.9 3161.3 3,362.6 317.7 408.3 165.64 704.7 4134.8 5,205.1 3011.4 2,812.3 905.53 917.5 1397.5 1,143.4 708.42 622.3 153.52 72.3 554.89 550.0 1123.4 2,332.8 1016.6 2,223.2 106.77 109.6 -490.2 -729.5 218.2 -107.2 22788 22788 Jan-Feb Actual As % of Budget 2009 2008 16.5 14.3 18.8 15.9 19.4 16.6 13.6 9.6 5.9 6.0 12.2 12.1 11.4 16.7 16.5 16.1 10.2 16.0 7.8 22.2 17.5 77.6 5.7 14.9 14.3 6.9 13.7 6.0 30.0 24.7 -13.0 -1.6 258.4 -139.8
2009 Budget Mln. Dal.
2009 Jan-Feb Actual
4582.2 756.8 3771.1 709.0 3390.5 657.4 380.5 51.6 811.1 47.8 5362.9 655.6 3838.0 436.9 1035.2 171.3 1957.5 200.0 845.3 65.6 147.3 25.7 698.0 39.8 1524.9 218.7 1468.2 201.7 56.7 17.0 -780.7 101.3 64.6 166.9 25253 25253 Budget As % of GDP at CMP 2009 2008 18.3 16.1 15.0 15.4 13.5 14.0 1.5 1.4 3.2 0.7 18.3 21.4 15.3 13.3 4.1 4.0 7.8 6.2 3.1 3.4 0.6 0.7 2.8 2.5 6.1 5.0 5.9 4.5 0.2 0.5 -3.1 -2.2 0.3 1.0
8
2008 Jan-Feb Actual
% change over prev. period J-F-09 J-F-08
18.0 -0.4 641.2 599.0 18.4 -3.9 559.8 17.4 2.2 39.3 31.5 -47.9 13.2 107.0 42.2 629.7 4.1 -5.2 469.2 -6.9 27.1 147.7 16.0 38.3 9.1 28.0 183.3 138.3 -52.6 16.1 56.1 -54.1 8.7 82.2 -51.6 21.7 36.3 -45.7 160.5 133.4 51.2 -38.6 27.0 -37.1 -65.4 11.6 773.3 -156.2 149.9 11.3 52.2 22788 5.5 6.1 Jan-Feb Actual As % of GDP at CMP 2009 2008 3.0 2.8 2.8 2.7 2.6 2.5 0.2 0.2 0.2 0.2 2.8 2.6 1.7 2.1 0.7 0.7 0.8 0.8 0.6 0.3 0.1 0.2 0.2 0.4 0.9 0.7 0.8 0.6 0.1 0.1 0.4 0.1 0.7 0.7
The Gambia Monthly Economic Bulletin- March 2009 . 2.4 Public Debt (a) External Debt The stock of external debt declined substantially at end-2007 following HIPC and MDRI debt relief. At the end of 2006, prior to completion point, the stock of nominal external public debt was US$676.7 million (133.1 percent of GDP). Multilateral creditors accounted for 84 percent of this debt. At end-2007, post-completion point, the stock of external public debt fell to US$299.4 million (46.0 percent of GDP). (b) Outstanding Domestic Debt •
As on 28 February 2009, outstanding domestic debt stood at D5.9 billion (amounting to 24.8% of GDP) compared to D5.5 billion (amounting to 24.3% of GDP) a year ago.
•
Treasury bills, accounting for 79.5% of total domestic debt, declined by 1.1% to D4.7 billion at the end of February 2009.
•
At end-Feb 2009 the CBG provided 8% of interest bearing domestic debt, commercial banks 63%, Parastatals 14%, Sukuk Al Salaam 2% and others 14%. Outstanding Domestic Public Debt, 28 February 2009
Type of debt Treasury bills Sukuk Al-Salam Government Bonds Non-interest bearing Treasury Notes Total
Million Dalasi 28 Feb 2008 28 Feb 2009 4749 4696 71 92 250 250 415 873 5485
5911
Composition (in percentage) 28 Feb 2008 28 Feb 2009 86.6 79.5 1.3 1.5 4.6 4.2 7.6 14.8 100.0
100.0
Composition of Interest Bearing Domestic Debt (in percentage) Book Value 28 Feb 2009 By Holders 8 64 15 13 100 By Instruments 92 2 6 100
Face Value
28 Feb 2008
28 Feb 2008
28 Feb 2009
Central Bank Commercial Banks Parastatals Other Non Banks Total
9 56 18 18 100
8 56 18 18 100
8 63 15 14 100
Treasury Bills Sukuk Al Salaam Government Bonds Total domestic debt (%)
93 2 5 100
94 1 5 100
93 2 5 100
9
The Gambia Monthly Economic Bulletin- March 2009 2.5 Money Supply in January 2009 • • •
Money supply grew by 19.3% in January 2009 compared to 3.9% a year ago. Reserve money increased by 12.7% compared to 0.1% during the same period. Domestic credit increased to D6.7 billion in Jan 2009, by 51.9% over a year ago.
Items Money supply Growth rate (%) Reserve money Growth rate (%)
Jan2008 3.9
Jan2009 19.3
0.1
12.7
Trends of Money Supply in Recent Years
• •
• •
Growth rate of broad money supply had fluctuated over the years. It decelerated from 26.2% in 2006 to 6.7% in 2007 and accelerated again to 18.4% in 2008. A significant slowdown in broad money growth in 2007 reflected improved government finances and stagnant lending to the private sector. Share of quasi money (i.e. deposits) in broad money supply has increased, while that of narrow money (i.e. currency in circulation) has decreased over the years affecting perhaps business transactions. During 2008 there was substantial increase of both time and demand deposits by 33.4% and 30.5% respectively due to significant growth of official deposits, while there was modest growth of savings deposits by 4.8% mainly due to growth in private savings Growth Rates of Money Supply (in percentage)
I T E MS 2006 2007 Broad money (M3) supply 26.2 6.7 Narrow Money (Currency in circulation) 36.0 -12.8 Quasi money (Deposits) 23.3 13.1 Composition of Money Supply (in percentage) Currency/ M3 25.0 20.4 Deposits/ M3 75.0 79.6
Components Money Supply (M3) Money Currency Demand deposits Private sector Official deposits Quasi money Savings deposits Private sector Official deposits Time deposits Private sector Official deposits
Growth Rate (%) 2008 18.4 21.6 8.5 30.5 17.1 170.5 15.0 4.8 5.3 -30.4 33.4 26.3 56.6
10
2008 18.4 8.5 20.9 18.7 81.3
Composition (%) 2007 2008 100.0 100.0 50.9 52.3 20.4 18.7 30.4 33.6 27.8 27.5 2.7 6.1 49.1 47.7 31.6 27.9 31.2 27.7 0.4 0.2 17.6 19.8 13.4 14.3 4.1 5.5
The Gambia Monthly Economic Bulletin- March 2009 2.6 Bank Credits •
Private sector credit rose by 41.3% to D3.8 billion.
