Gambia Monthly Economic Bulletin February 2010

8/6/2019 Gambia Monthly Economic Bulletin February 2010

1/43

The Gambia Monthly Economic Bulletin- February 2010

THE GAMBIA MONTHLY

ECONOMIC BULLETIN1

February 2010

Institutional Support Project for Economic and Financial Governance (ISPEFG)Ministry of Finance (MOF)The Republic of Gambia

The Quadrangle, Banjul, the Gambia

1The Gambia Monthly Economic Bulletinprovides an update on the recent economic developments andpolicies in the Republic of the Gambia. This Bulletin has been prepared, under the overall guidance of the

Honorable Permanent Secretary Mr. Serign Cham, by a research team comprising Tarun Das,

Macroeconomic Adviser (ISPEFG), Momodou Taal, Principal Economist; and Ms. Ceesay Chiel,

Economist in the Statistics and Special Studies Unit, Ministry of Finance; with key inputs from the

Ministry of Finance (MOF), the Central Bank of Gambia (CBG), the Gambian Bureau of Statistics

(GBOS), and the Gambian Revenue Authority (GRA).

It is needless to point out that the views expressed in this Bulletin solely indicate the views of the

Research Team, which need not necessarily imply the views of the MOF, the other budgetary agencies or

the organizations they are associated with.

Any questions and feedback can be addressed to: Tarun Das ([email protected])

1
mailto:[email protected]:[email protected]


2/43


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 (2006) Million US$ 2061 184 out of 229countries

GDP Nominal (2006) Million US$ 511 199 out of 229countries

GDP PPP per capita (2006) US$ 1921 140 out of 169countries

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

Poverty Ratio (% of peoplebelow One-US$ per day) (2004)

Percent 59 7 out of 95 countries

2


3/43


Source: http://www.nationmaster.com

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


4/43


4

Concluding Paragraphs of

The Budget 2010 Speech by

Honorable Abdou Kolley,

Minister of Finance,

The Republic of the Gambia

117. The zero-rating of sales tax on rice in 2008 to minimize the impact ofthe food crisis on the poor people and the implicit subsidy on the price ofoil by leaving the pump price unchanged, when international oil priceswere rising, were policy measures that resulted in revenue lossesequivalent to 2 percent of GDP. These developments, coupled with thefinancial and economic crises that ensued, have made 2008 a verydifficult year. In 2009, however, the Gambian economy performed betterthan expected because of strong growth in agriculture.

118. In spite of the positive growth registered in 2009, the Gambia stillfaces a heavy debt burden. Interest on government debt is expected toconsume nearly 20% of government revenues in 2009, mostly in interestson domestic debt. This is why in the 2010 budget, Government intends tolower the domestic debt, ease pressure on Treasury bill yields, generatesavings from lower interest payments and strengthen public financialmanagement.

119. Achieving these goals call for strict discipline in budget execution.This is a challenge that we face as a country with limited resources buttogether, with our dynamic leaders guidance, Sheikh Professor Dr. AlhajiYahya A.J.J. Jammeh, we will thrive and demonstrate that we have thepeople, the will and commitment, and with Allahs Blessing, to navigatethrough difficult times.

120. As we confront these formidable challenges, I call on ourdevelopment partners, bilateral and multilateral, whose efforts in supportof our development we so cherish, to continue to accompany us withrenewed vigour and a common sense of purpose.


5/43


Contents

Items Page

Basic Facts about the Gambia 2

Concluding paragraphs of the Budget 2010 Speech by Honorable Abdou

Kolley, Minister for Finance and Economic Affairs

3

Contents 4

ISPEFG Project/ Research Team and Document History 5

Highlights 6-7

At a Glance 8

1. Global Economic Outlook1.1 Global recovery is uneven, weak, slow and painful1.2 Global Commodity Prices and Inflation

9-159

14

2. Current State of the Gambian Economy

2.1 Overall and Sectoral GDP Growth Rates2.2 Consumer Price Index (CPI) and Inflation2.3 Projection of CPI inflation for the year 2010

16-36161820

2.4 Government Fiscal Performance in January 20102.5 Projections of Fiscal Outturn for 20102.6 Domestic Debt and Outstanding Treasury Bills2.7 Treasury Bills Yields2.8 Money Supply2.9 Performance of Commercial Banks2.10 Commercial Banks Assets2.11 Commercial Banks Liabilities2.12 Interest Rates and Central Banks Policy Rates2.13 BOP, Foreign Exchange Reserves and Exchange Rates2.14 Exchange Rates

212325

2627282930313236

3. Recent Policy Developments and Development Issues 3.1 Highlights of the 2010 Budget

3.2 Tax Measures announced in the 2010 Budget3.3 IMF Executive Board Completes Sixth Review of PRGF3.4 Assessment of Quantitative Targets agreed with IMF under PRGF

37-403738

3940

5


6/43


ISPEFG Project and Monthly Economic Bulletin Research Team

Project Supervisor Honorable Mr. Serign Cham,Permanent Secretary

Project Coordinator Mr. Momodou Cham

Macroeconomic AdviserPrincipal EconomistEconomist

Dr. Tarun DasMomodou TaalMs. Ceesay Chilel

Document History:

This report is an update of the following reports prepared by the Research Team:

1. The Gambia Quarterly Economic Bulletin, pp.1-30, 31 March 2009.2. The Gambia Monthly Economic Abstract, pp.1-16, 31 March 2009.3. The Gambia Monthly Economic Bulletin, pp.1-40, 30 April 2009.4. The Gambia Monthly Economic Abstract, pp.1-16, 30 April 2009.5. The Gambia Monthly Economic Bulletin, pp.1-39, 31 May 2009.6. The Gambia Monthly Economic Abstract, pp.1-15, 31 May 2009.

7. The Gambia Monthly Economic Bulletin, Part-1, pp.01-22, June 2009.8. The Gambia Monthly Economic Bulletin, Part-2, pp.23-46, June 2009.9. The Gambia Monthly Economic Abstract, pp.1-16, June 2009.10.The Gambia Monthly Economic Bulletin, Part-1, pp.01-22, July 2009.11.The Gambia Monthly Economic Bulletin, Part-2, pp.23-46, July 2009.12.The Gambia Monthly Economic Abstract, pp.1-16, July 2009.13.The Gambia Monthly Economic Abstract, pp.1-16, August 2009.14.The Gambia Monthly Economic Abstract, pp.1-16, September 2009.15.The Gambia Monthly Economic Bulletin, pp.1-25, October 2009.16.The Gambia Monthly Economic Bulletin, pp.1-37, November 2009.17.The Gambia Monthly Economic Bulletin, pp.1-37, December 2009.

18.The Gambia Monthly Economic Bulletin, pp.1-36, January 2010.

6


7/43


HIGHLIGHTS

Impact of Global Financial Crisis and Economic Slowdown

As per the IMF projections made in the WEO Update Jan 2010, global output is expected to

contract by (-) 0.8% in 2009 followed by a positive growth of 3.9% in 2010 . IMF concludes that althoughthe global economy has started to pull out of the unprecedented recession witnessed since the WorldWar-II, recovery is uneven, slow, and jobless. In African developing economies, growth is projected toslow down significantly from 5.2% in 2008 to 1.9% in 2009.

Global Food and Oil Prices

Due to sluggish demand and economic slowdown, there were significant decline of worldcommodity prices including food and petroleum since August 2008. However, since March 2009commodity prices have started rising again in response to some increase in global demand,.

Brent crude oil prices averaged $76.37 per barrel in Jan 2010 up from $74.67 per barrel in Dec2009. The IMFs baseline petroleum price projection is unchanged at US$76 a barrel for 2010 and

revised up by a small amount to $82 a barrel in 2011. Looking ahead, commodity prices are expected torise a bit further supported by the strength of global demand, especially from emerging economies.

Impact on the Gambian Economy

A global crisis of this magnitude is bound to have adverse impact on any country. The Gambianeconomy was not an exception and witnessed a decline in exports, remittances, foreigninvestment, tourist arrivals, manufacturing production and wholesale and retail trade in 2008.

However, thanks to bumper crops and very good performance by electricity, telecom and financialsectors, the real GDP growth at constant market prices improved from 6% in 2007 to 6.3% in2008, supported by a spectacular growth of 26.6% in agriculture GDP and a growth of 4.2% inservices GDP despite decline by 1.2% in industrial GDP.

Due to fall in tourists income and foreign investment and deceleration of agricultural growth, realGDP growth rate in 2009 is estimated to decelerate to 5%, aided by a growth of 5.5% inagriculture production, 3.5% in industry and 5.7% in services production.

CPI Inflation

The annual point-to-point CPI inflation decelerated significantly from 7% (Food 8.7% and Non-Food 5.4%) in Jan 2009 to 3.6% (Food 4.3% and Non-Food 2.5%) in Jan 2010. The 12-monthaverage inflation rate also decelerated from 4.6% in Jan 2009 to 4.3% in Jan 2010.

Among other groups, transport recorded an inflation of 2.4%, utilities 2.4%, restaurants and hotels3.9% and miscellaneous goods and services 8.1% in Jan 2010.

Government Fiscal Performance

Governments fiscal performance was mixed in Jan 2010 compared with that in Jan 2009. Taxrevenues declined by 9.9% in Jan 2010 over Jan 2009 compared with a growth of 19.4% in Jan2009 over Jan 2008. However, there was better performance of non-tax revenues in Jan 2010than in Jan 2009. Overall fiscal surplus at 0.2% of GDP in Jan 2010 turned out to be the same asin Jan 2009

7


8/43


Domestic Debt and Treasury Bills Yields

At the end of January 2010, outstanding domestic debt stood at D6.1 billion (amounting to 21.9%of GDP), compared to the outstanding domestic debt at D5.9 billion (amounting to 23.4% of GDP)a year ago. Including CBG support, the total outstanding domestic debt increased to D7.0 billionat end-January 2010, from D6.3 billion a year ago.

The share of Treasury bills increased from 79.7% at the end of Jan 2009 to 84.5% at the end ofJan 2010 and the share of Sukuk Al-Salam increased from 1.3% to 2.5%, while the share ofGovernment bonds declined marginally from 4.2% to 4.1%, and the share of NIB treasury billsdeclined from 14.8% to 8.9% over the same period.

Yields on treasury bills fluctuated widely in recent months. As expected, the higher the maturityof treasury bills, the higher is the yield. However, despite stability in deposit rates and significantdecline of annual point-to-point CPI inflation rate from 7% in Jan 2009 to 2.8% in Dec 2009,average yields on the 91-day bills increased from 10.5% in Jan 2009 to 11% in Dec 2009 andyield on 182-day bills from 12.1% in Jan 2009 to 12.9% in Dec 2009.

In view of the declining trend of inflation rates, the Monetary Policy Committee reduced the policyrate by 2 percentage points to 14% with effect from December 2009. As a result, average yieldsof the 91-day, 182-day and 364-day bills fell from 11%, 12.9% and 14.3% respectively inDecember 2009 to 10.3%, 12% and 13.6% respectively in Jan 2010 and further to 10%, 11% and12.9% respectively in February 2010.

Money Supply and Bank Credits

Broad money supply (M2) recorded an annual growth of 19.4% in December 2009, compared to18.4% a year ago. On the supply side, 19.4% growth in broad money supply in December 2009was supported by 9.4% growth in currency, 9.4% growth in demand deposits, 19.8% growth insavings deposits and 45.1% growth in time deposits.

On the demand side, growth was due to 12.3% growth in net foreign assets and 23.3% growth innet domestic assets over a year ago.

