Gambia Monthly Economic Abstract June 2009

8/14/2019 Gambia Monthly Economic Abstract June 2009

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The Gambia Monthly Economic Abstract- June 2009

THE GAMBIA MONTHLY

ECONOMIC ABSTRACT1

June 2009

Institutional Support Project for Economic and Financial Governance (ISPEFG)Department of State for Finance and Economic Affairs (DOSFEA)

The Republic of GambiaThe Quadrangle, Banjul, the Gambia

1The Gambia Monthly Economic Abstractis an abridged version ofthe Gambia Monthly/ QuarterlyEconomic Bulletin published every month. Itprovides a brief account of the current state of the Gambian

economy. The Abstract has been prepared jointly by Dr. Tamsir Cham, Director; Economic Management

and Planning Unit (EMPU) and Dr. Tarun Das, Macroeconomic Adviser (ISPEFG), Ministry of Finance

and Economic Affairs (MOFEA) under the overall direction of the Permanent Secretary, MOFEA.

Any questions and feedback can be addressed to: Either Tamsir Cham ([email protected])

or Tarun Das ([email protected])

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mailto:[email protected]:[email protected]:[email protected]:[email protected]


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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 DecemberItems (Year) Units Value Rank in the World

from topin descending order

Area (2009) Sq. km. 11,300 171 out of 248countries

Population (2008) Million 1.735 148 out of 241countries

GDP PPP (2004) Million US$ 3284 167 out of 224countriesGDP Nominal (2006) Million US$ 511 199 out of 229

countriesGDP PPP per capita (2004) US$ 1945 177 out of 223

countriesGDP per capita (2006) US$ 329 192 out of 207

countriesPoverty Ratio (% of people Percent 59 7 out of 59 countries

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below One-US$) (2000)

Source:http://www.nationmaster.com

3
http://www.nationmaster.com/http://www.nationmaster.com/http://www.nationmaster.com/


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HIGHLIGHTS

CPI Inflation and Oil Prices

Annual point-to-point CPI inflation accelerated from 1.6% (Food 1.9% and non-food 1%) in May

2008 to 5.9% (Food 7.1% and non-food 4.5%) in May 2009. The 12-month average inflation ratealso accelerated to 5.8% in May 2009 from 4.9% a year ago.

Given global economic slowdown, 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 andincreased to US$60/barrel in May 2009 and US$70/barrel in June 2009.

Government Financial Performance

Government Financial Performance was mixed in the first half of 2009 (Jan-June 2009) than in

the first half of 2008. In Jan-June 2009 revenue and grants increased by 15.5% aided by 13.3%increase in taxes, 8.9% increase in non-taxes and 63.7% increase in grants over Jan-June 2008.

Overall, there was a fiscal deficit of 198 million Dalasi in Jan-June 2009, higher than the fiscal

deficit of 86 million Dalasi in Jan-June 2008, due to significant increase of capital expenditure by55.2% in Jan-June 2009 over Jan-June 2008,

Domestic Debt and Treasury Bills Yields

At the end of May 2009, outstanding domestic debt stood at D5.6 billion (28.4% of GDP),

compared to D6 billion (33.3% of GDP) a year ago. Treasury bills accounted for 84.5% of totaldomestic debt at the end of May 2009, compared to 80.4% a year ago.

Despite significant decline of CPI inflation from 7% in Jan 2009 to 5.9% in May 2009, average

yield on the 91-day increased from 10.5% in Jan 2009 to 12.5% in May 2009, yield of 182-daybills from 12.1% to 13.8% and that of 364-day bills from 14.4% to 15.3% over the period.

Money Supply and Bank Credits

Annual growth rate of broad money supply (M3) accelerated from 7.5% in May 2008 to 17.3% in

May 2009, supported by 18.1% growth in currency, 10.4% growth in demand deposits, 10.8%growth in savings deposits and 38.1% growth in time deposits. On the demand side, growth wasmainly due to 35% growth in domestic credits.

Domestic credit increased from D5.2 billion in May 2008 to D7 billion in May 2009, supported by

44.1% growth in government borrowing, 67.3% growth in credits to public entities and 33.3%growth in credits to the private sector.

Gambian banks were least affected by global financial crisis as the Gambian banks do not have

large exposure to foreign assets or liabilities. At end- May 2009, foreign assets constituted only

7.5% of total assets and external liabilities constituted only 1.5% of total liabilities.

Foreign Exchange Reserves and Exchange Rate

At end-May 2009, international reserves stood at US$119.7 million equal to 4 months of import.

In June 2009, the Dalasi depreciated against the major currencies viz. the British Pound, Swedish

Kroner, CFA Franc, Euro and US dollar over June 2008.