•
Credit to distributive trade, building and construction and manufacturing increased by 34.1%, 46.2% and 80.9% respectively in January 2009 over January 2008.
•
In contrast, loans and advances to agriculture, tourism and fishing contracted by 25.8%, 1.4% and 2.4% respectively.
•
2.7 Commercial Banks’ Assets The banking industry remains sound. Total industry assets increased by 19.5% to D12.5 billion year-on-year at end-Dec 2008, and stood at D12.3 billion at end-Jan 2009, up by 14% over those at the end-Jan 2008.
•
Gambian banks do not have large exposure to foreign assets or foreign liabilities. At end-Jan 2009, foreign assets constituted only 9.2% of total assets (foreign exchange 1.9%, balances abroad 6.4% and foreign investment 0.9%), down from 14.4% a year ago (foreign exchange 1.9%, balances abroad 11.7% and foreign investment 0.8%).
•
At end-Jan 2009, loans and advances to the public sector declined by 33.8% while those to the private sector increased by 49.4% over Jan-2008.
•
At end-Jan 2009, investments in government Treasury Bills increased by 10.2 percent while banks’ foreign investment increased by almost 40 percent.
•
The risk-weighted capital adequacy ratio stood at 35.9% in Dec 2008, well above the statutory requirement of 8%.
•
Non-performing loans rose from 7.3% in Sep 2008 to 9.5% in Dec 2008, but were adequately provisioned in compliance with the statutory requirements. 2.8 Commercial Banks’ Liabilities
•
As mentioned earlier, Gambian banks do not have large exposure to foreign liabilities. At end-Jan 2009, external sector related liabilities constituted only 3.1% of total liabilities (non-residents deposits 0.9%, balances with banks abroad 1.6% and external debt 0.6%), down from 4.1% a year ago (non-residents deposits 2%, balances with banks abroad 1.5% and external debt 0.6%).
•
In January 2009 commercial banks’ total deposits increased by 21 percent over January 2008, contributed by a growth of 25.3 percent in demand deposits, 5.1 percent growth in savings deposits and 42.5 percent growth in time deposits.
•
In January 2009 banks capital and reserves increased by 26 percent, bank balances increased by 33.6% while borrowings declined by 38.5% over January 2008.
11
The Gambia Monthly Economic Bulletin- March 2009
Commercial Banks’ Assets at the end of January 2009 (Million Dalasi) Assets
1. Notes and coins 2. Foreign exchange 3. Local Bank balance ii. CBG iii. Banks locally 4. Balances abroad 5. Bills purchased 6. Loans/ advances i. Public sector ii. Private sector 7. Investments i. Govt Treasury Bills ii. Others iii Foreign Investment 8. Fixed assets 9. Guarantees 10. Other assets 11.Total assets 12. Net Balance (11-9)
Jan-08
173.7 205.9 939.5 914.4 25.1 1,266.8 8.1 2,431.1 146.9 2,284.3 ,919.5 2,668.9 168.4 82.2 562.2 1,225.3 1,098.3 10830.6 9605.3
Dec-08
Jan-09
217.3 401.3 854.7 851.9 2.8 758.4 40.9 3,263.1 325.7 2,937.4 3,231.1 2,949.5 139.9 141.6 840.1 1,435.8 1,425.5 12,468.2 11,032.4
204.3 234.5 976.6 912.2 64.4 790.3 1.5 3,510.8 97.3 3,413.5 3,198.4 2,940.6 142.7 115.1 857.2 1,366.5 1,209.3 12349.4 10982.9
Composition (%) Jan-08
Dec-08
Jan-09
% change in Jan-09 over Jan-08
1.6 1.9 8.7 8.4 0.2 11.7 0.1 22.4 1.4 21.1 27.0 24.6 1.6 0.8 5.2 11.3 10.1 100.0 88.7
1.7 3.2 6.9 6.8 0.0 6.1 0.3 26.2 2.6 23.6 25.9 23.7 1.1 1.1 6.7 11.5 11.4 100.0 88.5
1.7 1.9 7.9 7.4 0.5 6.4 0.0 28.4 0.8 27.6 25.9 23.8 1.2 0.9 6.9 11.1 9.8 100.0 88.9
17.6 13.9 4.0 -0.2 156.8 -37.6 -81.9 44.4 -33.8 49.4 9.6 10.2 -15.2 39.9 52.5 11.5 10.1 14.0 14.3
Commercial Banks Liabilities at the end of January 2009 (Million Dalasi) LIABILITIES (IN D'000)
Jan-08
Dec-08
Jan-09 Jan-08
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 Head office & branches ii Other banks abroad 6. Borrowings from i Other banks locally ii Head office & branches iv Other banks abroad 7. Guarantees 8. Other liabilities 9. Total liabilities (1 to 8) 10. Net balance (9-7)
1,242.0 2,419.2 2,184.4 40.7 194.0 2,589.2 2,488.3 83.9 17.1 1,428.6 991.4 88.6 348.6 6,437.0 206.9 47.7 159.2 320.2 251.8 68.4 1,225.3 1,399.2 10,830.6 9,605.3
1,448.0 3,286.7 2,653.5 39.5 593.6 2,737.9 2,638.8 75.0 24.0 1,938.9 1,386.2 18.1 534.6 7,963.5 137.0 86.7 50.3 414.6 12.0 201.1 201.5 1,435.8 1,069.3 12,468.2 11,032.4
1,565.5 3,032.4 2,375.8 24.8 631.7 2,721.6 2,637.5 71.8 12.3 2,035.2 1,444.1 17.6 573.5 7,789.1 276.3 81.9 194.4 196.7 120.4 76.4 1,366.5 1,155.3 12,349.4 10,982.9
Source : Central Bank of The Gambia
12
11.5 22.3 20.2 0.4 1.8 23.9 23.0 0.8 0.2 13.2 9.2 0.8 3.2 59.4 1.9 0.4 1.5 3.0 0.0 2.3 0.6 11.3 12.9 100.0 88.7
Composition (%) Dec-08 Jan-09 11.6 26.4 21.3 0.3 4.8 22.0 21.2 0.6 0.2 15.6 11.1 0.1 4.3 63.9 1.1 0.7 0.4 3.3 0.1 1.6 1.6 11.5 8.6 100.0 88.5
12.7 24.6 19.2 0.2 5.1 22.0 21.4 0.6 0.1 16.5 11.7 0.1 4.6 63.1 2.2 0.7 1.6 1.6 0.0 1.0 0.6 11.1 9.4 100.0 88.9
% change in Jan-09 over Jan-08 26.0 25.3 8.8 -39.0 225.5 5.1 6.0 -14.4 -28.0 42.5 45.7 -80.1 64.5 21.0 33.6 71.7 22.1 -38.5 -52.2 11.6 11.5 -17.4 14.0 14.3
The Gambia Monthly Economic Bulletin- March 2009 2.9 Balance of Payments and Foreign Exchange Reserves •
Balance of Payments estimates indicate an overall deficit of D1.30 billion ($54.6 million) in 2008 compared to an estimated surplus of D796.80 million ($32.0 million) in 2007, reflecting the deterioration in both the current and the capital and financial accounts.