Domestic credit increased by 14.4% from D6.4 billion in Dec 2008 to D7.5 billion in Dec 2009,supported by 14% growth in government borrowing, 78.5% growth in credits to public entitiesand 16.7% growth in credits to the private sector, over a year ago.

Balance of Payments, Foreign Exchange Reserves and Exchange Rate

Balance of payments estimates by the CBG indicate an overall surplus of D137.9 million in 2009compared to a deficit of D811.3 million in 2008. The current account balance including transfersrecorded a surplus of D1.54 billion relative to a deficit of D1.2 billion in 2008 while the capital andfinancial account balance worsened to a deficit of D1.4 billion.

As at end-January 2010, gross international reserves totaled US$183.3 million, equivalent to 7.2months of import cover.

In 2009, the Dalasi depreciated against the British Pound by 7.2 percent, the US Dollar by 9.8

percent, the CFA by 11.2 percent and the Euro by 11.8 percent. However, in January 2010, the

Dalasi appreciated against the British Pound by 0.08 percent, the US Dollar by 0.02 percent, CHF

by 2.01 percent and the CFA by 2.12 percent, while Dalasi depreciated against Euro by 0.37

percent from end-December 2009.

8


9/43


At a Glance- February 2010

EconomicIndicators

LatestReference

Period

Status in thelatest reference

period

Status in theCorresponding

period a year ago

Outlook for 2010

Real GDP (MP)

Growth rate (%)

Calendar year

2009

Overall 5.0

Agriculture 5.5Industry 3.5Services 5.7

Overall 6.3

Agriculture 26.6Industry (-) 1.2Services 4.2

Overall 5.4

Agriculture 4.2Industry 4.5Services 6.2

CPI inflation (%) Jan 2010 Overall 3.6Food 4.3Non-food 2.5

Overall 7.0Food 8.7Non-food 5.4

Expected to remainmoderate in the range of3.5 to 5.5 percent.

Brent crude oilprice (US$/ brl)

Jan 2010 AverageUS$76.37

Average US$50 May stabilize aroundUS$76 in 2010

Growth rate (%) ofRevenue & grants

Jan 2010 2.9 18.7

Overall fiscal performancein 2010 is expected to bebetter than in 2009 due tosignificant budgeted

deceleration in expenditure.Overall fiscal deficit isbudgeted at 1.1% of GDPin 2010.

Growth rate (%) ofExp & Net Lending

Jan 2010 6.2 (-) 0.6

Revenue & grantsas % of GDP

Jan 2010 1.4 1.5

Exp & Net Lendingas % of GDP

Jan 2010 1.2 1.3

Overall fiscal bal.as % of GDP

Jan 2010 0.2 0.2

Basic balance as% of GDP

Jan 2010 0.3 0.5

Basic Primary bal.as % of GDP

Jan 2010 0.5 0.7

Domestic debtas % of GDP

Jan 2010 21.9 23.4 Likely to decline in 2010.

Yield on 91-daysTBs (%)

Feb 2010 10.0 11.1 Yields may come downfurther as CPI inflation ismoderate.Yield on 182-

days TBs (%)Feb 2010 11.0 12.8

Yield on 364-days TBs (%)

Feb 2010 12.9 14.4

GR of Moneysupply (M2) (%)

Dec 2009 19.4 18.4 Money growth rate islikely to remain high.

Banks assets(Billion Dalasi)

End-Dec 2009 18.7 19.6 Likely to increase

CBG policy rate(%)

Feb 2010 14 16 MPC reduced policyrate to 14% in Dec 2009.

Overall BOPBalance (Mln D)

2009 138 (-) 811 BOP situation is likely toremain comfortable in2010 due to revival ofexports, tourist income,remittances and foreigninvestment.

Current A/CBalance (Mln D)

2009 1540 (-) 1200

Capital-Fin. A/CBalance (Mln D)

2009 (-) 1402 389

Dalasi/ UK End-Jan 2010 43.01 37.27 Dalasi is expected todepreciate against majorcurrencies in 2010.

Dalasi/ US$ End-Jan 2010 26.94 26.07Dalasi/ CHF End-Jan 2010 25.29 20.85Dalasi/ CFA5000 End-Jan 2010 289.32 262.81Dalasi/ Euro End-Jan 2010 39.03 33.52

9


10/43


1. Global Economic Outlook

1.1 Policy-Driven and Multi-speed Recovery, but it is Painful and SluggishAs per the IMF latest projections made in the World Economic Outlook Update January 2010, theglobal economy has started recovery at a faster speed than anticipated earlier but the recovery is

uneven over regions (Table 1.1). Following the deepest global downturn in recent history, economicgrowth broadened to advanced economies in the second half of 2009. In 2010, world output isexpected to rise by 4 percent. This represents an upward revision of percentage point from theOctober 2009 World Economic Outlook. But in the most advanced economies, the recovery is weak,painful and slow by past standards, whereas in many emerging and developing economies, activity isrelatively vigorous, largely driven by buoyant internal demand. Policies need to foster a rebalancing ofglobal demand, remaining supportive where recoveries are not yet well sustained.

Prospects of African Economies

In recent years African economies in general experienced an economic boom contributed by twofavorable 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 thedeveloped countries have led to reversal of these positive factors and imposed serious adverse impacton the African economies. Real GDP growth in Africa as a whole is projected to decline from anaverage of 6% in 200408 to 1.9% in 2009, before accelerating to 4.3% in 2010 and 5.3% in 2011.

Growth projections for Sub-Saharan Africa have been revised upward to 1.6 percent in 2009 and4.3 percent in 2010 while growth projection for 2011 remains unchanged at 5.5 percent (see Table 1.1).This growth performance, while disappointing in light of the experience of the mid-2000s, is stillencouraging given the severity of the external shocks. An important factor behind this outcome hasbeen that many governments in the region have been able to use fiscal balances as shock absorbers,sustaining domestic demand and helping contain employment losses.

10
http://www.imf.org/external/pubs/ft/weo/2010/update/01/index.htm#tbl1http://www.imf.org/external/pubs/ft/weo/2010/update/01/index.htm#tbl1


11/43


Source: World Economic Outlook- Sustaining the recovery, October 2009, International Monetary Fund, Washington D.C.

11


12/43


12

Box 1.1

IMF Outlook for Sub-Saharan Africa

Published on October 3, 2009 Expresses Cautious Optimism

The International Monetary Fund (IMF) released the Regional Economic Outlook:Sub-Saharan Africa on October 3, 2009. Ms. Antoinette Monsio Sayeh, Director of

the IMF's African Department summarized the report's main findings as follows:

The global economic crisis has hit sub-Saharan Africa hard, reducing economic

growth to just 1 percent in 2009 after a period of sustained high economic growth.

Oil exporters and middle income countries in the region have been particularly badly

affected and most low-income countries somewhat less so. In all SSA countries,

however, the crisis will likely slow, if not reverse, progress on poverty reduction.

Unemployment and under-employment, already endemic, have likely risen across

the region. But playing-off the global economic recovery, we expect growth in sub-

Saharan Africa to rise to 4 percent in 2010 and 5 percent in 2011.

In many countries the prudent macroeconomic policies pursued in recent years

have provided some policy space to counter the effects of the slowdown.

Accordingly, most countries have been able to maintain or even raise public

spending, allowing fiscal deficits to widen temporarily. Where possible, monetary

policy has also played a supportive role.

There are significant downside risks, however. Therefore, wherever possible, IMF

staff recommends that fiscal and monetary policies remain supportive until the

economic recovery is well-established. As the recovery gains strength, the emphasis

of fiscal policy will need to shift from stabilization to medium-term considerations,including debt sustainability. In countries with binding financing constraints, the

room for fiscal policy is more limited and the primary focus will need to remain on

reducing macroeconomic imbalances. Financial sectors have been for the most part

resilient, but prudential supervision will need to remain vigilant in the face of the

impact of the economic slowdown on the quality of banks portfolios.

Scaled-up financial support from the IMF has buttressed countries policy response.

The doubling of lending limits and more flexible policies have facilitated a rapid

response to countries needs, and new IMF commitments to sub-Saharan Africa have

reached over US$3 billion so far this year, compared to some US$1.1 billion for the

whole of 2008 and only US$0.1 billion in 2007. Looking ahead, it will be critical that

other development partners support this effort and those of other international

financial institutions.


13/43


13


14/43


Figure 1.1 Sub-Saharan Africa: Projected GDP Growth, 200811

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

position.

14


15/43


15

Box 1.2 IMF-World Bank Debt Sustainability Analysis for African Economies

The objective of the IMF-World Bank debt sustainability framework, which was introduced in

2005, is to support low-income countries in their efforts to achieve their development goalswithout creating future debt problems (see The Debt Sustainability Framework for Low-Income

Countries, Occasional Paper 266, IMF (2008). A debt sustainability analysis using the DSF looks atfive debt burden indicators to evaluate the risk of external debt distress: the ratios of (i)

present value (PV) of debt-to-GDP; (ii) PV of debt-to-exports; (iii) PV of debt-to-revenues;(iv) debt service-to-revenues; and (v) debt service-to-exports. The risk of debt distress is

derived by reviewing the evolution of debt burden indicators compared to their indicative

policy-dependent debt-burden thresholds using a baseline scenario, alternative scenarios, andstress tests. The thresholds depend on the quality of a countrys policies and institutions as

measured by the three-year average of the World Banks Country Policy and Institutional

Assessment (CPIA) index.


16/43


1.2 World Commodity Prices

Inflation pressures will remain subdued in most economies

The global recession has caused a large drop in inflation and rising concern about milddeflation. The still-low levels of capacity utilization and well-anchored inflation expectations areexpected to contain inflation pressures (Figure 3) However, the decline in inflation pressureshas been limited among some emerging economies. In the advanced economies, headlineinflation is expected to pick up from zero in 2009 to 1 percent in 2010, as rebounding energyprices more than offset slowing labor costs. In emerging and developing economies, inflation isexpected to edge up to 6 percent in 2010, as some of these economies may face growingupward pressures due to more limited economic slack and increased capital flows.

Commodity prices are rebounding

Commodity prices have rebounded ahead of the recovery (Table 1.2). Brent crude oil pricesaveraged $76.37 per barrel in January 2010 up from $74.67 per barrel in Dec 2009. Lookingahead, commodity prices are expected to rise a bit further supported by the strength of globaldemand, especially from emerging economies. However, this upward pressure is expected to

be modest, given the above-average inventory levels and substantial spare capacity in manycommodity sectors. Accordingly, the IMFs baseline petroleum price projection is unchanged atUIS76 a barrel for 2010 and revised up by a small amount to $82 a barrel in 2011. Other non-fuel commodity prices have also been marked up modestly.