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At a Glance- June 2009

EconomicIndicators

LatestReference

Period

Status in thelatest

referenceperiod

Status in theCorresponding

period in theprevious year

Outlook for 2009

Real GDP (FC)Growth rate (%) Calendar year2008 Overall 7.2Agriculture 28.4Industry 0.7Services (-)0.6

Overall 6.1Agriculture 3.9Industry (-)3.1Services 10.4

Overall 3.6 to 4.5Agriculture 4.0 to 6.0Industry 2.0 to 2.4Services 2.4 to 4.4

CPI inflation (%) May 2009 Overall 5.9Food 7.1Non-food 4.5

Overall 1.6Food 1.9Non-food 1.0

Expected to decline inthe remaining months ofthe year

Brent crude oil price(US$/ brl)

June 2009 Average US$50 AverageUS$132

May stabilize aroundUS$60 by the end-2009

Growth rate (%) ofRevenue & grants

Jan-June 2009 15.5 -1.2

Growth rate (%) of CapExp & NL

Jan- June 2009 67.8 -16.7

Fiscal performance in 2009may not be better than in2008.

Rev. and grants as %

of nominal GDP

Jan-June 2009 11.1 10.7

Exp & NL as % ofnominal GDP

Jan-June 2009 12.1 11.2

Overall fiscal bal. as %of GDP

Jan-June 2009 -1.0 -0.5

Basic Balance as % ofnominal GDP

Jan-June 2009 0.8 0.4

Primary Bas. Bal, as %of GDP

Jan-June 2009 2.8 2.5

As % of GDP at current

market prices, revenues,expenditures and basicbalance are off-track.

Domestic debt as %of GDP

May 2009 28.4% 33.3% Likely to decline in 2009.

Yield of 91-days(in %)

May 200912.5 10.2

Yield of 182-days

(%)

May 2009

13.8 11.3Yield of 364-days(%)

May 200915.3 13.0

Yields may come downas CPI inflation hasstarted decelerating.

GR of Money supply(M3) (%)

May 2009 17.3 7.5 Money supply GR islikely to decelerate.

CBG Rediscountrate (%)

June 2009 16 15 Likely to remain stable.

Banks foreign assetsas % of total assets

May 2009 7.5 11.7

Foreign liabilities as% of total liabilities

May 2009 1.5 2.8

Likely to remain stable

Dalasi /UK 10 July 2009 43.73 41.65Dalasi/ US$ 10 July 2009 26.63 20.94

Dalasi/ CHF 10 July 2009 24.50 19.90Dalasi/ Euro 10 July 2009 37.50 32.21Dalasi/ CFA (5000) 10 July 2009 274.00 251.05

Dalasi is likely todepreciate against major

currencies during theyear 2009.

Foreign ExchangeReserves (US$ Mln)

End-May 2009 119.7 140.4 Likely to remain under pressure.

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1. Consumer Price Index and Inflation

As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflationaccelerated significantly from 1.6% in May 2008 to 5.9% in May 2009, and the 12-monthaverage inflation rate accelerated to 5.8% in May 2009 from 4.9% a year ago.

Food and drinks (with weights of 55.2% in overall CPI) recorded average inflation of7.1% in May 2009, up from 1.9% a year ago, and contributed 70.8% to overall inflation inMay 2009.

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

Among other groups, in May 2009, clothing and textiles recorded annual inflation of4.7%, housing and utilities 5.5%, restaurants and hotels 5.8% and house rent 3.1%.

Table-1 CPI Inflation Rates in May 2009 (in percentage)

Items WeightsWi (%)

May-2008Index

May-2009Index

Inflation(%)

Wi (CPIi1CPIi0)

Contribution2 (%)

Overall 100.0 113.81 120.51 5.9 652.2 100.0Food 55.2 117.39 125.75 7.1 461.5 70.8Tobacco 0.7 104.30 106.13 1.8 1.3 0.2Clothing 11.3 106.25 111.2 4.7 55.7 8.5Utilities 3.4 115.77 122.11 5.5 21.6 3.3Furnishing 5.2 111.52 114.97 3.1 18.1 2.8Health 1.0 101.04 101.77 0.7 0.7 0.1Transport 4.4 118.86 119.95 0.9 4.8 0.7Telecom 3.0 101.54 101.98 0.4 1.3 0.2

Recreation 8.0 103.94 104.67 0.7 5.8 0.9Education 1.5 101.87 102.25 0.4 0.6 0.1Hotels 0.4 109.89 116.3 5.8 2.3 0.4Misc. 5.9 112.56 125.79 11.8 78.4 12.0non-food 44.8 109.08 114.03 4.5 221.7 29.2

Source of basic data: Gambian Bureau of Statistics (GBOS).

2Contribution of an item to overall inflation is estimated by the following formula:

Contribution of Item (i) = W i (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 = Wi

For example, contribution of food is estimated as 100 X 525.0 / 746.7 = 70.3%.