•
The goods account balance deteriorated to a deficit of D5.27 billion in 2008, or by 23.4%. Exports are estimated at D2.16 billion in 2008, or a decrease of 5.1 per cent from 2007. The import bill rose to D7.41 billion, or 13.3 per cent from 2007.
•
Projections for 2009 indicate deterioration in the overall balance emanating from the ongoing slowdown in global economic activity which is expected to adversely impact remittances, foreign direct investment and tourism.
Foreign Exchange Reserves •
Reflecting the widening of the current account deficit, gross external reserves stood at US$116.8 million at end-January 2009 compared to US$140.4 million in January 2008.
•
Volume of transactions in the inter-bank foreign exchange market in the year to endJanuary 2009 amounted to D35.1 billion (US$1.3 billion) compared to D37.8 billion (US$1.7 billion) a year ago. 2.10 Exchange Rate
•
During January to December 2008, the Dalasi depreciated against major international currencies traded in the inter-bank market except the British Pound, reflecting the impact of the global financial crisis on remittances and tourism as well as increased demand for foreign exchange to meet the high cost of imports.
•
Since January 2009, Dalasi has appreciated against major international currencies.
27 March 2009
37.25
26.14
22.59
13
300.00
257.18
34.15
The Gambia Monthly Economic Bulletin- March 2009
3. Recent Policy Developments and Issues 3.1 IMF approves US$9.2 million Augmentation for PRGF In February 2009, the IMF Executive Board has approved US$9.2 million Augmentation and US$7.5 million disbursement for the Gambia under the Poverty Reduction Growth Facility (PRGF) Arrangement to help mitigate the impact of the global slowdown The IMF has complemented the Gambian authorities for the satisfactory implementation of the PRGF-supported program and their commitment to prudent economic policies, which have contributed to robust growth and moderate inflation. Nevertheless, The Gambia was not spared from the adverse impact of the global economic crisis, which led to a decline in foreign exchange reserves and widening of the current account deficit as a result primarily of reduced income from tourism and remittances. The IMF appreciated the commitment of the authorities to achieve sustained growth and poverty reduction by maintaining fiscal discipline, reducing the still high debt level, and promoting private sector development. The government will increase the share of budgetary resources allocated to poverty reduction, in line with the priorities of the poverty reduction strategy, and faster progress toward achieving the Millennium Development Goals (MDGs). Fiscal policy is being strengthened to ensure long-term fiscal sustainability. Going forward, it will be important to improve the revenue base, rationalize taxation, better align the budget with PRSP priorities, and further strengthen public financial management. The IMF also appreciated the commitment of the Central Bank of the Gambia (CBG) to maintain a monetary policy designed to keep inflation at single-digit levels, and to rebuild international reserves for providing a stronger buffer against adverse external developments. However, the IMF cautioned that the Gambia remains at high risk of debt distress, even after receiving HIPC and MDRI debt relief, due to high levels of debt in relation to exports and vulnerability to external shocks. They have requested the government to formulate a national debt strategy to ensure long-term sustainability, and to rely on grants for financing the country's development programs. 3.2 The Joint (Fund-Bank) Staff Advisory Note (JSAN) on PRSP In October 2008 the Gambian National Planning Commission (NPC) completed the first Annual Progress Report (APR) of the 2007 Poverty Reduction Strategy Paper (PRSP). The APR notes that the country’s poverty rates are high and the poor remain highly vulnerable to exogenous shocks. As per the latest poverty survey, fifty eight percent of the households are poor. There are concerns that the high growth in recent years was concentrated in sectors such as telecommunication and tourism which had limited impact on the poverty reduction. In February 2009 the staffs of the IMF and World Bank jointly prepared the Joint Staff Advisory Note (JSAN) on the PRSP-APR for The Gambia. The JSAN recommends the following priority tasks by the government. (a) developing a comprehensive agricultural sector strategy; (b) maintaining macro-economic stability; (c) prioritizing improvement of governance; and (d) refining PRSP performance indicators.
14
THE GAMBIA MONTHLY ECONOMIC BULLETIN1
March 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. This Bulletin has been prepared by Tarun Das, Macroeconomic Adviser; in association with Tamsir Cham, Director and Ami Khan and Momodou Taal, Principal Economists in the Economic Management and Planning Unit (EMPU) of the Department of State for Financial and Economic Affairs (DOSFEA); with key inputs from the Debt Management Adviser, Fiscal/Financial Adviser, the Gambian Bureau of Statistics (GBOS), the Central Bank of Gambia (CBG) and the Gambian Revenue Authority (GRA). Any questions and feedback can be addressed to: either Tarun Das ([email protected]) or Tamsir Cham ([email protected]).