Table-1.2 Trends of World Commodity Prices16
http://www.imf.org/external/pubs/ft/weo/2010/update/01/index.htm#fig3http://www.imf.org/external/pubs/ft/weo/2010/update/01/index.htm#fig3


17/43


Annual averages Quarterly averages Monthly averages

Jan-Dec

Jan-Dec

Jan-Jan

Oct-Dec

Jan-Mar

Apr-Jun

Jul-Sep

Oct-Dec

Nov Dec Jan

Commodity Unit 2008 2009 2010 2008 2009 2009 2009 2009 2009 2009 2010

Energy

Crude oil, Brent $/bbl 97.64 61.86 76.37 55.89 44.98 59.13 68.37 74.97 77.04 74.67 76.37Crude oil, Dubai $/bbl 93.78 61.75 76.64 53.67 44.56 58.93 68.07 75.46 77.63 75.49 76.64Natural gas, US $/mbt 8.86 3.95 5.81 6.40 4.57 3.70 3.17 4.36 3.69 5.37 5.81

Beverages & foodCocoa /kg 257.7 288.9 352.3 224.1 259.4 257.9 296.4 341.8 338.5 350.9 352.3Coffee, Arabica /kg 308.2 317.1 350.3 267.8 283.9 320.2 322.7 341.7 335.6 348.7 350.3Tea, Kolkata auc. /kg 225.5 251.5 251.4 220.2 177.4 271.3 273.0 284.4 291.2 267.7 251.4Tea, Mombasa auc. /kg 221.8 252.0 284.5 190.8 214.9 228.0 281.7 283.2 290.6 297.7 284.5Coconut oil $/mt 1,224 725 785 772 677 779 711 734 729 768 785Copra $/mt 816 480 524 520 447 513 469 491 493 509 524Groundnut oil $/mt 2,131 1,184 1,314 1,773 1,283 1,166 1,133 1,152 1,116 1,192 1,314Palm oil $/mt 949 683 795 512 577 743 679 732 725 792 795Soybean oil $/mt 1,258 849 924 830 755 863 856 921 931 935 924Soybeans $/mt 523 437 437 377 394 461 454 439 440 450 437Barley $/mt 200.5 128.3 146.5 129.5 116.3 129.5 122.0 145.5 155.3 150.6 146.5Maize $/mt 223.1 165.5 167.3 168.4 166.9 176.0 151.3 167.8 171.6 164.6 167.3Rice, Thailand, 5% $/mt 650.2 555.0 571.3 564.4 586.3 552.4 539.0 542.3 542.8 591.0 571.3Rice, Thailand, 25% $/mt n.a. 458.1 510.8 449.9 469.4 458.7 441.4 462.8 460.3 515.3 510.8Wheat, Canada $/mt 454.6 300.5 287.2 322.1 321.9 325.6 271.2 283.4 288.4 287.8 287.2Bananas EU $/mt 1,188 1,145 941 944 1,142 1,288 1,118 1,032 1,027 989 941

Fishmeal $/mt 1,133 1,230 1,683 1,023 1,013 1,097 1,276 1,535 1,526 1,651 1,683Meat, beef /kg 313.8 263.6 295.1 268.0 245.2 262.8 273.2 273.5 275.6 280.0 295.1Meat, chicken /kg 169.6 171.7 166.4 174.7 173.5 174.1 173.9 165.1 164.6 164.7 166.4Meat, sheep /kg 458.5 427.6 451.2 410.0 378.5 428.7 453.3 450.1 457.0 447.5 451.2Oranges $/mt 1,107 909 1,089 842 799 870 861 1,107 1,154 1,014 1,089Shrimp, Mexico /kg 1,069 945 794 1,014 976 970 970 864 863 794 794Sugar EU /kg 69.69 52.44 47.81 51.97 51.44 53.76 55.43 49.11 49.63 48.92 47.81Raw MaterialsLogs, Cameroon $/cum 526.9 421.5 442.4 473.8 426.8 394.8 414.9 449.5 451.1 452.7 442.4Plywood /sht 645.5 564.6 557.2 645.5 572.8 565.8 561.5 558.4 558.6 557.2 557.2Sawnwood, Camrn $/cum 958.3 748.9 804.1 770.8 689.2 721.2 779.0 806.3 821.0 807.7 804.1Cotton Memphis /kg 161.3 145.3 179.7 129.4 122.4 137.5 148.8 172.4 173.9 179.5 179.7Rubber RSS1, US /kg 284.1 214.6 335.1 202.8 165.8 187.0 221.0 284.7 279.3 310.0 335.1Fertlilizers

DAP $/mt 967.2 323.1 427.5 663.3 362.2 303.6 309.6 316.9 290.3 360.4 427.5Phosphate rock $/mt 345.6 121.7 97.5 371.3 193.3 113.3 90.0 90.0 90.0 90.0 97.5

Potassium chloride $/mt 570.1 630.4 354.4 766.7 865.2 726.7 506.8 423.0 435.0 399.0 354.4TSP $/mt 879.4 257.4 296.3 658.7 321.7 247.7 224.7 235.7 228.5 232.0 296.3Urea $/mt 492.7 249.6 275.8 292.2 267.3 241.1 241.6 248.3 244.8 261.1 275.8Metals & MineralsAluminum $/mt 2,573 1,665 2,235 1,821 1,360 1,485 1,812 2,003 1,949 2,180 2,235Copper $/mt 6,956 5,150 7,386 3,905 3,428 4,663 5,859 6,648 6,676 6,982 7,386Gold $/toz 872 973 1,118 795 909 922 960 1,102 1,127 1,135 1,118Iron ore /dmt 140.6 101.0 101.0 140.6 101.0 101.0 101.0 101.0 101.0 101.0 101.0Lead /kg 209.1 171.9 236.8 124.5 115.7 149.9 192.8 229.3 230.9 232.9 236.8Nickel $/mt 21,11 14,65 18,43 10,84 10,47 12,92 17,70 17,52 16,99 17,06 18,43Silver /toz 1,500 1,469 1,775 1,020 1,265 1,376 1,477 1,760 1,788 1,764 1,775Steel cr coilsheet $/mt 966 783 700 1,100 1,033 700 700 700 700 700 700Steel hr coilsheet $/mt 883 683 600 1,000 933 600 600 600 600 600 600Steel rebar $/mt 760 486 510 630 473 450 500 522 495 490 510Steel wire rod $/mt 1,010 969 750 1,200 1,200 1,007 857 814 825 768 750Tin /kg 1,851 1,357 1,771 1,310 1,103 1,351 1,459 1,517 1,494 1,555 1,771Zinc /kg 187.5 165.5 243.4 118.5 117.2 147.3 176.1 221.4 219.3 237.6 243.4

Source: World Bank Pink Sheet February 2010

17


18/43


2. Current State of the Gambian Economy2.1 Overall and Sectoral GDP Growth Rates

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

However, thanks to bumper crops contributed by favorable monsoon at home and highinternational prices of food grains, and very good performance by electricity, telecomand financial sectors, the real GDP growth at constant 2004 market prices improvedfrom 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 constantmarket prices is expected to be 5% supported by a growth of 5.5% in agriculturalproduction, 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 ofindustry declined from 14.7% to 13.2% and that of services declined from 63.7% to61.5% during the same period. Increase of agricultural share was contributed byincrease in share of crops, while decline of services share was mainly due to decline ofshare of wholesale and retail trade, and transport and communications.

Agriculture

26%

Mining

2%Manufacturing

6%Utilities

2%Construction

4%

Trade

26%

Hotels

4%

Transport

12%

Business

11%

Others

7%

GDP Composition (%) in 200

18


19/43


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

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

GDPMP Agriculture Industry Services

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

(in percentage)Sectoral Shares in GDP

(in percentage)Items 2006

Actual2007

Actual2008

Actual2009Estd.

2010Proj

2006Actual

2007Actual

2008Actual

2009Estd.

GDP at 2004 basic price 3.1 6.0 6.3 5.0 5.4 100.0 100.0 100.0 100

Agriculture and allied -14.3 -1.9 26.6 5.5 4.2 23.1 21.6 25.3 25.3

-- Crops -26.3 -15.2 55.2 5.5 4.5 11.8 9.5 13.6 13.7

-- Livestock 2.4 11.9 4.3 4.5 3.9 8.8 9.4 9.0 9.0

-- Forestry 3.0 -4.0 1.0 0.7 2.0 0.7 0.6 0.6 0.5-- Fishing 7.8 18.0 3.5 11.3 3.9 1.9 2.1 2.0 2.1

Industry 4.5 2.5 -1.2 3.5 4.5 15.1 14.7 13.4 13.2-- Mining and quarrying 1.2 -14.1 8.8 8.8 10.0 2.4 1.9 1.9 2.0

-- Manufacturing 4.1 3.9 -8.3 0.4 3.3 7.0 7.0 5.9 5.6

-- Electricity, gas, water 8.7 59.1 1.7 10.0 10.7 1.1 1.6 1.5 1.6

-- Construction 6.0 -4.3 5.0 3.0 1.0 4.6 4.2 4.1 4.0

Services 10.0 8.3 4.2 5.7 6.2 61.8 63.7 61.3 61.5-- Wholesale/retail trade 16.1 9.7 -2.3 1.0 1.0 28.2 29.5 26.6 25.5

-- Hotels/ restaurants 15.7 14.3 2.9 3.0 3.8 3.6 3.9 3.7 3.6

-- Transport / telecom 2.7 7.0 -8.0 8.0 8.8 12.8 13.0 11.0 11.3

-- Financial 5.7 -0.9 28.2 3.0 8.0 7.5 7.0 8.3 8.2

-- Real est., business -3.9 1.4 0.0 2.5 3.4 3.4 3.3 3.0 3.0

-- Public administration 11.1 12.9 42.1 2.0 3.4 2.6 2.8 3.7 3.6

-- Other service 11.0 17.8 27.0 37.1 24.8 3.7 4.1 4.9 6.3

Source: Gambian Bureau of Statistics (GBOS) http://www.gbos.gm for the years 2006-2009 andprojections for 2010 are made by the Research Team.

19
http://www.gbos.gm/http://www.gbos.gm/


20/43


2.2 Consumer Price Index and Inflation

As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflationdecelerated significantly from 7% in Jan 2009 to 3.6% in Jan 2010. The 12-monthaverage inflation rate also decelerated from 4.6% in Jan 2009 to 4.3% in Jan 2010.

Food and drinks (with weights of 55.1% in overall CPI) recorded an annual point-to-pointinflation rate of 4.3% in Jan 2010, down from 8.7% a year ago, and contributed 70.4% tooverall inflation in Jan 2010.

Non-food items (with weights of 44.9% in overall CPI) recorded annual inflation rate of2.5% in Jan 2010, down from 5.4% a year ago and contributed 29.6% to total inflation.

Among other groups, transport recorded an inflation of 2.4%, utilities 2.4%, restaurantsand hotels 3.9% and miscellaneous goods and services 8.1% in Jan 2010.

Table-2.2 CPI Inflation Rates in January 2010 (in percentage)Items Weights

Wi (%)Jan 2009

IndexJan 2010

IndexInflation

(%)Wi (CPIi1

CPIi0)Contributio

n2 (%)Overall 100.0 120.13 124.42 3.6 425.2 100.0Food 55.1 125.42 130.86 4.3 299.5 70.4Tobacco 0.7 105.70 106.64 0.9 0.6 0.1Clothing 11.2 110.94 112.73 1.6 20.1 4.7Utilities 3.4 121.07 123.98 2.4 9.9 2.3Furnishing 5.2 114.83 116.3 1.3 7.7 1.8Health 1.2 101.77 101.82 0.0 0.1 0.0Transport 4.4 119.92 122.81 2.4 12.7 3.0Telecom 3.0 101.95 102.5 0.5 1.6 0.4Recreation 8.1 104.36 105.71 1.3 10.9 2.6

Education 1.5 102.24 102.99 0.7 1.1 0.3Hotels 0.4 115.87 120.43 3.9 1.6 0.4Misc. 5.9 123.91 133.92 8.1 59.3 13.9Non-food 44.9 113.71 116.52 2.5 126.3 29.6

Source of basic data: Gambian Bureau of Statistics (GBOS). http://www.gbos.gm

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 = WiFor example, contribution of food is estimated as 100 X 299.5 / 425.2 = 70.4%.