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Sub-group wise inflation in May 2009 (%)

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

Overall

Tobacco

Utilities

Health

Telecom

Education

Misc.

Series1

Contribution to Inflation in May 2009 (%)

Food

70%

Clothing

9%

Utilities

3%

Furnishing

3%

Transport

1%Others

14%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

07-Ja

Mar

May

Jul

Sp

Nv

08-Ja

Mar

May

Jul

Sp

Nv

09-Ja

Mar

May

Food

All

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2 World Commodity Prices and Inflation

As a result of the sharp downturn in global demand, commodity prices, especially for energy,declined significantly since the last quarter of 2008. Inflation will continue to retreat due to thecombination of lower commodity prices and increasing economic slackness, with deflation risksgrowing in advanced economies. IMF forecasts indicate that G-7 deflation vulnerability has risen

above its previous peak, reflecting high risks in Japan and the United States and moderate risksin several euro area members including Germany, Italy and France.

Inflationary pressures also subsided in the low and income economies. Although commodityprices recorded some increase in January 2009, they declined again during Feb-April 2009.With some evidence of green shoots in the developed countries, most of the commodity pricesshowed some upward trends in May-June 2009 (Table-2). However, they are still much lowerthan their peaks of mid-2008.

2.1 Trends of International Crude Oil Prices

During 2008 Brent crude oil prices ruled very high until July 2008 when prices increased to $147

per barrel. However, due to global financial crisis and economic slowdown oil prices starteddeclining thereafter. A recent report from the Paris based International Energy Agency (IEA) hasprojected that the world oil demand in 2009 will decline by half a million barrels per day (bpd). Intheir last meeting, the OPEC has decided not to have any cut in oil supply. Accordingly, oilprices are expected to remain soft in the rest of the year 2009.

In March-April 2009 Brent crude oil prices ranged around US$47 per barrel. Given weakness in theChinese demand and negative growth in the US and EU and OPECs decision to have no supply cuts,global crude oil prices were projected to remain soft and rule around $51 per barrel in 2009. However,since April 2009 petroleum prices started rising and increased to US$60 per barrel in May 2009 and ruledaround US$70 in June 2009.

Trends of Monthly Brent Crude Oil Prices (US$/ barrel)

0

20

40

60

80

100

120

140

Jan-99

Jul-99

Jan-0

Jul-00

Jan-01

Jul-01

Jan-0

Jul-02

Jan-0

Jul-03

Jan-0

Jul-0

Jan-0

Jul-05

Jan-0

Jul-06

Jan-0

Jul-0

Jan-0

Jul-08

Jan-09

Months and Years 1999-2009

US$perBa

Series1

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Table-2 Trends of World Commodity Prices

Quarterly averages Monthly averages

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar

Apr-Jun Apr May Jun

Commodity Unit 2008 2008 2008 2009 2009 2009 2009 2009

EnergyCoal, Australia a/ $/mt 138.65 162.80 92.97 71.93 66.48 63.56 64.50 71.38

Crude oil, Brent a/ $/bbl 122.39 115.60 55.89 44.98 59.13 50.85 57.94 68.62Crude oil, Dubai a/ $/bbl 116.67 113.47 53.67 44.56 58.93 50.18 57.40 69.21

Natural gas, Europe a/ $/mmbtu 12.40 14.62 15.75 11.94 8.18 8.51 8.09 7.95

Natural gas, US a/ $/mmbtu 11.35 9.03 6.40 4.57 3.71 3.50 3.81 3.81Beverages

Cocoa b/ /kg 276.4 282.6 224.1 259.7 258.7 258.1 247.5 270.4

Coffee, Arabica b/ /kg 315.1 321.2 267.8 283.9 320.2 297.4 332.9 330.2

Tea, Mombasa auctions b/ /kg 221.6 252.8 190.8 214.9 228.0 221.0 222.3 240.8Fats and Oils

Coconut oil b/ $/mt 1,499 1,246 772 677 781 747 843 754

Copra $/mt 1,013 817 520 447 513 499 559 480

Groundnut oil b/ $/mt 2,328 2,417 1,773 1,283 1,165 1,187 1,157 1,151

Palm oil b/ $/mt 1,198 928 512 577 744 702 801 730

Soybean oil b/ $/mt 1,466 1,353 830 755 859 801 892 885

Soybeans b/ $/mt 585 566 377 394 460 414 465 502Grains

Barley b/ $/mt 239.1 216.6 129.5 116.3 129.5 111.3 128.7 148.5Maize b/ $/mt 259.0 244.7 168.4 166.9 176.0 168.5 179.9 179.5

Rice, Thailand, 35% $/mt n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Sorghum $/mt 246.9 214.7 151.0 145.3 148.1 154.1 160.1 130.0