1
The Gambia Monthly Economic Bulletin- March 2009
At a Glance- March 2009 Economic Indicators
Latest Reference Period
Status in the latest reference period in 2009
Status in the Corresponding period in 2008
Outlook for 2009
1. Inflation, Money Supply, Interest Rates CPI inflation (%) Brent crude oil price (US$/ brl) Money supplyGrowth rate (%)
Feb 2009 Mar 2009 Jan 2009
Overall 7.0 Food 8.8 Non-food 4.8 Average US$45
Overall 5.0 Food 8.1 Non-food 1.2 Average US$104
19.3
3.9
Expected to rise in March-July 2009 & decline thereafter May rise to US$52 in April-May 2009 Money supply growth may be around 16%
2. Government fiscal operations - Percentage change over previous period Revenue Tax Revenue Nontax Revenue Grants Exp & Net Lending Current Exp. Interest Capital Exp. Net Lending Overall fiscal bal. Primary Balance
Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09
-3.9 2.2 -47.9 107.0 -5.2 27.1 16.1 -38.6 -65.4 -156.0 52.2
18.4 17.4 31.5 13.2 4.1 -6.9 -52.6 51.2 -37.1 773.3 11.3
Can be considered to be on track as per Budget estimates. Better performance by revenue items (except for grants) in Jan-Feb 2009 compared with Jan-Feb 2008. Fiscal surplus due to decline of interest payments in Jan-Feb 2009.
3. Government fiscal operations as percentage of GDP at current market prices Rev. and grants Exp & Net Lending Interest Overall fiscal bal. Primary Balance
Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09 Jan-Feb 09
3.0 2.6 0.3 0.4 0.7
2.8 2.8 0.6 0.1 0.7
As % of GDP at current market prices, revenues and expenditures are ontrack.
4. Outstanding Domestic Public Debt in Million Dalasi Treasury bills Sukuk Al-Salam Govt Bonds Non-int. bearing Treasury Notes Total
Feb 2009 Feb 2009 Feb 2009 Feb 2009
4696 92 250 873
4749 71 250 415
Feb 2009
5911
5485
2
Outstanding treasury bills are expected to decline.
The Gambia Monthly Economic Bulletin- March 2009
At a Glance- March 2009 Continued Economic Indicators
Latest Reference Period
Status in the latest reference period in 2009
Status in the Corresponding period in 2008
Outlook for 2009
5. Composition of Outstanding Domestic Public Debt (Percentage share in total) Treasury bills Sukuk Al-Salam Govt Bonds Non-int. bearing Treasury Notes Total
Feb 2009 Feb 2009 Feb 2009 Feb 2009
79.5 1.5 4.2 14.8
86.6 1.3 4.6 7.6
Feb 2009
100
100
Share of non-interest bearing Treasury notes is expected to decline.
6. Composition of Interest Bearing Domestic Debt By Holders (in percentage) Central Bank Banks Parastatals Other Non Banks Total
Feb 2008 Feb 2008 Feb 2008 Feb 2008 Feb 2008
8 63 15 14 100
8 56 18 18 100
Likely to remain stable.
7. Composition of Interest Bearing Domestic Debt By Instruments (in percentage) Treasury Bills Sukuk Al Salaam Govt Bonds Total dom. Debt
Feb 2008 Feb 2008 Feb 2008 Feb 2008
93 2 5 100
94 1 5 100
Expected stable.
to
remain
8. Maturity Composition of Treasury Bills (in Percentage) 91-days 182-days 364-days
Feb 2008 Feb 2008 Feb 2008
15 16 69
11 22 67
9. Yields of Treasury Bills (in Percentage) 91-days 182-days 364-days
Feb 2008 Feb 2008 Feb 2008
11.1 12.8 14.4
10.9 11.9 13.7
Yields may come down when CPI inflation decelerates.
10. Annual Growth Rate of Money Supply (Percentage) Broad Money supply (M3) Reserve Money
Jan-2009
19.3
3.9
Jan-2009
12.7
0.1
3
Broad money growth rate is likely to decelerate.
The Gambia Monthly Economic Bulletin- March 2009
At a Glance- March 2009 Continued Economic Indicators
Latest Reference Period
Status in the latest reference period in 2009
Status in the Corresponding period in 2008
Outlook for 2009
11. CBG Policy Rates and Banks’ Lending rates (Percentage per annum) CBG Bank rate Rediscount rate Bank lending rate
Mar 2009 Mar 2009 Mar 2009
10 16 18 to 27
10 15 18 to 27
Banks’ lending rates may decline if the credit rating system is strengthened.
12. Share of Banks Foreign Assets/ Liabilities in Total Assets/ Liabilities (%) Foreign assets Foreign liabilities
Jan 2009 Jan 2009
9.2 3.1
14.4 4..1
Likely to remain stable
13. Balance of Payments (billion Dalasi) Goods A/C Balance Goods exports Goods imports Overall BOP Balance
2008
(-) 5.27
(-) 4.27
2008 2008 2008
2.16 7.41 (-) 1.30
2.27 6.54 0.80
Likely to remain under pressure. Likely to deteriorate further in 2009.
14. Inter-bank Exchange Rate- End Period Mid-Market Rates Dalasi per unit of foreign currency US$ UK £ Euro CHF CFA (5000)
Mar 2009 Mar 2009 Mar 2009 Mar 2009 Mar 2009
26.14 37.25 34.15 22.59 257.18
19.46 40.87 30.82 19.15 239.16
Dalasi is likely to depreciate against major currencies.
15. Foreign Exchange Reserves (US$ Million) FER Inter-bank FE transactions
End-Jan 2009 Jan 2009
116.8
140.4
1300
1700
4
Likely to remain under pressure.