20
http://www.gbos.gm/http://www.gbos.gm/


21/43


Sub-group wise inflation in J an 2010 (

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

Overall

Tobacco

Utilities

HealthTelecom

Education

Misc.

Contribution to Inflation in J an 2010

Food

70%

Clothing

5%

Transpor

3%

Recreatio

3%

Utilities

2%

Furnishing

2%

Others

15%

Food

Clothing

Transport

Recreatio

Utilities

Furnishing

Others

Food, Non-Food, Overall Inflation Rates

0.0

2.0

4.0

6.0

8.0

10.0

12.0

07-Ja M

arM

ay Jul Sp Nv08

-Ja Mar

May Jul Sp Nv

09-Ja M

arM

ay Jul Sp Nv10-Ja M

ar

Food Non-Food All

21


22/43


2.3 Projection of CPI inflation for the year 2010

We have made three alternative projections of inflation rates for the year 2010, on the basis ofthe following assumptions:

(1) Alternative-1: It is assumed that the CPI variation for a month over the previous month

in 2010 will be the average CPI variation for the month over the previous month in lasttwo years (2009 and 2008). Thus, Feb 2010 CPI is estimated by the following formula:

Projected CPI for Feb 2010 = Jan 2010 CPI + [Feb 2009 CPI + Feb 2008 CPI Jan 2009 CPI Jan 2008 CPI]/ 2. For 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 previousmonth in 2010 will be the same as that for the respective month over the previous monthin 2009. For example, CPI for Jan 2010 is estimated by the following formula:

Projected CPI for Feb 2010 = Jan 2010 CPI+ (Feb 2009 CPI Feb 2008 CPI). For thesubsequent months, CPI is projected by the similar formula.

(3) Alternative-3: Average of inflation rates underAlternatives 1 and 2.

Results are presented in Table 2.3 which indicates that inflation rate is expected to remainmoderate in the range of 3.5% to 5.5% during 2010, and the year-end 12-month averageinflation rate is expected to be around 4%.

Table-2.3: Projections of CPI inflation for the year 2010 (in percentage)2007Index

2008Index

2009Index

2010-Alt1

2010-Alt2

2008Inf.rate

2009Inf.rate

2010-Alt1

2010-Alt2

2010Alt3

Jan 106.86 112.31 120.13 124.42 124.42 5.1 7.0 3.6 3.6 3.6Feb 107.01 112.34 120.25 124.50 124.54 5.0 7.0 3.5 3.6 3.5Mar 109.36 112.73 120.30 124.72 124.59 3.1 6.7 3.7 3.6 3.6Apr 111.64 113.21 120.36 124.99 124.65 1.4 6.3 3.8 3.6 3.7

May 112.05 113.83 120.51 125.37 124.80 1.6 5.9 4.0 3.6 3.8Jun 111.98 114.48 120.61 125.75 124.90 2.2 5.4 4.3 3.6 3.9July 111.95 116.21 120.84 126.73 125.13 3.8 4.0 4.9 3.6 4.2Aug 112.09 117.65 121.15 127.60 125.44 5.0 3.0 5.3 3.5 4.4Sep 111.86 118.96 121.75 128.56 126.04 6.3 2.3 5.6 3.5 4.6Oct 111.95 119.29 121.99 128.84 126.28 6.6 2.3 5.6 3.5 4.6Nov 112.13 119.54 122.7 129.32 126.99 6.6 2.6 5.4 3.5 4.4Dec 112.26 119.93 123.19 129.76 127.48 6.8 2.7 5.3 3.5 4.4Q1 107.7 112.5 120.2 124.5 124.5 4.4 6.9 3.6 3.6 3.6Q2 111.9 113.8 120.5 125.4 124.8 1.7 5.8 4.0 3.6 3.8Q3 112.0 117.6 121.2 127.6 125.5 5.0 3.1 5.3 3.5 4.4

Q4 112.1 119.6 122.6 129.3 126.9 6.7 2.5 5.4 3.5 4.5Ave 110.9 115.9 121.1 126.7 125.4 4.5 4.6 4.6 3.5 4.1

Note: Projections are made by the Research Team. Alternative projections 1, 2 and 3 are defined in thetext above.

22


23/43


2.4Government Fiscal Performance in January 2010

Columns (4), (5) and (6) ofTable-2.4.1 present major item-wise revenue realization andexpenditure of the government in the first month (i.e. Jan) of 2008, 2009 and 2010respectively. Columns (7) and (8) indicate annual percentage changes of major items ofrevenues and expenditure in Jan 2009 and Jan 2010 respectively over those in the

corresponding period of the previous year.

It is observed from the table that the governments fiscal performance was notsatisfactory in Jan 2010 compared with that in Jan 2009. Tax revenues declined by 9.9% inJan 2010 over Jan 2009 compared with a growth of 19.4% in Jan 2009 over Jan 2008.However, there was better performance of non-tax revenues in Jan 2010 than in Jan 2009.

In Jan 2010, total expenditures & net lending increased by 6.2% over Jan 2009 due to0.3% increase in current expenditure and 25.8% increase of capital expenditure and netlending over Jan 2009.

There was a fiscal surplus of D48 million, Basic surplus of D84.1 million and BasicPrimary surplus of D130.9 million in Jan 2010, lower than fiscal surplus of D57.1 million,Basic surplus of D116.7 million and basic primary surplus of D177.1 million in Jan 2009.

Table-2.4.1 Govt Financial Performance in January 2010 (Million Dalasi)Items 2009

Actual2010

Budget2008Jan

2009Jan

2010Jan

Jan-09% ch over

Jan-08

Jan-10% ch over

Jan-09

(1) (2) (3) (4) (5) (6) (7) (8)Revenue and grants 4893.0 5474.1 323.1 383.7 394.8 18.7 2.9

Domestic Revenue 3904.9 4413.2 320.7 369.1 372.6 15.1 0.9Tax Revenue 3517.5 3991.3 293.3 350.2 315.5 19.4 -9.9Nontax Revenue 387.4 421.9 27.4 18.9 57.1 -30.9 201.7

Grants 988.1 1061.0 2.4 14.5 22.2 494.2 52.9Exp & Net Lending 5631.9 5772.9 328.4 326.6 346.8 -0.6 6.2

Current Expenditure 3625.1 4455.6 234.6 251.6 252.5 7.2 0.3Personnel Emoluments 1191.8 1499.3 66.9 93.6 115.1 39.8 23.0

Other Charges 1691.9 2193.9 87.1 97.7 90.6 12.2 -7.3Interest 741.4 762.4 80.6 60.4 46.8 -25.1 -22.4

External 153.2 176.3 36.0 21.2 9.0 -41.0 -57.4Domestic 588.3 586.1 44.6 39.1 37.8 -12.4 -3.4

Cap Exp & Net Lending 2006.8 1317.3 93.8 75.0 94.3 -20.1 25.8Capital Expenditure 1889.1 1255.3 66.8 92.0 94.3 37.7 2.5

Externally financed 1300.1 1360.0 38.9 74.2 58.4 90.6 -21.3Net Lending 117.7 62.0 27.0 -17.0 0.0 -162.9 -100.0

Overall Fiscal Balance -739.0 -298.7 -5.3 57.1 48.0 -1,177.5 -16.0Basic Balance -427.0 0.3 31.2 116.7 84.1 274.4 -27.9Basic Primary Balance 314.5 762.7 111.8 177.1 130.9 58.4 -26.1Nominal GDP (GBOS) 25286 28046 22978 25286 28046 10.0 10.9

Source: Statistics and Special Studies Unit, MOF.Notes:(1) Overall balance = (Revenue and Grants) minus (Expenditure and Net Lending);(2) Basic Balance = (Domestic Revenue) less (Expenditure and Net Lending excluding externallyfinanced capital expenditure) and(3) Basic Primary Balance = Basic Balanceplus interest payments

23


24/43


Column (2) to (6) of Table-2.4.2 indicates the item-wise fiscal performance of thegovernment, as percentage of GDP, for 2009-outturn, 2010-Budget, January 2008, January2009 and January 2010 outturn respectively.

It is observed from the table that the fiscal performance in January 2010 is not betterthan in January 2009 in terms of percentages of GDP. However, overall fiscal surplus at0.2% of GDP in Jan 2010 is the same as that in Jan 2009.

The Budget for 2010 has targeted at total revenue and grants amounting to 19.5% ofGDP (marginally higher than 19.4% of GDP in 2009-Outturn) and total expenditure and netlending amounting to 20.6% of GDP (significantly lower than 22.3% of GDO in 2009-Outturn) resulting in an overall fiscal deficit amounting to 1.1% of GDP, significantly lowerthan 2.9% of GDP recorded in 2009-Outturn.

Significant reduction in total expenditure is sought to be achieved through drastic cut incapital expenditure from 7.5% of GDP in 2009-Outturn to 4.5% of GDP in 2010 Budget.Such a cut in capital expenditure may be good to maintain fiscal sustainability, but mayaffect adversely development activities unless funds are supplanted by donors assistance.

Table-2.4.2 Govt Financial Performance in 2009 and January 2010(As % of GDP at current market prices)

Items 2009 2010 2008 2009 2010Actual Budget Jan Jan Jan

(1) (2) (3) (4) (5) (6)Revenue and grants 19.4 19.5 1.4 1.5 1.4

Domestic Revenue 15.4 15.7 1.4 1.5 1.3Tax Revenue 13.9 14.2 1.3 1.4 1.1Nontax Revenue 1.5 1.5 0.1 0.1 0.2

Grants 3.9 3.8 0.0 0.1 0.1Exp & Net Lending 22.3 20.6 1.4 1.3 1.2

Current Expenditure 14.3 15.9 1.0 1.0 0.9Personnel Emoluments 4.7 5.3 0.3 0.4 0.4Other Charges 6.7 7.8 0.4 0.4 0.3Interest 2.9 2.7 0.4 0.2 0.2

External 0.6 0.6 0.2 0.1 0.0Domestic 2.3 2.1 0.2 0.2 0.1

Cap Exp & Net Lending 7.9 4.7 0.4 0.3 0.3Capital Expenditure 7.5 4.5 0.3 0.4 0.3

Externally financed 5.1 4.8 0.2 0.3 0.2Net Lending 0.5 0.2 0.1 -0.1 0.0

Overall Bal Inc. grants -2.9 -1.1 0.0 0.2 0.2

Basic Balance -1.7 0.0 0.1 0.5 0.3

Basic Primary Balance 1.2 2.7 0.5 0.7 0.5

Source: Statistics and Special Studies Unit, MOF.Notes:(1) Overall balance = (Revenue and Grants) minus (Expenditure and Net Lending);(2) Basic Balance = (Domestic Revenue) less (Expenditure and Net Lending excluding externallyfinanced capital expenditure) and(3) Basic Primary Balance = Basic Balanceplus interest payments

24


25/43


2.5 Projection of Fiscal Outturn for the Year 2010

Column (2) of the Table-2.5.3 below presents detailed item-wise revenues and expenditure inJan 2010. The ratios of actual realization for any item in Jan to the final outturn for the itemduring the complete year for the last five years viz. 2005, 2006, 2007, 2008 and 2009 arepresented 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 monthlyseasonality over the year, expected revenue and expenditure outcomes for the full year 2010are estimated by the following formula and are presented in column (9) of the Table-2.5.3.