Wheat, US, HRW b/ $/mt 346.5 317.7 228.1 231.6 250.5 234.2 262.3 255.1

Wheat US SRW $/mt 277.8 241.5 182.7 187.4 195.6 182.6 202.5 201.7Other Food

Bananas EU $/mt 1,263 1,123 944 1,142 1,280 1,292 1,286 1,262

Fishmeal $/mt 1,185 1,198 1,023 1,013 1,096 1,040 1,103 1,146

Meat, beef b/ /kg 332.7 372.4 268.0 245.2 262.8 255.5 263.7 269.2

Meat, chicken b/ /kg 167.9 177.1 174.7 173.5 174.1 171.2 174.5 176.7

Meat, sheep /kg 493.2 477.3 410.0 378.5 428.8 404.4 427.7 454.4

Oranges b/ $/mt 1,322 1,163 842 799 864 905 888 798

Shrimp, Mexico b/ /kg 1,109 1,048 1,014 976 970 970 970 970

Sugar EU domestic b/ /kg 77.59 74.70 51.97 51.44 53.75 52.09 53.84 55.34

Sugar, world b/ /kg 27.01 31.14 26.28 28.85 33.89 30.09 35.36 36.22

Raw Materials Logs, Cameroon $/cum 554.4 548.5 473.8 426.8 394.6 382.5 395.4 406.0

Plywood /sheets 647.3 648.6 645.5 572.8 565.5 567.7 565.9 562.7

Sawnwood, Cameroon $/cum 1,052.3 974.5 770.8 689.2 721.4 684.3 717.6 762.5

Cotton Memphis /kg 171.6 170.0 130.1 129.8 142.4 135.6 150.2 141.4

Rubber RSS1, US /kg 311.7 329.1 202.8 165.8 187.0 183.6 189.8 187.6

FertilizersDAP b/ $/mt 1,191.6 1,153.7 663.3 362.2 303.6 335.4 297.5 277.8

Phosphate rock b/ $/mt 367.5 409.2 371.3 193.3 113.3 125.5 117.5 96.9

Potassium chloride b/ $/mt 511.1 635.0 766.7 865.2 726.7 745.0 717.5 717.5

Urea b/ $/mt 575.7 745.4 292.2 267.3 241.1 245.2 240.8 237.4

Metals and Minerals

Aluminum b/ $/mt 2,940 2,787 1,821 1,360 1,485 1,421 1,460 1,574

Copper b/ $/mt 8,443 7,680 3,905 3,428 4,663 4,407 4,569 5,014

Gold $/toz 896 870 795 909 922 890 929 946

Iron ore b/ /dmtu 140.6 140.6 140.6 101.0 101.0 101.0 101.0 101.0

Lead b/ /kg 230.7 191.2 124.5 115.7 149.9 138.3 144.0 167.4

Nickel b/ $/mt 25,682 18,96110,84

310,47

112,92

0 11,16612,63

5 14,960

Silver /toz 1,720 1,495 1,020 1,265 1,376 1,252 1,411 1,466

Steel cr coilsheet c/ $/mt 900 1,100 1,100 1,033 700 700 700 700

Steel, rebar c/ $/mt 838 934 630 473 450 425 450 475

Steel wire rod c/ $/mt 950 1,135 1,200 1,200 1,007 1,100 1,020 900

Tin b/ /kg 2,265 2,051 1,310 1,103 1,351 1,174 1,379 1,499

Zinc b/ /kg 211.3 177.0 118.5 117.2 147.3 137.9 148.4 155.7

Source: World Bank Pink Sheet July 2009

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3. Government Fiscal Performance in Jan-June 2009

Columns (4), (5) and (6) of Table-3.1 present major item-wise revenue realization andexpenditure of the government in the first half (i.e. Jan-June) of 2007, 2008 and 2009respectively. Column (8) indicates annual percentage changes of major items of revenuesand expenditure in Jan-June 2009 compared with those in Jan-June 2008 (column 7).

It may be observed from the table that, in terms of percentage increases, the governmentsfiscal performance has been mixed in Jan-June 2009 compared with that in Jan-June 2008.

In Jan-June 2008 total revenues and grants declined by 1.2%, as tax revenues decreasedby 3.8% and non-tax revenues declined by 26.3% over Jan-June 2007. On contrast, Jan-June 2009 has witnessed 15.5% increase in total revenue and grants aided by 13.3%increase in taxes, 8.9% increase in non-tax revenues and 64% increase in grants.

During Jan-June 2009, total expenditures and net lending has increased by 20.4% over Jan-June 2008 due to 18% increase in personnel emoluments, 55.2% increase of capital

expenditure and 6.3% increase by interest payments over Jan-June 2008.