The Gambia Monthly Economic Bulletin- March 2009 1. Global Economic Outlook 1.1 A Tough Year Ahead It is well known that the global economy is now passing through a severe financial crisis and economic slowdown. As per the latest estimates made by the International Monetary Fund, world economic growth has decelerated from 5.2% in 2007 to 3.4% in 2008 and is expected to grow just at 0.5% in 2009, with the downturn led by advanced economies. Activity in the advanced economies is expected to contract by 2% in 2009, the first annual contraction in the postwar period. Developing economies are expected to grow at 3.3% in 2009, down from 6.3% in 2008, while Sub-Saharan Africa is expected to grow at 3.5% in 2009, down from 5.4% in 2008 Unemployment rates are rising across the major economies, especially in the United States and Europe. Based on the expectation that housing prices will turn around sometime in 2009, and there will be continued efforts by the governments and central banks to continue with the expansionary fiscal and monetary stimulus, the global economy is projected to experience a gradual recovery in 2010, with global growth picking up to 3% and SubSaharan African growth to 5% in 2010. 1.2 World Commodity Prices As a result of the sharp downturn in global demand, commodity prices, especially for energy, declined significantly since the last quarter of 2008. Inflationary pressures had subsided in the major advanced economies. Some advanced countries are showing signs of deflation. Inflationary pressures also subsided in the low and income economies. However, commodity prices recorded some increase in January 2009, but declined again in February 2009. 1.3 Petroleum Prices During 2008 Brent crude oil prices ruled very high until July 2008 when prices increased to $147 per barrel. However, due to global financial crisis and economic slowdown oil prices started declining thereafter. In March 2009 crude oil prices ranged around US$45 per barrel. Given weakness in the Chinese demand and negative growth in the US and EU, global oil prices are likely to remain soft in 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, high food grains prices and very good performance by electricity, telecom and financial sectors, the real GDP growth at constant 2004 factor cost improved from 6.1% in 2007 to 7.2% in 2008, supported by a spectacular growth of 28.4% in agriculture value added and a marginal growth of 0.7% by industry while
5
The Gambia Monthly Economic Bulletin- March 2009 services value added declined by (-) 0.6% due to poor performance by trade and public administration. •
Agriculture is expected to perform well in 2009, but due to higher base in 2008 the agricultural growth will be moderate in 2009. It is projected that real GDP growth rate in 2009 is likely to be around 4.5% aided by a growth of 6% in agriculture, 2% in industry and 4.4% in services.
Figure 2.1 Trends of Sectoral Growth Rates 1998-2009 40.0 Growth Rate (%)
30.0 20.0 10.0 0.0 -10.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
-20.0 -30.0 Year 1998-2009 GDP
Agriculture
Industry
Services
Table-2.1: Trends of Sectoral Growth Rates and Shares in GDP2 In the Gambia in 2005-2009 (In percentage) I T E MS
GDP at 2004 FC
Sectoral Shares (%)
GDP Growth Rates (%)
2005 Actual 2.0
2006 Actual 6.6
2007 Actual 6.1
2008 Est. 7.2
2009 Proj. 4.5
2005 Actual 100.0
2006 Actual 100.0
2007 Actual 100.0
2008 Est. 100.0
2009 Proj. 100.0
Agriculture and allied
-0.8
3.9
3.9
28.4
6.0
29.1
28.4
27.8
33.4
33.9
Industry
6.2
18.5
-3.1
0.7
2.0
15.8
17.5
16.0
15.0
14.7
Services
3.2
5.7
10.4
-0.6
4.4
60.0
59.5
61.9
57.4
57.4
Source: Gambian Bureau of Statistics (GBOS) for the years 2005-2008 and projections for 2009 by the Macroeconomic Adviser.
2
Gross Domestic Product at Factor Cost at constant 2004 prices. 6
The Gambia Monthly Economic Bulletin- March 2009 2.2 Consumer Price Index and Inflation •
As measured by the Consumer Price Index (CPI), the annual point-to-point inflation accelerated from 5% in February 2008 to 7.0% in February 2009. However, the 12month average inflation rate decelerated to 4.5% from 5.7% a year ago.
•
Food items (with weights of 55.2% in overall CPI) recorded average inflation of 8.8% in Feb 2009 compared to 8.1% a year ago and contributed 72% to inflation in Feb 2009.
•
Non-food items (with weights of 44.8% in overall CPI) recorded annual inflation of 4.8% in February 2009 compared to 1.2% a year ago and contributed 28% to inflation.
•
Among other groups, in February 2009, clothing and textiles recorded annual inflation of 5.4%, housing and utilities 5.9%, restaurants 7.7% and transport 4.4%.
Items
3
Feb-2008
Feb-2009
Inflation (%)
Wi.(CPI1-CPI0)
Overall
Weights (%) 100.0
112.3
Food Tobacco Clothing Utilities Furnishing
55.2 0.7 11.3 3.4 5.2
115.5 103.8 105.3 114.4 110.6
Health Transport Telecom Recreation
1.0 4.4 3.0 8.0
101.0 114.9 101.1 103.6
Education Hotels Misc. non-food
1.5 0.4 5.9 44.8
101.9 107.6 112.3 108.6
120.25 125.57 105.68 110.98 121.18 114.87 101.77 119.93 101.95 104.5 102.24 115.89 124.28 113.79
7.0 8.8 1.8 5.4 5.9 3.9 0.8 4.4 0.9 0.9 0.4 7.7 10.7 4.8
777.3 558.7 1.3 64.1 23.1 22.6 0.8 22.2 2.6 7.5 0.6 3.0 71.0 233.4
Contributio n3 (%) 100.0 71.9 0.2 8.2 3.0 2.9 0.1 2.9 0.3 1.0 0.1 0.4 9.1 28.1
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 558.7 / 777.3 = 71.9%.
7
The Gambia Monthly Economic Bulletin- March 2009 2.3 Government Financial Performance in January-February 2009 • • • •
It may be observed from the following tables that the year 2009 has started with good performance of the government financial operations. As percentage of GDP at current market prices, revenues and expenditures in Jan-Feb 2009 are observed to be on track. In Jan-Feb 2009 revenue and grants increased by 18% aided by 17.4% increase by taxes, 31.5% increase by non-taxes and 13.2% increase by grants over Jan-Feb 2008. Total expenditures and net lending increased by only 4.1% in Jan-Feb 2009 over Jan-Feb 2008 due to decline of current expenditure and interest payments over Jan-Feb 2008. As percentages of the budget figures, government revenue collections and expenditures also performed better in Jan-Feb 2009 than those in Jan-Feb 2008. 2008 Actual Million Dal.