Expected outturn for an item in 2010 = 100 X (actual realization in Jan 2010) / averagerealization ratio (in percentage) in Jan in the last five years (2005-2009)

Comparison of the expected outcome given in Column (9) with the budget estimates given inColumn (10) leads to the following conclusions:

(a) Tax revenue target given in the Budget 2010 may not berealized, unless tax revenuecollections improve significantly in the subsequent months in 2010.

(b) However, non-tax revenue targets are likely to be realized comfortably.(c) Grants may also fall short of budget estimates unless their inflows and disbursement are

augmented significantly in the subsequent months in 2010.(d) Both the current expenditure and capital expenditure are expected to remain within

budget estimates.(e) Although capital expenditure has been drastically pruned down in the 2010 Budget, its

utilization needs to be augmented significantly in the subsequent months.(f) Overall, it is expected to have a fiscal deficit of D736 million (2.6% of GDP) compared to

budgeted fiscal deficit at D299 million (1.1% of GDP). Primary balance is likely to be (-)0.1% of GDP, compared to 1.1% of GDP as targeted in the 2010 Budget.

2.5.3 Government Fiscal Performance in Jan 2010 and Expected Outturn for 2010

Items 2010-Jan

Actual

Ratio of Jan performance inAnnual Outturn (in Percentage)

Ave.ratio2005-2009

2010Proj.Out-turn3

2010Budget

Esti-mate

2005-Jan

2006-Jan

2007-Jan

2008-Jan

2009-Jan

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)1.Rev & grants (2+5) 394.7 10.4 9.2 8.3 8.6 7.8 4218.4 5474.12.Dom. Revenue (3+4) 372.5 8.2 9.6 8.7 9.2 9.5 3963.5 4413.23.Tax Rev (3.1+3.2) 315.5 8.9 10.0 9.2 9.3 10.0 3243.0 3991.33.1 Direct Tax (a to e) 127.7 9.5 12.0 10.1 9.7 13.1 1138.9

(a) Personal 48.9 9.2 7.9 6.4 8.5 10.5 8.5 575.3(b) Corporate 49.9 8.2 12.7 11.3 9.8 14.2 11.2 444.8(c) Capital Gains 2.3 6.1 6.6 2.4 3.9 6.7 5.1 45.6(d) Payroll 16.5 34.6 43.3 25.9 33.0 18.6 31.1 53.0(e) Other 10.1 54.8 57.6 42.8 50.1 44.8 50.0 20.2

3Expected outturn for an item in 2010 = 100 X (actual realization in Jan 2010) / average realization ratio(in percentage) in Jan in the last five years (2005-2009).

25


26/43


2.5.3 Government Fiscal Performance in Jan 2010 and Expected Outturn for 2010Items 2010-

JanActual

Ratio of Jan performance inAnnual Outturn (in Percentage)

Ave.ratio2005-2009

2010Proj.Out-turn4

2010Budget

Esti-mate

2005-Jan

2006-Jan

2007-Jan

2008-Jan

2009-Jan

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

3.2 Indirect Tax 187.7 90.9 90.6 91.0 92.8 89.6 2104.0

3.2.1 Dom Tax on G&S 61.7 89.0 91.4 89.5 92.3 91.1 715.4(a) Stamp Duties 0.7 4.9 4.5 5.2 1.7 11.8 5.6 13.2(b) Excise Duties 12.8 6.1 7.6 10.0 13.2 7.4 8.9 143.8(c) Dom Sales Tax 48.2 10.7 6.9 8.7 7.6 9.3 8.6 558.4

3.2.2 Tax on Ext Trade 126.0 8.2 9.9 8.7 9.3 8.7 1388.6(a) Duty (i+ii) 69.2 9.8 11.6 8.5 9.1 9.8 709.5

(i) Oil 33.9 13.4 15.6 11.0 6.7 12.7 11.9 285.3(ii) Non-oil 35.3 8.5 9.3 7.1 10.3 6.4 8.3 424.2

(b) Sale tax on imp (i+ii) 56.8 6.5 7.9 8.9 9.5 7.1 679.1(i) Oil 16.2 8.1 9.0 8.7 7.4 8.3 195.1(ii) Non-oil 40.6 7.8 8.9 9.7 7.1 8.4 483.9

4. Nontax Rev (a to d) 57.1 3.6 4.8 5.5 7.7 4.9 5.3 720.6 421.9(a) Govt Charges 28.5 1.7 6.8 1.1 9.9 7.9 5.5 520.0(b) NTR from CRD 0.5 13.6 11.3 3.4 11.2 21.5 12.2 4.1(c) NTR from CED 6.7 6.7 7.4 9.7 6.9 7.7 87.3(d) Others 21.4 37.0 12.0 10.0 3.0 36.0 19.6 109.2

5. Grants 22.2 37.0 3.8 0.3 1.0 1.5 8.7 254.9 1061.06. Exp & Net Lend (7+8) 346.8 11.2 6.5 9.0 7.6 5.8 4954.6 5772.97. Cur. .Exp (7.1 to 7.3) 252.5 8.9 5.7 5.9 7.4 6.9 3969.4 4455.67.1 Pers. Emoluments 115.1 13.5 10.0 6.9 6.8 7.8 9.0 1275.5 1499.3

7.2 Other Charges 90.6 4.7 3.3 3.2 5.8 5.8 4.6 1989.3 2193.97.3 Interest (a+b) 46.8 9.3 5.2 8.8 11.3 8.1 704.6 762.4

(a) External 9.0 16.4 13.8 19.0 23.4 13.9 17.3 52.3 176.3(b) Domestic 37.8 7.3 2.3 4.7 8.0 6.7 5.8 652.3 586.1

8. Cap Exp & Net Lend. 94.3 11.9 7.7 16.4 8.2 3.7 985.2 1317.38.1 Capital Exp. (a+b) 94.3 11.7 8.0 9.7 6.5 4.9 985.2 1255.3

(a) Ext. Financed (i+ii) 58.4 11.7 8.5 11.7 7.7 5.7 64.1 1360.0(i) Loans 36.2 6.7 9.1 15.4 10.7 9.5 91.0 39.8(ii) Grants 22.2 39.6 3.8 0.3 1.5 2.2 91.0 24.4

(b) GLF Capital 36.0 9.4 0.0 1.7 5.3 3.0 3.9 921.08.2 Net lending 0.0 0.0 0.0 103.1 22.9 -14.4 22.3 0.0 62.09. Overall fiscal bal (1-6) 47.9 -736.2 -298.710.Basic balance 84.1 -926.9 0.311. Basic Primary Bal. 130.9 -222.3 762.7

Memorandum Items: As percentage of IMF Program Nominal GDP (equal to D19904 million)

12. Fiscal bal (1-6)5 0.2 -2.6 -1.113.Basic balance 0.3 -3.3 0.014. Basic Primary Bal. 0.5 -0.8 2.7

4 Expected outturn for an item in 2010 = 100 X (actual realization in Jan 2010) / average realization ratio (inpercentage) in Jan in the last five years (2005-2009).5(1) Overall balance = (Revenue and Grants) minus (Expenditure and Net Lending); (2) Basic Balance = (DomesticRevenue) less (Expenditure and Net Lending excluding externally financed capital expenditure) and(3) BasicPrimary Balance = Basic Balanceplus interest payments

26


27/43


2.6 Domestic Debt and Treasury Bills Outstanding

(a) At the end of January 2010, outstanding domestic debt stood at D6.1 billion (amountingto 21.9% of GDP), compared to the outstanding domestic debt at D5.9 billion (amountingto 23.4% of GDP) a year ago.

(b) Including CBG support, the total outstanding domestic debt increased to D7.0 billion atend-January 2010, from D6.3 billion a year ago. Outstanding Treasury bills, whichaccounted for 74.2 percent of the stock, increased by 10.1 percent to D5.2 billion.

(c) The share of Treasury bills increased from 79.7% at the end of Jan 2009 to 84.5% at theend of Jan 2010 and the share of Sukuk Al-Salam increased from 1.3% to 2.5%, while theshare of Government bonds declined marginally from 4.2% to 4.1%, and the share of NIBtreasury bills declined from 14.8% to 8.9% over the same period.

Table-2.6-A Outstanding Domestic Public Debt as on 31 January 2010Type of debt Million Dalasi % change

in Jan 2010

over Jan 2009

Composition(in percentage)

31 Jan2009

31 Jan2010

31 Jan2009

31 Jan2010

Treasury bills 4,706 5,179 10.1 79.7 84.5

Sukuk Al-Salam 77 155 100.3 1.3 2.5

Government Bonds 250 250 0.0 4.2 4.1

NIB Treasury Notes 873 547 -37.4 14.8 8.9

Total 5,906 6,130 3.8 100 100

GDP at CP (GBOS) 25286 28046

As % of GDP at CP 23.4 21.9

Domestic Debt Sustainability

As per the analysis made by the CBG, the current level of Gambias domestic debt is notsustainable. Out of three sustainability indicators given in Table-2.6.B, one indicator viz. debtservice to revenue ratio is not satisfied.

Table-2.6-B Primary Benchmarks for Domestic Debt Sustainability Ratios (%)Item Threshold 2006 2007 2008 2009

Estimated1. Debt service torevenue ratio

28-63 142 124 118 91

2. Debt to GDP ratio 20-25 33 30 27 24.53. Debt to revenueratio

92-167 180 158 166 147

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. Thethresholds used here are those used by the Debt Relief International (DRI) for many HIPC countries.Source: Central Bank of Gambia

27


28/43


2.7 Treasury Bills Yields

Yields on treasury bills fluctuated widely in recent months. As expected, the higher thematurity of treasury bills, the higher is the yield. However, despite stability in depositrates and significant decline of annual point-to-point CPI inflation rate from 7% in Jan2009 to 2.8% in Dec 2009, average yields on the 91-day bills increased from 10.5% in

Jan 2009 to 11% in Dec 2009 and yield on 182-day bills from 12.1% in Jan 2009 to12.9% in Dec 2009.

In view of the declining trend of inflation rates, the Monetary Policy Committee reducedthe policy rate by 2 percentage points to 14% with effect from December 2009. As aresult, average yields of the 91-day, 182-day and 364-day bills fell from 11%, 12.9% and14.3% respectively in December 2009 to 10.3%, 12% and 13.6% respectively in Jan2010 and further to 10%, 11% and 12.9% respectively in February 2010.

Table-2.7 Average yields on treasury bills (in percentage per annum)

2008 2009 201091-D 162-D 364-D 91-D 182-D 364-D 91-D 182-D 364-D

Jan 10.6 11.4 13.6 10.5 12.1 14.4 10.3 12.0 13.6Feb 10.9 11.9 13.7 11.1 12.8 14.4 10.0 11.0 12.9Mar 11.0 12.1 13.6 11.4 12.7 14.4

Apr 10.9 11.9 13.3 12.0 13.0 14.6

May 10.2 11.3 13.0 12.5 13.8 15.3

Jun 10.0 11.2 13.3 13.0 13.8 15.6

Jul 9.6 10.6 12.6 11.5 12.0 14.4

Aug 8.8 10.2 12.1 10.2 11.2 13.3

Sep 8.9 11.0 13.1 10.4 11.7 14.3

Oct 10.3 11.4 13.6 10.8 12.1 14.2

Nov 10.1 13.4 13.7 10.8 12.3 14.0

Dec 9.9 12.5 14.0 11.0 12.9 14.3

Trends of Yields of Treasury Bills during 2007-2010

8

9

10

11

12

13

14

15

16

J-07

M-07

M-07

J-07

S-07

N-07

J-08

M-08

M-08

J-08

S-08

N-08

J-09

M-09

M-09

J-09

S-09

N-09

J-10

M-10

Yield(

91-D 162-D 364-D

28


29/43


2.8 Money Supply

Broad money supply (M2) recorded an annual growth of 19.4% in December 2009,compared to 18.4% a year ago. While quasi money increased by a faster pace of 30.3%,narrow money increased by 9.4 percent. Reserve money grew by 9.3 percent, higherthan an increase of 5.7 percent recorded a year ago.