Overall, there is a fiscal deficit of D197.7 million, and basic surplus of D70.2 million in Jan-June 2009, compared to a fiscal deficit of D86 million and basic surplus of D70.2 million inJan-June 2008.

Table-3.1 Govt Financial Performance in Jan-June2009 compared with Jan-June2008

Items2008Actual

Mln Dal.

2009Budget

EstimateMln. Dal.

2007Jan-June

ActualMln Dal.

2008Jan-June

ActualMln Dal.

2009Jan-June

ActualMln Dal.

% changeIn Jan-

Jun 2008over Jan-Jun 2007

% changeIn Jan-

Jun 2009over Jan-Jun 2008

(1) (2) (3) (4) (5) (6) (7) (8)

Revenue and grants 3645 4582 1941 1919 2216 -1.2 15.5Domestic Revenue 3479 3771 1893 1820 2055 -3.8 12.9

Tax Revenue 3161 3391 1637 1631 1849 -0.3 13.3Nontax Revenue 318 380 256 189 206 -26.3 8.9

Grants 166 811 49 99 161 102.5 63.7

Exp & Net Lending 4135 5363 1748 2005 2414 14.7 20.4Current Expenditure 3011 3838 1194 1544 1640 29.3 6.3Personnel Emoluments 906 1035 336 450 531 34.0 18.0

Other Charges 1398 1958 450 710 701 57.7 -1.2

Interest 708 845 409 385 409 -5.9 6.3External 154 147 104 80 98 -23.5 22.7Domestic 555 698 305 305 311 0.1 2.1

Cap Exp & Net Lending 1123 1525 553 461 773 -16.7 67.8

Capital Expenditure 1017 1468 488 396 614 -18.9 55.2

Net Lending 107 57 66 65 159 -0.8 144.4Overall Bal Inc. grants -490 -781 194 -86 -198 -144.4 129.7Basic balance -156 -268 590 70 158 -88.1 125.3Basic Primary Bal 553 577 999 455 567 -54.5 24.7

Nominal GDP (IMP Prg) 17959 19904 16007 17859 19904 11.6 11.5

Notes:(1) Overall balance= (Revenue and grants) minus (expenditure and net lending).(2) Basic balance= Domestic revenue minus (expenditure and net lending)plus externallyfinanced capital expenditure; (3) Basic primary balance= Basic balanceplus interestpayments

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Column (2) of Table-3.2 indicates the item-wise actual fiscal performance in 2008 aspercentage of GDP and the column (3) indicates the item-wise budget estimates in 2009 aspercentage of GDP. It is observed from these columns that 2009 budget estimates assumebetter performance of grants and expenditure as percentages of GDP. Overall fiscal deficit

for 2009 is estimated as 3.9% of GDP compared to 2.7% of GDP in 2008.

Columns (4), (5) and (6) ofTable-3.2 present the major item-wise performance of revenuesand expenditure in the first half (Jan-June) of 2007, 2008 and 2009 respectively, aspercentages of the corresponding nominal GDP (IMF Program estimate) for the full year. It isobserved from the table that, in terms of the percentages of GDP, the total revenues andexpenditures have performed better in Jan-June 2009 than those in Jan-June 2008.

The revenue and expenditure ratios to GDP are also observed to be on track in Jan-June2009 as compared with the 2009 budget estimates (given in column-5).

Table-3.2 Govt Financial Performance in Jan-June2009 compared with Jan-June2008

Items

2008Actualas % of

GDP

2009Budgetas % of

GDP

2007Jan-Junas % of

GDP

2008Jan-Junas % of

GDP

2009Jan-Junas % of

GDP

2008Jan-Junas % ofActual

2009Jan-Junas % ofBudget

(1) (2) (3) (4) (5) (6) (7) (8)

Revenue and grants 20.3 23.0 12.1 10.7 11.1 52.6 48.4

Domestic Revenue 19.4 18.9 11.8 10.2 10.3 52.3 54.5

Tax Revenue 17.6 17.0 10.2 9.1 9.3 51.6 54.5

Nontax Revenue 1.8 1.9 1.6 1.1 1.0 59.4 54.0

Grants 0.9 4.1 0.3 0.6 0.8 59.5 19.9

Exp & Net Lending 23.0 26.9 10.9 11.2 12.1 48.5 45.0

Current Expenditure 16.8 19.3 7.5 8.6 8.2 51.3 42.7

Personnel Emoluments 5.0 5.2 2.1 2.5 2.7 49.7 51.2Other Charges 7.8 9.8 2.8 4.0 3.5 50.8 35.8