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 fiscal balance Primary Balance Nominal GDP
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 fiscal balance Primary Balance
2008 Budget Mln. Dal.
3644.6 4,475.5 3479 3,770.9 3161.3 3,362.6 317.7 408.3 165.64 704.7 4134.8 5,205.1 3011.4 2,812.3 905.53 917.5 1397.5 1,143.4 708.42 622.3 153.52 72.3 554.89 550.0 1123.4 2,332.8 1016.6 2,223.2 106.77 109.6 -490.2 -729.5 218.2 -107.2 22788 22788 Jan-Feb Actual As % of Budget 2009 2008 16.5 14.3 18.8 15.9 19.4 16.6 13.6 9.6 5.9 6.0 12.2 12.1 11.4 16.7 16.5 16.1 10.2 16.0 7.8 22.2 17.5 77.6 5.7 14.9 14.3 6.9 13.7 6.0 30.0 24.7 -13.0 -1.6 258.4 -139.8
2009 Budget Mln. Dal.
2009 Jan-Feb Actual
4582.2 756.8 3771.1 709.0 3390.5 657.4 380.5 51.6 811.1 47.8 5362.9 655.6 3838.0 436.9 1035.2 171.3 1957.5 200.0 845.3 65.6 147.3 25.7 698.0 39.8 1524.9 218.7 1468.2 201.7 56.7 17.0 -780.7 101.3 64.6 166.9 25253 25253 Budget As % of GDP at CMP 2009 2008 18.3 16.1 15.0 15.4 13.5 14.0 1.5 1.4 3.2 0.7 18.3 21.4 15.3 13.3 4.1 4.0 7.8 6.2 3.1 3.4 0.6 0.7 2.8 2.5 6.1 5.0 5.9 4.5 0.2 0.5 -3.1 -2.2 0.3 1.0
8
2008 Jan-Feb Actual
% change over prev. period J-F-09 J-F-08
18.0 -0.4 641.2 599.0 18.4 -3.9 559.8 17.4 2.2 39.3 31.5 -47.9 13.2 107.0 42.2 629.7 4.1 -5.2 469.2 -6.9 27.1 147.7 16.0 38.3 9.1 28.0 183.3 138.3 -52.6 16.1 56.1 -54.1 8.7 82.2 -51.6 21.7 36.3 -45.7 160.5 133.4 51.2 -38.6 27.0 -37.1 -65.4 11.6 773.3 -156.2 149.9 11.3 52.2 22788 5.5 6.1 Jan-Feb Actual As % of GDP at CMP 2009 2008 3.0 2.8 2.8 2.7 2.6 2.5 0.2 0.2 0.2 0.2 2.8 2.6 1.7 2.1 0.7 0.7 0.8 0.8 0.6 0.3 0.1 0.2 0.2 0.4 0.9 0.7 0.8 0.6 0.1 0.1 0.4 0.1 0.7 0.7
The Gambia Monthly Economic Bulletin- March 2009 . 2.4 Public Debt (a) External Debt The stock of external debt declined substantially at end-2007 following HIPC and MDRI debt relief. At the end of 2006, prior to completion point, the stock of nominal external public debt was US$676.7 million (133.1 percent of GDP). Multilateral creditors accounted for 84 percent of this debt. At end-2007, post-completion point, the stock of external public debt fell to US$299.4 million (46.0 percent of GDP). (b) Outstanding Domestic Debt •
As on 28 February 2009, outstanding domestic debt stood at D5.9 billion (amounting to 24.8% of GDP) compared to D5.5 billion (amounting to 24.3% of GDP) a year ago.
•
Treasury bills, accounting for 79.5% of total domestic debt, declined by 1.1% to D4.7 billion at the end of February 2009.
•
At end-Feb 2009 the CBG provided 8% of interest bearing domestic debt, commercial banks 63%, Parastatals 14%, Sukuk Al Salaam 2% and others 14%. Outstanding Domestic Public Debt, 28 February 2009
Type of debt Treasury bills Sukuk Al-Salam Government Bonds Non-interest bearing Treasury Notes Total
Million Dalasi 28 Feb 2008 28 Feb 2009 4749 4696 71 92 250 250 415 873 5485
5911
Composition (in percentage) 28 Feb 2008 28 Feb 2009 86.6 79.5 1.3 1.5 4.6 4.2 7.6 14.8 100.0
100.0
Composition of Interest Bearing Domestic Debt (in percentage) Book Value 28 Feb 2009 By Holders 8 64 15 13 100 By Instruments 92 2 6 100
Face Value
28 Feb 2008
28 Feb 2008
28 Feb 2009
Central Bank Commercial Banks Parastatals Other Non Banks Total
9 56 18 18 100
8 56 18 18 100
8 63 15 14 100
Treasury Bills Sukuk Al Salaam Government Bonds Total domestic debt (%)
93 2 5 100
94 1 5 100
93 2 5 100
9
The Gambia Monthly Economic Bulletin- March 2009 2.5 Money Supply in January 2009 • • •
Money supply grew by 19.3% in January 2009 compared to 3.9% a year ago. Reserve money increased by 12.7% compared to 0.1% during the same period. Domestic credit increased to D6.7 billion in Jan 2009, by 51.9% over a year ago.