On the supply side, 19.4% growth in broad money supply in December 2009 wassupported by 9.4% growth in currency, 9.4% growth in demand deposits, 19.8% growthin savings deposits and 45.1% growth in time deposits.

On the demand side, growth was due to 12.3% growth in net foreign assets and 23.3%growth in net domestic assets over a year ago.

Domestic credit increased by 14.4% from D6.4 billion in Dec 2008 to D7.5 billion in Dec2009, supported by 14% growth in government borrowing, 78.5% growth in credits topublic entities and 16.7% growth in credits to the private sector, over a year ago.

Table-2.8 Money Supply and Demand in December 2009

Components Dec2007

MillionDalasi

Dec2008

MillionDalasi

Dec2009

MillionDalasi

Dec2008

%share

Dec2009

%share

Dec-08% ch.

over Dec2007

Dec-09% ch.

over Dec2008

1.Money Supply (M3) (2+3) 8274 9796 11695 100 100 18.4 19.4

2.Narrow Money (2.1+2.2) 4209 5120 5600 52 48 21.6 9.42.1 Currency 1689 1,833 2,005 19 17 8.5 9.4

2.2 Demand deposits 2519 3287 3,595 34 31 30.5 9.43.Quasi money (3.1+3.2) 4065 4677 6095 48 52 15.0 30.33.1 Savings deposits 2612

2,738 3,28128 28 4.8 19.8

3.2 Time deposits 1453 1,939 2,814 20 24 33.4 45.1Demands for money (1+2) 8274 9796 11695 100 100 18.4 19.4

1.Net foreign assets (1.1+1.2) 4042 3476 3902 35 33 -14.0 12.31.1 Monetary Authorities 3069 2,715 3232 28 28 -11.6 19.0

1.2 Commercial banks 973 762 671 8 6 -21.7 -11.9

2.Net Dom. Assets (2.1+2.2) 4232 6320 7793 65 67 49.4 23.32.1 Domestic credit 4200 6436 7491 66 64 53.2 16.4(a) Credits to government 1189 2,661 3033 27 26 123.9 14.0

(b) Credits to public entities 229 428 765 4 7 87.4 78.5

(c) Credits to private sector 2600 3164 3694 32 32 21.7 16.7(d) Credits to forex bureau 183 183 0 2 0 0.0 -100.0

2.2 Other items, net 31 -116 301 -1 3 -473.3 -359.3Reserve Money 2745 2902 3171 5.7 9.3

Source: Central Bank of Gambia

29


30/43


2.9 Performance by Commercial Banks

(a) The Gambian banking industry consists of 13 banks with highly skewed distribution ofassets. The industry continues to be dominated by three large banks which accounted for64.4% of the total assets at the end of September 2009, although their share has declinedfrom 67% a year ago. The industrys total assets increased to D14.8 billion in 2009, up 8.0

percent from September 2009.

(b) The banking industrys overall condition in terms of capital adequacy, liquidity and assetquality was satisfactory. The industrys average risk-weighted capital adequacy ratio was18.1 percent at end-December 2009, compared to 33.22 percent in September 2009. Allthe banks observed the minimum requirement. However, the ratio of non-performing loansto gross loans was 8.0 percent in December 2009 compared to 7.0 per cent in September2009, and profitability declined.

(c) Loans and advances to all major economic sectors increased by 27.1 per cent to D4.5billion in December 2009 from D3.5 billion in December 2008. Credit to distributive trade,agriculture, building and construction and transportation increased by 24.3 percent, 34.2

percent, 15.3 percent and 25.7 percent respectively. Similarly, loans and advances tofishing, tourism and consumer loans increased by 6.3 percent, 4.9 percent and 19.1percent respectively during the same period.

Table-2.9 Sectoral Distribution of Bank Loans (Million Dalasi)2007 2008 2009 % change over last year Composition (%)

Million D Million D Million D 2008 2009 2008 2009

Agriculture 189.39 195.48 262.41 3.2 34.2 5.5 5.8

Fishing 16.24 15.87 16.87 -2.3 6.3 0.4 0.4

Construction 302.17 435.73 502.37 44.2 15.3 12.3 11.2

Transportation 325.6 267.82 336.55 -17.7 25.7 7.6 7.5

Trade 719.77 960.76 1194.28 33.5 24.3 27.2 26.6

Tourism 202.27 201.01 210.93 -0.6 4.9 5.7 4.7

Personal loans 449.46 609.07 725.32 35.5 19.1 17.2 16.1

Others 426.73 850.51 1246.49 99.3 46.6 24.1 27.7

Total 2631.63 3536.25 4495.22 34.4 27.1 100.0 100.0

Agriculture, 5.8Fishing, 0.4

Construction, 11.2

Transportation, 7.5

Trade, 26.6

Tourisum, 4.7

Personalloans, 16.1

Others, 27.7 Agriculture

Fishing

Construction

Transportation

Trade

Tourisum

Personalloans

Others

Composition of Sectoral Loans in 2009 (%) Source: CBG

30


31/43


2.10 Commercial Banks Assets

Total assets of the commercial banks increased by 18.7% on year-on-year basis fromD12.5 billion at end-Dec 2008 to D14.8 billion at end-Dec 2009.

Gambian banks do not have large exposure to foreign assets or foreign liabilities. Atend-Dec 2009, foreign assets constituted only 9.9% of total assets (foreign exchange2.4%, balances abroad 6.5% and foreign investment 1.1%), down from 10.4% a yearago (foreign exchange 3.2%, balances abroad 6.1% and foreign investment 1.1%).

Gambian banks also do not have large contingent liabilities. At end-Dec 2009 contingentliabilities constituted only 11.9% of total liabilities, compared to 11.5% a year ago.

At end-Dec 2009, loans and advances increased by 25.7% over a year and constituted27.7% of total assets, compared to 26.2% a year ago.

At end-Dec 2009, investments in government Treasury Bills by the banks increased by

24.9% over a year and constituted 24.9% of their total assets. As expected, three largebanks had the dominant share.

At end-Dec 2009, loans and advances to the public sector increased by 108.8% over ayear, while those to the private sector increased by only 16.5% over a year ago.

Table-2.10 Commercial Banks Assets at the end-December 2009 (MillionDalasi)

Dec-2008 Dec-2009

1. Notes and coins 204.3 217.3 211.9 1.7 1.4 6.4 -2

2. Foreign exchange 118.1 401.3 348.0 3.2 2.4 239.7 -133. Local Bank balance 918.2 854.7 1,221.9 6.9 8.3 -6.9 43

ii. CBG 884.5 851.9 999.2 6.8 6.7 -3.7 17

iii. Banks locally 33.7 2.8 222.6 0.0 1.5 -91.7 7874

4. Balances abroad 1,186.6 758.4 959.1 6.1 6.5 -36.1 26

5. Bills purchased 9.3 40.9 74.3 0.3 0.5 338.1 81

6. Loans and advances 2,446.6 3,263.1 4,101.8 26.2 27.7 33.4 25

i. Public sector 91.7 325.7 679.9 2.6 4.6 255.3 108

ii. Private sector 2,355.0 2,937.4 3,421.9 23.6 23.1 24.7 16

7. Investments 2,958.8 3,231.1 3,998.2 25.9 27.0 9.2 23

i. Govt Treasury Bills 2,605.7 2,949.5 3,683.9 23.7 24.9 13.2 24

ii. Others 198.9 139.9 152.3 1.1 1.0 -29.6 8

iii Foreign Invest. 154.2 141.6 161.9 1.1 1.1 -8.2 148. Fixed assets 548.8 840.1 1,140.8 6.7 7.7 53.1 35

9. Guarantees 1,201.6 1,435.8 1,764.2 11.5 11.9 19.5 22

10. Other assets 835.3 1,425.5 985.4 11.4 6.7 70.7 -30

11. Total assets (1 to 10) 10,427.7 12,468.2 14,805.6 100.0 100.0 19.6 18

12. Net Balance (11-9) 9,226.1 11,032.4 13,041.4 88.5 88.1 19.6 18

% ch. Dc0

over Dc0

Assets (Million

Dalasi)

Dec-2007 Dec-2008 Dec-2009 Composition (%) % ch. Dc08

over Dc07

Source: Central Bank of Gambia.

31


32/43


2.11 Commercial Banks Liabilities

As mentioned earlier, Gambian banks do not have large exposure to foreign liabilities.At end-Dec 2009, external sector related liabilities constituted only 4.9% of total liabilities(non-residents deposits 4%, balances with banks abroad 0.1% and external debt 0.8%),up from 3.1% a year ago (non-residents deposits 1.1%, balances with banks abroad0.4% and external debt 1.6%).

At end-Dec 2009 bank deposits increased by 21.7% over a year, aided by a growth of9.4% in demand deposits, 19.8% in savings deposits and 45.1% in time deposits.

At end-Dec 2009 banks capital and reserves increased by 9.5% and bank balancesincreased by 70.4%, while borrowings increased by 43.4% over a year.

At end-Dec 2009, direct contingent liabilities (i.e. guarantees) of banks increased by22.9% over a year and constituted 11.9% of total liabilities.

Table-2.11 Commercial Banks Liabilities at the end-December 2009 (MillionDalasi)

Dec-2008 Dec-2009

1. Capital and reserves 1,219.2 1,448.0 1,586.1 11.6 10.7 18.8 9

2. Demand deposits 2,519.3 3,286.7 3,595.0 26.4 24.3 30.5 9

i Residents 2,271.9 2,653.5 2,737.1 21.3 18.5 16.8 3

ii Non residents 28.0 39.5 443.9 0.3 3.0 41.1 1023

iii Government entities 219.4 593.6 413.9 4.8 2.8 170.5 -30

3. Savings deposits 2,612.3 2,737.9 3,281.0 22.0 22.2 4.8 19

i Residents 2,503.6 2,638.8 3,181.3 21.2 21.5 5.4 20

ii Non residents 74.2 75.0 90.7 0.6 0.6 1.1 20

iii Government entities 34.5 24.0 9.0 0.2 0.1 -30.4 -62

4. Time deposits 1,453.1 1,938.9 2,814.2 15.6 19.0 33.4 45

i Residents 1,096.4 1,386.2 2,058.2 11.1 13.9 26.4 48

ii Non residents 15.4 18.1 63.8 0.1 0.4 17.7 251

iii Government entities 341.3 534.6 692.2 4.3 4.7 56.6 29

Total deposits 6,584.7 7,963.5 9,690.2 63.9 65.4 20.9 21

5. Bank Balances 161.0 137.0 233.5 1.1 1.6 -14.9 70

i HO & branches 20.7 86.7 189.7 0.7 1.3 318.9 118

ii Other banks abroad 140.3 50.3 8.8 0.4 0.1 -64.2 -82

iii. Banks locally - - 35.0 0.0 0.2 -

6. Borrowings from 324.9 414.6 594.7 3.3 4.0 27.6 43

i Cent. bank of Gambia - - 20.0 0.0 0.1

ii Other banks locally - 12.0 10.0 0.1 0.1iii HO & branches 255.9 201.1 451.9 1.6 3.1 -21.4 124

iv Other banks abroad 69.0 201.5 112.8 1.6 0.8 -44

v. Other sources - - - 0.0 0.0

7. Guarantees 1,201.6 1,435.8 1,764.2 11.5 11.9 19.5 22

8. Other liabilities 936.3 1,069.3 936.9 8.6 6.3 14.2 -12

9. Total liabilities (1 to 8) 10,427.7 12,468.2 14,805.6 100.0 100.0 19.6 18

10. Net balance (9-7) 9,226.1 11,032.4 13,041.4 88.5 88.1 19.6 18

Dec-2007 Dec-2008 Dec-2009 % ch. Dc08

over Dc07

% ch. Dc0

over Dc0

Composition (%)Liabilities (Million

Dalasi)


32


33/43


2.12Interest Rates and Central Bank Policy Rates

Interest rate on treasury bills declined from 31% in 2003 to 14.9% in 2006 and further to 13.7%in 2007. It ranged in between 13.1% to 14.7% in 2008 and between 12.3% to 14.3% in 2009.The bank rate of the CBG declined from 29% in 2003 to 9% in 2007, but was raised to 10% atthe end of 2007 to check effective demand and inflationary pressures on the economy. It has

remained at 10% since then. However, with the introduction of the Monetary Policy Committee(MPC) Policy Rate, the Bank rate has become ineffective and non-operational.