Interest 3.9 4.2 2.6 2.2 2.1 54.3 48.4

External 0.9 0.7 0.7 0.4 0.5 51.8 66.3

Domestic 3.1 3.5 1.9 1.7 1.6 55.0 44.6

Cap Exp & Net Lending 6.3 7.7 3.5 2.6 3.9 41.0 50.7

Capital Expenditure 5.7 7.4 3.0 2.2 3.1 38.9 41.8

Net Lending 0.6 0.3 0.4 0.4 0.8 61.0 281.0Overall BalInc.grants3

-2.7 -3.9 1.2 -0.5 -1.0 17.6 25.3

Basic balance4 -0.9 -1.3 3.7 0.4 0.8 -45.2 -59.1

Basic Prim. Balance5 3.1 2.9 6.2 2.5 2.8 82.2 98.2

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

3 (1) Overall balance= (Revenue and grants) minus (expenditure and net lending).4 (2) Basic balance= Domestic revenue minus (expenditure and net lending)plus externallyfinanced capital expenditure;5 (3) Basic primary balance= Basic balanceplus interest payments

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4. Domestic Debt and Treasury Bills Outstanding

At the end of May 2009, outstanding domestic debt stood at D5.6 billion (amounting to28.4% of GDP), down by 5.5% from the outstanding domestic debt at D6 billion(amounting to 33.3% of GDP) a year ago.

The share of Treasury bills increased from 80.4% at the end of May 2008 to 84.5% at theend of May 2009, share of Sukuk Al-Salam from 0.8% to 1.4% and that of Governmentbonds increased from 4.2% to 4.4% over the period.

On contrary, the share of Non-interest bearing Treasury Notes declined from 14.6% to9.7% over the period

Table-4.1: Outstanding Domestic Public Debt as on 30 April 2009Type of debt Million Dalasi

30 May2008

30 May2009

% change inApril 09

over April 2008

Composition (inpercentage)

30 May

2008

30 May

2009

Treasury bills 4806 4772 -0.7 80.4 84.5

Sukuk Al-Salam 47 76 61.5 0.8 1.4

Government Bonds 250 250 0.0 4.2 4.4

NIB Treasury Notes 873 547 -37.4 14.6 9.7

Total 5977 5645 -5.5 100 100

Memo Item: Domestic debt as % of nominal GDP (As per IMF Program, nominal GDP equalsD17959 for 2008 and D19904 for 2009)

As % of nominalGDP

33.3 28.4

Domestic Debt Sustainability

As per the analysis made by the CBG, the Gambias domestic debt is unsustainable. Out ofthree sustainability indicators given in Table-2.8.2, only one indicator viz. debt to revenue ratio issatisfied. However, debt to GDP ratio may be satisfied during 2009.

Table-4.2 Primary Benchmarks for Domestic Debt Sustainability Ratios (%)Item Threshold 2006 2007 2008 2009

Projected1. Debt service torevenue ratio

28-63 142 124 118 91

2. Debt to GDP ratio 20-25 33 30 27 31

3. Debt to revenueratio

92-167 180 158 166 147

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

Source: Central Bank of Gambia

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5. Treasury Bills Yields

Yields on treasury bills fluctuated widely in recent months. Despite significant decline ofCPI inflation from 7% in January 2009 to 5.9% in May 2009, Average yield on the 91-dayincreased from 10.5% in Jan 2009 to 12.5% in May 2009, yield of 182-day billsincreased from 12.1% to 13.8% and that of 364-day bills increased from 14.4% to 15.3%

over the period.

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

Table-5 Interest Rates (yields on treasury bills in percentage per annum)

2007 2008 20093-M 6-M 12-M 3-M 6-M 12-M 3-M 6-M 12-M

Jan 10.5 12.7 13.6 10.6 11.4 13.6 10.5 12.1 14.4Feb 12.0 13.4 13.8 10.9 11.9 13.7 11.1 12.8 14.4Mar 12.6 13.4 13.7 11.0 12.1 13.6 11.4 12.7 14.4Apr 13.0 13.4 13.8 10.9 11.9 13.3 12.0 13.0 14.6

May 12.8 13.3 13.8 10.2 11.3 13.0 12,.5 13.8 15.3Jun 12.6 13.1 13.9 10.0 11.2 13.3Jul 12.5 13.2 13.9 9.6 10.6 12.6Aug 12.6 12.9 13.6 8.8 10.2 12.1Sep 11.6 12.2 12.9 8.9 11.0 13.1Oct 10.6 11.7 12.5 10.3 11.4 13.6Nov 10.5 11.5 12.5 10.1 13.4 13.7Dec 10.4 11.6 13.6 9.9 12.5 14.0

Trends of Yields of Treasury Bills during 2007-2009

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6. Money Supply in May 2009

Annual growth rate of broad money supply (M3) accelerated from 7.5% in May 2008 to17.3% in May 2009.