Items Money supply Growth rate (%) Reserve money Growth rate (%)
Jan2008 3.9
Jan2009 19.3
0.1
12.7
Trends of Money Supply in Recent Years
• •
• •
Growth rate of broad money supply had fluctuated over the years. It decelerated from 26.2% in 2006 to 6.7% in 2007 and accelerated again to 18.4% in 2008. A significant slowdown in broad money growth in 2007 reflected improved government finances and stagnant lending to the private sector. Share of quasi money (i.e. deposits) in broad money supply has increased, while that of narrow money (i.e. currency in circulation) has decreased over the years affecting perhaps business transactions. During 2008 there was substantial increase of both time and demand deposits by 33.4% and 30.5% respectively due to significant growth of official deposits, while there was modest growth of savings deposits by 4.8% mainly due to growth in private savings Growth Rates of Money Supply (in percentage)
I T E MS 2006 2007 Broad money (M3) supply 26.2 6.7 Narrow Money (Currency in circulation) 36.0 -12.8 Quasi money (Deposits) 23.3 13.1 Composition of Money Supply (in percentage) Currency/ M3 25.0 20.4 Deposits/ M3 75.0 79.6
Components Money Supply (M3) Money Currency Demand deposits Private sector Official deposits Quasi money Savings deposits Private sector Official deposits Time deposits Private sector Official deposits
Growth Rate (%) 2008 18.4 21.6 8.5 30.5 17.1 170.5 15.0 4.8 5.3 -30.4 33.4 26.3 56.6
10
2008 18.4 8.5 20.9 18.7 81.3
Composition (%) 2007 2008 100.0 100.0 50.9 52.3 20.4 18.7 30.4 33.6 27.8 27.5 2.7 6.1 49.1 47.7 31.6 27.9 31.2 27.7 0.4 0.2 17.6 19.8 13.4 14.3 4.1 5.5
The Gambia Monthly Economic Bulletin- March 2009 2.6 Bank Credits •
Private sector credit rose by 41.3% to D3.8 billion.
•
Credit to distributive trade, building and construction and manufacturing increased by 34.1%, 46.2% and 80.9% respectively in January 2009 over January 2008.
•
In contrast, loans and advances to agriculture, tourism and fishing contracted by 25.8%, 1.4% and 2.4% respectively.
•
2.7 Commercial Banks’ Assets The banking industry remains sound. Total industry assets increased by 19.5% to D12.5 billion year-on-year at end-Dec 2008, and stood at D12.3 billion at end-Jan 2009, up by 14% over those at the end-Jan 2008.
•
Gambian banks do not have large exposure to foreign assets or foreign liabilities. At end-Jan 2009, foreign assets constituted only 9.2% of total assets (foreign exchange 1.9%, balances abroad 6.4% and foreign investment 0.9%), down from 14.4% a year ago (foreign exchange 1.9%, balances abroad 11.7% and foreign investment 0.8%).
•
At end-Jan 2009, loans and advances to the public sector declined by 33.8% while those to the private sector increased by 49.4% over Jan-2008.
•
At end-Jan 2009, investments in government Treasury Bills increased by 10.2 percent while banks’ foreign investment increased by almost 40 percent.
•
The risk-weighted capital adequacy ratio stood at 35.9% in Dec 2008, well above the statutory requirement of 8%.
•
Non-performing loans rose from 7.3% in Sep 2008 to 9.5% in Dec 2008, but were adequately provisioned in compliance with the statutory requirements. 2.8 Commercial Banks’ Liabilities
•
As mentioned earlier, Gambian banks do not have large exposure to foreign liabilities. At end-Jan 2009, external sector related liabilities constituted only 3.1% of total liabilities (non-residents deposits 0.9%, balances with banks abroad 1.6% and external debt 0.6%), down from 4.1% a year ago (non-residents deposits 2%, balances with banks abroad 1.5% and external debt 0.6%).
•
In January 2009 commercial banks’ total deposits increased by 21 percent over January 2008, contributed by a growth of 25.3 percent in demand deposits, 5.1 percent growth in savings deposits and 42.5 percent growth in time deposits.
•
In January 2009 banks capital and reserves increased by 26 percent, bank balances increased by 33.6% while borrowings declined by 38.5% over January 2008.
11
The Gambia Monthly Economic Bulletin- March 2009
Commercial Banks’ Assets at the end of January 2009 (Million Dalasi) Assets
1. Notes and coins 2. Foreign exchange 3. Local Bank balance ii. CBG iii. Banks locally 4. Balances abroad 5. Bills purchased 6. Loans/ advances i. Public sector ii. Private sector 7. Investments i. Govt Treasury Bills ii. Others iii Foreign Investment 8. Fixed assets 9. Guarantees 10. Other assets 11.Total assets 12. Net Balance (11-9)
Jan-08
173.7 205.9 939.5 914.4 25.1 1,266.8 8.1 2,431.1 146.9 2,284.3 ,919.5 2,668.9 168.4 82.2 562.2 1,225.3 1,098.3 10830.6 9605.3
Dec-08
Jan-09
217.3 401.3 854.7 851.9 2.8 758.4 40.9 3,263.1 325.7 2,937.4 3,231.1 2,949.5 139.9 141.6 840.1 1,435.8 1,425.5 12,468.2 11,032.4
204.3 234.5 976.6 912.2 64.4 790.3 1.5 3,510.8 97.3 3,413.5 3,198.4 2,940.6 142.7 115.1 857.2 1,366.5 1,209.3 12349.4 10982.9
Composition (%) Jan-08
Dec-08
Jan-09
% change in Jan-09 over Jan-08
1.6 1.9 8.7 8.4 0.2 11.7 0.1 22.4 1.4 21.1 27.0 24.6 1.6 0.8 5.2 11.3 10.1 100.0 88.7
1.7 3.2 6.9 6.8 0.0 6.1 0.3 26.2 2.6 23.6 25.9 23.7 1.1 1.1 6.7 11.5 11.4 100.0 88.5
1.7 1.9 7.9 7.4 0.5 6.4 0.0 28.4 0.8 27.6 25.9 23.8 1.2 0.9 6.9 11.1 9.8 100.0 88.9
17.6 13.9 4.0 -0.2 156.8 -37.6 -81.9 44.4 -33.8 49.4 9.6 10.2 -15.2 39.9 52.5 11.5 10.1 14.0 14.3
Commercial Banks Liabilities at the end of January 2009 (Million Dalasi) LIABILITIES (IN D'000)
Jan-08
Dec-08
Jan-09 Jan-08
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 Head office & branches ii Other banks abroad 6. Borrowings from i Other banks locally ii Head office & branches iv Other banks abroad 7. Guarantees 8. Other liabilities 9. Total liabilities (1 to 8) 10. Net balance (9-7)
1,242.0 2,419.2 2,184.4 40.7 194.0 2,589.2 2,488.3 83.9 17.1 1,428.6 991.4 88.6 348.6 6,437.0 206.9 47.7 159.2 320.2 251.8 68.4 1,225.3 1,399.2 10,830.6 9,605.3