In response to tight monetary conditions and against a backdrop of falling inflation, the CBGreduced the statutory minimum reserve requirement of banks from 16% to 14% in March 2008.The CBG rediscount rate declined from 34% in 2003 to 14% in 2004. In order to counteremerging inflationary pressures, the CBG raised its rediscount rate by one percentage pointfrom 14% to 15% in June 2007, and further to 16% in October 2008. The rediscount rateremained unchanged at 16% since then until November 2009. In view of the declining trend ofinflation rates, the MPC reduced the policy rate by 2 percentage points to 14% with effect fromDecember 2009. As a result, average yields of the 91-day, 182-day and 364-day bills fell from11%, 12.9% and 14.3% respectively in December 2009 to 10.3%, 12% and 13.6% respectively

in Jan 2010 and further to 10%, 11% and 12.9% respectively in February 2010.

Despite significant fall of the yields on treasury bills in recent years, maximum short-termdeposit rates and commercial banks lending rates remain very high, and there exist wideinterest rate spreads. Successful disinflation allowed the weighted yield on treasury bills to fallfrom over 25% in early 2005 to 11.3% in February 2010. By contrast, commercial banks lendingrates remained sticky above 20% due to high operating costs and high risks of bank credits.

Table-2.12 Trends of Nominal Interest rates (per cent per annum, end period)

Items 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Bank lending rare- min 18 18 17 21 21 21 18 18 18 18Bank lending rare- max 24 24 24 36.5 36.5 30 28 27 27 27

Deposit rate (SB) min 8 8 8 8 10 5 5 5 4 4Deposit rate (SB) max 10 10 10 17 17 10 7 7 7 7Time dep (3 months) min 9.5 9.5 6 7 8 5 5 5 5 5Time dep (3 months) max 12.5 12.5 13 22 22 14 8.5 12.9 13.6 15.5Time dep (6 months) min 10 10 6 8 8 7 6 6 6 6Time dep (6 months) max 12.5 12.5 13 22 22 15 13 12.9 13.6 15.5Time dep (12 month) min 11 11 7 10 12 7 6 7 7 6Time dep (12 month) max 12.5 12.5 13 22 23 13 13 12.9 13.6 15.5Govt. treasury bills 12 15 20 31 30 16 12.8 13.7 13.6 14.2CBG Bank Rate 10 13 18 29 28 14 9 10 10 10CBG Rediscount Rate 15 18 23 34 33 19 14 15 16 16

Range = Maximum-MinimumBank lending rate 6 6 7 15.5 15.5 9 10 9 9 9Deposit rate (SB) 2 2 2 9 7 5 2 2 3 3

Time deposits (3 months) 3 3 7 15 14 9 3.5 7.9 8.6 9.5Time deposits (6 months) 2.5 2.5 7 14 14 8 7 6.9 7.6 9.5Time deposits (12 month) 1.5 1.5 6 12 11 6 7 5.9 6.6 9.5

Factors Influencing Interest RatesInflation (GDP-Deflator) 3.6 14.9 15.0 22.9 13.6 3.9 0.0 2.0 8.0 4.7CPI-Inflation 0.9 4.5 8.6 17.0 14.3 5.0 2.1 5.4 4.9 4.5Real GDP-Growth Rate 5.5 5.7 0.7 2.4 2.1 -0.1 3.1 6.3 6.3 5.0Exch. Rate change (%) 12.2 22.7 27.0 43.2 5.3 -4.8 -1.8 -11.4 -9.8 15.9

33


34/43


2.13 BOP, Foreign Exchange Reserves and Exchange Rates

(a) BOP Situation in the first three Quarters of 2009

(a) Preliminary BOP estimates by the CBG for Jan-Sep 2009 indicated a higher overalldeficit at D1066.6 million than D721.6 million in Jan-Sep 2008.

(b) The current account recorded a surplus of D751 million in Jan-Sep 2009 compared to adeficit of D650.8 million in Jan-Sep 2008. But, the capital and financial account balanceworsened significantly to a deficit of D1817.5 million in Jan-Sep 2009 from a deficit of onlyD70.8 million in Jan-Sep 2008.

(c) The goods account balance improved from a deficit of D2.0 billion in Jan-Sep 2008 toD1.65 billion in Jan-Sep 2009 attributed to the surge in exports which more than offset theincrease in imports. Exports, including re-exports increased from D2.3 billion Jan-Sep

2008 to D3.6 billion in Jan-Sep 2009, while imports increased from D4.3 billion to D5.2billion over the period, resulting in narrowing down the trade deficit.

(d) Net factor income deficit decreased from D585 million in Jan-Sep 2008 to D200 million inJan-Sep 2009, while non-factor services surplus deteriorated from D530 million to D317million and net transfers improved from D1.4 billion to D2.3 billion over the period.

.(b) Overall BOP Situation in 2009

(a) There was significant improvement in the BOP situation in the fourth quarter and theoverall BOP outcome in 2009 was not as bad as they were anticipated earlier.

(b) Preliminary Balance of payments estimates by the CBG indicate an overall surplus ofD137.9 million in 2009 compared to a deficit of D811.3 million in 2008. The currentaccount balance including transfers recorded a surplus of D1.54 billion relative to a deficitof D1.2 billion in 2008 while the capital and financial account balance worsened to a deficitof D1.4 billion.

(c) Foreign Exchange Reserves

(c) As at end-January 2010, gross international reserves totaled US$183.3 million,equivalent to 7.2 months of import cover.

(d) Volume of transactions in the domestic foreign exchange market remained virtuallyunchanged at US$1.54 billion in January 2010 from a year earlier.

34


35/43


Table-2.13-A Balance of Payments during the First three Quarters of 2009 (Million Dalasi)

(Million Dalasi) 2008 2009-Q1 2009-Q2

2009-Q3

2008Q1-Q3

2009Q1-Q3

1 Goods balance (1.1-1.2) -2919.2 -683.9 -399 -565.0 -2001.0 -1647.91.1 Exports of goods (a+b+c) 3175.7 934.5 1331.6 1294.8 2292.5 3560.9

a. Exports of goods in trade stat 330.4 239.1 597.8 503.1 274.4 1340.0b. Re-exports 2489.1 660.9 706.8 759.5 1753.4 2127.2c. Other goods 356.2 34.5 27 32.2 264.7 93.7

1.2 Imports of goods fob 6094.9 1618.4 1730.6 1859.8 4293.5 5208.82 Services, net (2.1 to 2.7) 757.5 370.3 34.7 -87.7 529.8 317.3

2.1 Transport -434.1 -123.6 -93.25 -186.1 -305.2 -402.92.2 Travel 1624.1 615.7 190.1 151.8 1141.1 957.62.3 Communications 214.4 52.4 82.9 80.6 173.4 215.92.4 Insurance -146 -38 -42.8 -45.3 -105.1 -126.12.5 Construction 120 12.9 14.8 45.6 61.6 73.32.6 Information technology -70.9 -23.6 7.45 -9.8 -23.5 -26.02.7 Others business -550 -125.5

-124.5-124.5 -412.5 -374.5

3 Income -757.4 -74.9 -57.5 -67.8 -585.9 -200.23.1 Investment income -931.4 -115.2 -101.2 -106.2 -719.2 -322.53.2 Compensation to labor 174 40.3 43.65 38.4 133.3 122.4

4 Transfers, net (4.1+4.2+4.3) 1809.4 154.1 834.6 1292.9 1406.3 2281.64.1 Official transfer 137.2 108.3 151.9 289.6 112.2 549.84.2 Remittances 1195.8 290.2 434.2 333.9 839 1058.34.3 Other transfer 476.4 -244.4 248.5 669.4 455.1 673.5

5 Current account balance -1109.7 -234.4 412.8 572.6 -650.8 751.06 Capital Account 24.4 0 0 236.4 22.3 236.47 Financial Account (7.1+7.2) 317.9 -234.6 -277.4 -1541.9 -93.1 -2053.9

7.1 Foreign direct investment 1555.7 262.7 262.7 262.7 1189.3 788.1

7.2 Other investment -1429.6 -311.1 -484.2 -439.1 -1156 -1234.47.3 Reserve change 191.8 -186.2 -55.9 -1365.5 -126.4 -1607.6

8 Capital and Financial A/C(6+7)

342.3 -234.6 -277.4 -1305.5 -70.8 -1817.5

9 Overall BOP Balance (5+8) -767.4 -469 135.4 -733.0 -721.6 -1066.6

Foreign Exchange Reserve 4370.6 4184.4 4128.5 2762.97

Equi to months of imports 2.0 7.1 6.5 4.1

Ave.Exch.rate(D/$) 22.35 26.19 26.8 26.8GDP at cmp (Million Dalasi) 18240 19529 19529 19529.0 18240 19529


35


36/43


Table-2.13-B Balance of Payments in the First Three Quarters of 2010 (As

% of GDP)

BOP as % of GDP 2008 2009-Q1 2009-Q2

2009-Q3

2008Q1-Q3

2009Q1-Q3

1 Goods balance (1.1-1.2) -16.0 -3.5 -2.0 -2.9 -11.0 -8.4

1.1 Exports of goods (a+b+c) 17.4 4.8 6.8 6.6 12.6 18.2a. Exports of goods in trade stat 1.8 1.2 3.1 2.6 1.5 6.9b. Re-exports 13.6 3.4 3.6 3.9 9.6 10.9c. Other goods 2.0 0.2 0.1 0.2 1.5 0.5

1.2 Imports of goods fob 33.4 8.3 8.9 9.5 23.5 26.72 Services, net (2.1 to 2.7) 4.2 1.9 0.2 -0.4 2.9 1.6

2.1 Transport -2.4 -0.6 -0.5 -1.0 -1.7 -2.12.2 Travel 8.9 3.2 1.0 0.8 6.3 4.92.3 Communications 1.2 0.3 0.4 0.4 1.0 1.12.4 Insurance -0.8 -0.2 -0.2 -0.2 -0.6 -0.62.5 Construction 0.7 0.1 0.1 0.2 0.3 0.42.6 Information technology -0.4 -0.1 0.0 -0.1 -0.1 -0.12.7 Others business -3.0 -0.6 -0.6 -0.6 -2.3 -1.9