On the supply side, 17.3% growth in money supply in May 2009 was supported by18.1% growth in currency, 10.4% growth in demand deposits, 10.8% growth in savingsdeposits and 38.1% growth in time deposits.

On the demand side, growth was mainly due to 35% growth in domestic credits, whilenet foreign assets decreased by 6.1% over a year ago.

Domestic credit increased from D6.1 billion in May 2008 to D7 billion in May 2009,supported by 44% growth in government borrowing, 67% growth in credits to publicentities and 33.3% growth in credits to the private sector, over a year ago.

Table-6 Money Supply in May 2009

Components May 2007Mill.D.

May 2008Mill.D.

May2009Mill.D.

May2008% Share

May2009% Share

May2008% change

overMay2007

May2009% change

overMay2008

1.Broad Money Supply (M3)(2+3)

7982.95 8580.60 10063.47 100.0 100.0 7.5 17.3

2.Narrow Money (2.1+2.2) 4166.13 4360.90 4929.14 50.8 49.0 4.7 13.0

2.1 Currency 1721.53 1495.11 1765.32 17.4 17.5 -13.2 18.1

2.2 Demand deposits (a+b) 2444.6 2865.79 3163.82 33.4 31.4 17.2 10.4

(a) Private sector 2226.34 2553.18 2636.51 29.8 26.2 14.7 3.3

(b) Official 218.26 312.61 527.31 3.6 5.2 43.2 68.7

3.Quasi money (3.1+3.2) 3816.82 4219.70 5134.33 49.2 51.0 10.6 21.7

3.1 Savings deposits (a+b) 2656.37 2534.74 2807.56 29.5 27.9 -4.6 10.8

(a) Private sector 2652.32 2526.35 2795.28 29.4 27.8 -4.7 10.6(b) Official 4.05 8.39 12.28 0.1 0.1 107.2 46.4

3.2 Time deposits (a+b) 1160.45 1684.96 2326.77 19.6 23.1 45.2 38.1

(a) Private sector 756.41 1275.15 1673.49 14.9 16.6 68.6 31.2

(b) Official 404.04 409.81 653.28 4.8 6.5 1.4 59.4

Demands for money (1+2) 7982.96 8580.6 10063.47 100.0 100.0 7.5 17.3

1.Net foreign assets (1.1+1.2) 4657.68 3557.09 3341.49 41.5 33.2 -23.6 -6.1

1.1 Monetary Authorities 2626.1 2644.07 2656.77 30.8 26.4 0.7 0.5

1.2 Commercial banks 2031.58 913.02 684.72 10.6 6.8 -55.1 -25.0

2.Net Domestic Assets(2.1+2.2)

3325.28 5023.51 6721.98 58.5 66.8 51.1 33.8

2.1 Domestic credit 4078.76 5184.13 7000.52 60.4 69.6 27.1 35.0

(a) Credits to government 1471.47 1895.83 2731.16 22.1 27.1 28.8 44.1

(b) Credits to public entities 197.52 385.71 645.3 4.5 6.4 95.3 67.3

(c) Credits to private sector 2226.48 2719.3 3624.06 31.7 36.0 22.1 33.3

(d) Credits to forex bureau 183.29 183.29 0 2.1 0.0 0.0 -100.0

2.2 Other items, net -753.48 -160.62 -278.54 -1.9 -2.8 -78.7 73.4

Source: Economic Research and Statistics Department of CBG.

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7. Sectoral Distribution of Bank Credits

Bank credits increased by 40.2% in March 2009 over March 2008. There was significantincrease across all sectors. While credits to agriculture increased by 66.2%, manufacturingcredits increased by 76.9%, building credits by 39.3%, transport credits by 27.4% anddistributive trade credits by 27.5% in March 2009 over March 2008. Credits to financial

institutions and other commercial credits also registered significant increases, while tourismcredits recorded the lowest increase by 16.5% among all the sectors.

As regards composition of bank credits, trade had the largest share (23%), followedby other commercial credits (17%), miscellaneous sectors (16%), building (11%),transport (9%), agriculture (8%), tourism (7%), manufacturing (5%), and financialinstitutions (4%) in 2008.

Table-7 Sectoral Distribution of Bank Credits in March 2009

Sectors Outstanding credits(Million Dalasi)

March-2008 March 2009

Annual GRin Mar 2009

(%)

Composition of bank credits(in percentage)

Mar-2008 Mar-2009Agriculture 178.507 296.65 66.2 6.7 7.9Fishing 16.268 19.156 17.8 0.6 0.5Manufacturing 99.959 176.846 76.9 3.7 4.7Building 286.313 398.95 39.3 10.7 10.7Transportation 253.027 322.375 27.4 9.5 8.6Trade 679.72 866.5 27.5 25.5 23.2Tourism 214.237 249.526 16.5 8.0 6.7Financial Inst. 84.225 135.869 61.3 3.2 3.6Other comm. 529.002 657.543 24.3 19.8 17.6Others 327.238 617.467 88.7 12.3 16.5Total credits 2668.496 3740.882 40.2 100.0 100.0

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8. Balance of Payments and Foreign Exchange Reserves

(i) 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. importscompared 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 an estimated surplus of D741.7 million ($29.8million), amounting to 3.6 percent of GDP in 2007, reflecting the deterioration in both thecurrent and the capital and financial accounts. The Net Usable Reserve of the CBG stood atUS$95.6 million at end-March 2009 and was above the IMF Program target (floor) by US$3.6million.