1,448.0 3,286.7 2,653.5 39.5 593.6 2,737.9 2,638.8 75.0 24.0 1,938.9 1,386.2 18.1 534.6 7,963.5 137.0 86.7 50.3 414.6 12.0 201.1 201.5 1,435.8 1,069.3 12,468.2 11,032.4
1,565.5 3,032.4 2,375.8 24.8 631.7 2,721.6 2,637.5 71.8 12.3 2,035.2 1,444.1 17.6 573.5 7,789.1 276.3 81.9 194.4 196.7 120.4 76.4 1,366.5 1,155.3 12,349.4 10,982.9
Source : Central Bank of The Gambia
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11.5 22.3 20.2 0.4 1.8 23.9 23.0 0.8 0.2 13.2 9.2 0.8 3.2 59.4 1.9 0.4 1.5 3.0 0.0 2.3 0.6 11.3 12.9 100.0 88.7
Composition (%) Dec-08 Jan-09 11.6 26.4 21.3 0.3 4.8 22.0 21.2 0.6 0.2 15.6 11.1 0.1 4.3 63.9 1.1 0.7 0.4 3.3 0.1 1.6 1.6 11.5 8.6 100.0 88.5
12.7 24.6 19.2 0.2 5.1 22.0 21.4 0.6 0.1 16.5 11.7 0.1 4.6 63.1 2.2 0.7 1.6 1.6 0.0 1.0 0.6 11.1 9.4 100.0 88.9
% change in Jan-09 over Jan-08 26.0 25.3 8.8 -39.0 225.5 5.1 6.0 -14.4 -28.0 42.5 45.7 -80.1 64.5 21.0 33.6 71.7 22.1 -38.5 -52.2 11.6 11.5 -17.4 14.0 14.3
The Gambia Monthly Economic Bulletin- March 2009 2.9 Balance of Payments and Foreign Exchange Reserves •
Balance of Payments estimates indicate an overall deficit of D1.30 billion ($54.6 million) in 2008 compared to an estimated surplus of D796.80 million ($32.0 million) in 2007, reflecting the deterioration in both the current and the capital and financial accounts.
•
The goods account balance deteriorated to a deficit of D5.27 billion in 2008, or by 23.4%. Exports are estimated at D2.16 billion in 2008, or a decrease of 5.1 per cent from 2007. The import bill rose to D7.41 billion, or 13.3 per cent from 2007.
•
Projections for 2009 indicate deterioration in the overall balance emanating from the ongoing slowdown in global economic activity which is expected to adversely impact remittances, foreign direct investment and tourism.
Foreign Exchange Reserves •
Reflecting the widening of the current account deficit, gross external reserves stood at US$116.8 million at end-January 2009 compared to US$140.4 million in January 2008.
•
Volume of transactions in the inter-bank foreign exchange market in the year to endJanuary 2009 amounted to D35.1 billion (US$1.3 billion) compared to D37.8 billion (US$1.7 billion) a year ago. 2.10 Exchange Rate
•
During January to December 2008, the Dalasi depreciated against major international currencies traded in the inter-bank market except the British Pound, reflecting the impact of the global financial crisis on remittances and tourism as well as increased demand for foreign exchange to meet the high cost of imports.
•
Since January 2009, Dalasi has appreciated against major international currencies.
27 March 2009
37.25
26.14
22.59
13
300.00
257.18
34.15
The Gambia Monthly Economic Bulletin- March 2009
3. Recent Policy Developments and Issues 3.1 IMF approves US$9.2 million Augmentation for PRGF In February 2009, the IMF Executive Board has approved US$9.2 million Augmentation and US$7.5 million disbursement for the Gambia under the Poverty Reduction Growth Facility (PRGF) Arrangement to help mitigate the impact of the global slowdown The IMF has complemented the Gambian authorities for the satisfactory implementation of the PRGF-supported program and their commitment to prudent economic policies, which have contributed to robust growth and moderate inflation. Nevertheless, The Gambia was not spared from the adverse impact of the global economic crisis, which led to a decline in foreign exchange reserves and widening of the current account deficit as a result primarily of reduced income from tourism and remittances. The IMF appreciated the commitment of the authorities to achieve sustained growth and poverty reduction by maintaining fiscal discipline, reducing the still high debt level, and promoting private sector development. The government will increase the share of budgetary resources allocated to poverty reduction, in line with the priorities of the poverty reduction strategy, and faster progress toward achieving the Millennium Development Goals (MDGs). Fiscal policy is being strengthened to ensure long-term fiscal sustainability. Going forward, it will be important to improve the revenue base, rationalize taxation, better align the budget with PRSP priorities, and further strengthen public financial management. The IMF also appreciated the commitment of the Central Bank of the Gambia (CBG) to maintain a monetary policy designed to keep inflation at single-digit levels, and to rebuild international reserves for providing a stronger buffer against adverse external developments. However, the IMF cautioned that the Gambia remains at high risk of debt distress, even after receiving HIPC and MDRI debt relief, due to high levels of debt in relation to exports and vulnerability to external shocks. They have requested the government to formulate a national debt strategy to ensure long-term sustainability, and to rely on grants for financing the country's development programs. 3.2 The Joint (Fund-Bank) Staff Advisory Note (JSAN) on PRSP In October 2008 the Gambian National Planning Commission (NPC) completed the first Annual Progress Report (APR) of the 2007 Poverty Reduction Strategy Paper (PRSP). The APR notes that the country’s poverty rates are high and the poor remain highly vulnerable to exogenous shocks. As per the latest poverty survey, fifty eight percent of the households are poor. There are concerns that the high growth in recent years was concentrated in sectors such as telecommunication and tourism which had limited impact on the poverty reduction. In February 2009 the staffs of the IMF and World Bank jointly prepared the Joint Staff Advisory Note (JSAN) on the PRSP-APR for The Gambia. The JSAN recommends the following priority tasks by the government. (a) developing a comprehensive agricultural sector strategy; (b) maintaining macro-economic stability; (c) prioritizing improvement of governance; and (d) refining PRSP performance indicators.
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