3 Income -4.2 -0.4 -0.3 -0.3 -3.2 -1.03.1 Investment income -5.1 -0.6 -0.5 -0.5 -3.9 -1.73.2 Compensation to labor 1.0 0.2 0.2 0.2 0.7 0.6

4 Transfers, net (4.1+4.2+4.3) 9.9 0.8 4.3 6.6 7.7 11.74.1 Official transfer 0.8 0.6 0.8 1.5 0.6 2.84.2 Remittances 6.6 1.5 2.2 1.7 4.6 5.44.3 Other transfer 2.6 -1.3 1.3 3.4 2.5 3.4

5 Current account balance -6.1 -1.2 2.1 2.9 -3.6 3.86 Capital Account 0.1 0.0 0.0 1.2 0.1 1.27 Financial Account (7.1+7.2) 1.7 -1.2 -1.4 -7.9 -0.5 -10.5

7.1 Foreign direct investment 8.5 1.3 1.3 1.3 6.5 4.07.2 Other investment -7.8 -1.6 -2.5 -2.2 -6.3 -6.37.3 Reserve change 1.1 -1.0 -0.3 -7.0 -0.7 -8.2


1.9 -1.2 -1.4 -6.7 -0.4 -9.3

9 Overall BOP Balance (5+8) -4.2 -2.4 0.7 -3.8 -4.0 -5.5Foreign Exchange Reserve 24.0 21.4 21.1 14.1


36


37/43


Table-2.13-C: Quarterly BOP Summary Table 2008-200Q3Percentage change (in terms of Dalasi BOP) over same quarter of previous year

(%)Items 2009-Q1 2009-Q2 2009-Q3 2009-

Q1-Q31 Goods balance (1.1-1.2) -10.2 -34.8 -10.0 -17.6

1.1 Exports of goods (a+b+c) 16.1 68.9 85.1 55.3a. Exports of goods in trade stat 246.5 377.9 526.5 388.3

b. Re-exports 3.3 23.6 40.1 21.3c. Other goods -64.2 -70.4 -58.2 -64.6

1.2 Imports of goods fob 3.3 23.6 40.1 21.32 Services, net (2.1 to 2.7) -31.7 -39.1 26.1 -40.1

2.1 Transport -10.0 -3.2 160.3 32.02.2 Travel -23.1 -3.2 5.5 -16.12.3 Communications 6.5 4.4 79.9 24.5

2.4 Insurance 5.3 10.3 49.8 19.92.5 Construction 303.1 -73.5 1725.6 19.12.6 Information technology #DIV/0! -472.5 -54.2 10.62.7 Others business -8.7 -9.5 -9.5 -9.2

3 Income -67.9 -67.3 -61.7 -65.83.1 Investment income -58.2 -53.9 -52.6 -55.23.2 Compensation to labor -5.6 0.1 -18.3 -8.2

4 Transfers, net (4.1+4.2+4.3) -66.3 85.5 158.9 62.24.1 Official transfer 153.6 275.1 898.7 390.04.2 Remittances 32.4 74.3 -9.9 26.14.3 Other transfer -225.3 54.9 571.4 48.0

5 Current account balance -4883.7 -246.9 -252.8 -215.46 Capital Account -100.0 7287.5 960.1

7 Financial Account (7.1+7.2) 1791.9 158.8 -5918.6 2106.2

7.1 Foreign direct investment -36.1 -36.1 -28.3 -33.77.2 Other investment -64.0 37.8 -825.8 6.87.3 Reserve change -142.2 -66.5 241.0 1171.9


1791.9 214.9 -4495.7 2467.1

9 Overall BOP Balance (5+8) 6153.3 -136.7 112.5 47.8Foreign Exchange Reserve -5.5 -3.1 -28.4

Equi to months of imports -8.6 -21.6 -48.9Ave.Exch.rate(D/$) 23.4 30.9 22.8

GDP at cmp 7.1 7.1 7.1 7.1

37


38/43


2.14 Exchange Rate

In 2009, the Dalasi depreciated against the British Pound by 7.2 percent, the US Dollar by 9.8

percent, the CFA by 11.2 percent and the Euro by 11.8 percent. However, in January 2010, the

Dalasi appreciated against the British Pound by 0.08 percent, the US Dollar by 0.02 percent,

CHF by 2.01 percent and the CFA by 2.12 percent, while Dalasi depreciated against Euro by

0.37 percent from end-December 2009.

In January 2010, Dalasi depreciated against UK by 15.5%, against US$ by 3.3%, CHF by21.3%, Euro by 10.1% and CFA by 16.4% over January 2009.

Table-2.14 End-period mid-market exchange rates (Dalasi per unit offoreign currency)

Year Month UK US$ CHF Euro CFA (5000)

2009 Jan 37.25 26.07 20.85 262.81 33.52Feb 37.38 26.11 22.04 257.78 33.6Mar 38.18 26.38 23.31 259.30 35.22Apr 39.05 26.80 23.00 262.17 35.32May 41.40 26.74 22.40 265.98 37.00June 43.13 26.87 21.96 272.87 37.04July 43.31 26.79 24.42 277.53 38.06Aug 43.80 26.63 24.36 281.45 37.68Sept 42.99 26.95 25.47 283.58 38.61Oct 43.48 26.91 26.07 297.13 39.61Nov 43.88 26.93 26.65 295.53 40.15Dec 43.04 26.94 25.81 288.26 39.87

2010 Jan 43.01 26.94 25.29 289.32 39.03

Annual Rate of appreciation (-) / depreciation (+) of Dalasi (in % over same month in 2008)

2009 Jan -15.9 16.7 4.7 1.9 3.9Feb -12.2 19.3 12.6 4.1 5.7Mar -6.6 35.6 21.7 14.2 8.4Apr -1.2 33.2 20.1 12.4 11.1May 2.9 29.5 15.1 15.3 8.2June 5.8 30.1 14.0 15.5 11.1July 4.0 27.9 22.7 18.2 10.6Aug 7.5 24.6 21.3 16.9 12.8Sept 3.2 16.6 28.2 16.9 13.7Oct 7.4 8.1 29.4 20.4 15.1Nov 8.2 2.5 32.8 20.6 14.4

Dec 7.2 1.5 12.5 11.8 11.22010 Jan 15.5 3.3 21.3 10.1 16.4

Source: Central Bank of Gambia (CBG)

38


39/43


3. Recent Policy Developments and Development Issues

3.1 Highlights of the Budget-2010

The Budget is based on sound macroeconomic policy framework to support inclusive growth, to

maintain low inflation and improve debt sustainability.

102. The 2010 Budget represents a decisive step by Government to tackle The Gambias

heavy debt burden, in particular interest payments on domestic debt. This budget aims

to reduce debt and create savings that could become an important resource for other

non-interest expenditures. Working closely with the Central Bank of The Gambia,

Government believes that with sound budget implementation, T-bill yields can be

significantly reduced in the months ahead.

103. Total revenue and grants is expected to increase from its budget of D4.582

billion in 2009 to D5.474 billion in 2010. This increase is driven mainly by increases in

tax revenues, project grants and budget support. Tax revenue is projected to increase

from its budget figure of D3.39 billion in 2009 to D3.991 billion in 2010, representing

18.58% of GDP. The overall increase in grants from a budget of D811 million in 2009 to

D1.061 billion in 2010 is mainly due to expected increases in project disbursements from

D513 million to D636 million and additional HIPC and EU budget support of D425

million.

104. Expenditure and Net Lending is projected to increase from D5.363 billion in

2009 to D5.772 billion in 2010. Interest payments on debt are projected to decline from

a budget of D845 million in 2009 to D762 million in 2010. Other current expenditures,

including externally financed, are projected to rise from D4.461 billion in 2009 D4.948

billion in 2010, of which Personnel Emoluments is expected to increase from D1.035

billion to D1.499 billion in 2009 to D1.499 billion in 2010.

105. The budget deficit for 2010 is projected at D298.7 million representing 1.39% of

GDP. This deficit will be fully financed through domestic and external resources. The

net-external financing is estimated at D354.7 million while net domestic financing, which

includes repayment of arrears and domestic loans is in the sum of D120 million.

Proceeds from capital revenue is equivalent to D64 million.

39


40/43


40


41/43


3.2 Taxation Measures Announced in the Budget for 2010

109. The corporate tax will be gradually reduced, starting with a 2 percent reductionfrom 35 percent to 33 percent for 2010. Similarly, the turnover tax will be reducedby 0.5 percent. .... Meanwhile, the implementation of the tax on interest income hasbeen differed.

110. Furthermore, following the completion of a nationwide Rental Property Survey,GRA will embark on a more rigorous collection of taxes on rented properties withinthe taxable threshold.

111. In 2008, Government zero-rated the sales tax on rice as a policy measure tominimize the impact of the food crisis, thus foregoing significant revenues. Now thatwe have passed the episode of high food prices and in a bid to encourage localagricultural production, Government would restore the sales tax on imported rice tothe 5% level.

112. Excise tax on alcoholic products and unmanufactured tobacco will be increased

in the following order: Unmanufactured tobacco from D26.04/kilo to D75/kilo; Winefrom D100/litre to D150/litre; Spirits from D150/litre to D175/litre; and Beer fromD75/litre to D100/litre.

113. Significant investment is being made to enhance the security features of ournational identification documents by going biometric, and as a result, the cost ofthese documents will be increased as follows: Drivers License from D300 to D500;Provisional Learners License from D50 to D100; International Drivers License fromD500 to D1000; Passport from D500 to D1000. Furthermore, Personalised NumberPlates will also be increased from D2500 to D5000.

114. The Road Tax Private and the Motor Vehicle Yearly License Private were last

reviewed fifteen years ago. Consequently, Road Tax Private will be increased asfollows: Less than 1 ton from D163 to D300; 1 to 2.5 tons from D205 to D400; and2.5 tons and above from D251 to D500. The Motor Vehicle Yearly License Privatewill be increased as follows: Less than 1 ton from D221 to D400; 1 to 2.5 tons fromD342 to D600; and 2.5 tons and above from D506 to D1000.

115. Although the Police will still be responsible for the technical aspects of issuingvehicle number plates and motor vehicle licences, all payments for road tax, vehiclelicenses and number plates will henceforth be made with the Gambia RevenueAuthority. The licence and the plates will only be issued by the Police uponpresentation of a GRA payment receipt. This will enhance revenue administration,while allowing the Police to concentrate on their core functions.

116. The personal income tax structure is being reviewed to bring it in line with theprevailing economic conditions and to make it more progressive, fairer and revenueproductive. Also, the audit and enforcement capacity of the Department of DomesticTaxes of GRA is being strengthened in anticipation of the planned introduction of avalue added tax (VAT) system in place of sales tax on or before January 2013.These reform measures are aimed at ensuring that our tax system remains efficientand equitable.

41


42/43


3.3 IMF Executive Board Completes Sixth Review Under The Gambias ECF Arrangementand Approves a 12-Month Extension and US$ US$7.1 Million Augmentation

As per the Press Release No. 10/55 dated February 19, 2010, posted on the InternationalMonetary Fund (IMF) Website, the Executive Board of the IMF completed the sixth review of

The Gambias economic performance under a program supported by the Extended CreditFacility (ECF)6. The Board approved a waiver for the non-observance of the fiscal performancecriterion based

Gambia Monthly Economic Bulletin February 2010

Documents

Transcript of Gambia Monthly Economic Bulletin February 2010