(c) The goods account deficit improved from a deficit of D3.52 billion, amounting to 17.2 percentof GDP in 2007 to a deficit of D2.92 billion, amounting to 12.8 percent of GDP in 2008, or adecline by 17.14%.

(d) Exports of goods at D3.18 billion amounted to 14% of GDP in 2008 compared to D3.29 billionamounting to 16.1% of GDP- a decline by only 3.4%. However, due to appreciation ofaverage exchange rate of dalasi per US$, goods exports in terms of US$ increased fromUS$132.2 million in 2007 to US$141.6 in 2008.

(e) The c.i.f. import bill declined by 10.1% from D7.43 billion, amounting to 36.4 percent of GDP,in 2007 to D6.67 billion, amounting to 29.3 percent of GDP, in 2008.

(f) Current account deficit including official transfer declined from (-) D1.46 billion, amounting to7.2 percent of GDP, in 2007 to (-) D1.11 billion, amounting to 4.9 percent of GDP in 2008.

(ii) BOP Situation in 2009

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

Revised balance of payments projections by the CBG indicate an overall deficit of D13.8 million(US$0.5 million) in 2009 compared to D811.30 million (US$30.3 million) in 2008. The currentaccount deficit, including official transfers is expected to widen to D3.8 billion (19% of GDP) in2009 from D3.6 billion (17.8% of GDP) in 2008. The capital and financial account balance isexpected to improve from a surplus of D2.7 billion in 2008 to D3.8 billion in 2009.

(iii) Foreign Exchange Reserves

The volume of transactions in the inter-bank foreign exchange market totaled D33.3 billion(US$1.4 billion) in January-May 2009 compared to D36.5 billion (US$1.7 billion) a year ago. Atend-May 2009, gross international reserves stood at D2.6 billion (US$119.7 million) equivalent to4.0 months of import cover.

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9. Exchange Rate

During the last one year, the Dalasi depreciated against major international currenciestraded in the inter-bank market except the British Pound, reflecting the impact of theglobal financial crisis on remittances and tourism as well as increased demand forforeign exchange to meet the high cost of imports.

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

At the end of May 2009, Dalasi has appreciated marginally against British Pound by0.1%, while it depreciated by 29.7%, 16.9% , 12.4% and 4.3% against US$, CHF, Euroand CFA respectively over May 2008.

Table-9 Inter-bank exchange rates - end of period mid-market rates(Dalasi per unit of foreign currency)

Year Month UK US$ CHF Euro CFA(5000)

2008 Jan 44.27 22.34 19.91 32.89 252.85

Feb 42.58 21.88 19.57 32.28 243.98

Mar 40.87 19.46 19.15 30.83 239.16

Apr 39.52 20.12 19.16 31.43 235.95

May 40.25 20.64 19.46 32.1 245.84

June 40.77 20.65 19.27 32.07 245.51

July 41.65 20.94 19.9 32.21 251.05

Aug 40.73 21.37 20.08 32.23 249.47

Sept 41.65 23.12 19.86 33.02 249.30

Oct 40.49 24.89 20.15 32.89 258.09

Nov 40.56 26.26 20.07 33.28 258.31Dec 40.14 26.54 22.94 35.67 259.15

2009 Jan 37.25 26.07 20.85 33.52 262.81

Feb 37.38 26.11 22.04 33.6 257.78

Mar 38.18 26.38 23.31 35.22 259.30

Apr 38.94 26.56 22.8 35.07 259.13

May 40.20 26.78 22.75 36.09 256.38

July 10 43.73 26.63 24.50 37.50 274.00

Rate of appreciation (-) / depreciation (+) of Dalasiover the corresponding month in 2008 (%)

2009 Jan -15.9 16.7 4.7 1.9 3.9

Feb -12.2 19.3 12.6 4.1 5.7Mar -6.6 35.6 21.7 14.2 8.4

Apr -1.5 32.0 19.0 11.6 9.8

May -0.1 29.7 16.9 12.4 4.3

July 10 5.0 27.1 23.1 16.4 9.1

Source: Central Bank of Gambia (CBG)

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Gambia Monthly Economic Abstract June 2009

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