Gambia Monthly Economic Bulletin January 2010

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    The Gambia Monthly Economic Bulletin- January 2010

    THE GAMBIA MONTHLYECONOMIC BULLETIN 1

    January 2010

    Institutional Support Project for Economic and Financial Governance (ISPEFG)Ministry of Finance and Economic Affairs (MOFEA)

    The Republic of GambiaThe Quadrangle, Banjul, the Gambia

    1 The Gambia Monthly Economic Bulletin provides an update on the recent economic developments and policies in the Republic of the Gambia. The Bulletin is prepared, under the overall guidance of theHonorable Permanent Secretary Mr. Serign Cham, by a research team comprising Tamsir Cham,Director; Momodou Taal, Principal Economist; Amie Khan, Senior Economist and Ceesay Chiel,Economist in the Economic Management and Planning Unit (EMPU) and Tarun Das, MacroeconomicAdviser (ISPEFG); with key inputs from the Ministry of Finance and Economic Affairs (MOFEA), theCentral Bank of Gambia (CBG), the Gambian Bureau of Statistics (GBOS), and the Gambian RevenueAuthority (GRA).

    It is needless to point out that the views expressed in this Bulletin solely indicate the views of theResearch Team, which do not necessarily imply the views of the MOFEA, the budgetary agencies or theorganizations they are associated with.

    Any questions and feedback can be addressed to: Either Tamsir Cham ( tamsirc@hotmail.com ) or Tarun Das ( das.tarun@hotmail.com )

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    mailto:tamsirc@hotmail.commailto:das.tarun@hotmail.commailto:tamsirc@hotmail.commailto:das.tarun@hotmail.com
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    The Gambia Monthly Economic Bulletin- January 2010

    Source: http://www.nationmaster.com

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    http://www.nationmaster.com/http://www.nationmaster.com/
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    The Gambia Monthly Economic Bulletin- January 2010

    Concluding Paragraphs of the Budget 2010 Speech byHonorable Abdou Kolley,

    Minister of Finance and Economic Affairs,The Republic of the Gambia

    117. The zero-rating of sales tax on rice in 2008 to minimize the impact of thefood crisis on the poor people and the implicit subsidy on the price of oil byleaving the pump price unchanged, when international oil prices were rising,were policy measures that resulted in revenue losses equivalent to 2 percentof GDP. These developments, coupled with the financial and economiccrises that ensued, have made 2008 a very difficult year. In 2009 however,the Gambian economy performed better than expected because of stronggrowth in agriculture.

    118. In spite of the positive growth registered in 2009, the Gambia still faces aheavy debt burden. Interest on government debt is expected to consumenearly 20% of government revenues in 2009, mostly in interest on domesticdebt. This is why in the 2010 budget, Government intends to lower thedomestic debt, ease pressure on Treasury bill yields, generate savings fromlower interest payments and strengthen public financial management.

    119. Achieving these goals call for strict discipline in budget execution. This is

    a challenge that we face as a country with limited resources but together,with our dynamic leaders guidance, Sheikh Professor Dr. Alhaji Yahya A.J.J.Jammeh, we will thrive and demonstrate that we have the people, the willand commitment, and with Allahs Blessing, to navigate through difficulttimes.

    120. As we confront these formidable challenges, I call on our developmentpartners, bilateral and multilateral, whose efforts in support of our development we so cherish, to continue to accompany us with renewedvigour and a common sense of purpose.

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    The Gambia Monthly Economic Bulletin- January 2010

    Contents

    Items Page

    Basic Facts about the Gambia 2Concluding paragraphs of the Budget 2010 Speech by Honorable AbdouKolley, Minister for Finance and Economic Affairs

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    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

    9-15914

    2. Current State of the Gambian Economy2.1 Overall and Sectoral GDP Growth Rates2.2 Consumer Price Index (CPI) and Inflation2.3 Projection of CPI inflation for the year 2009

    16-36161820

    2.4 Government Fiscal Performance in 2009 and Budget 20102.5 Salient features of the Budget 20102.6 Taxation Measures Announced in 2010 Budget2.7 Domestic Debt and Outstanding Treasury Bills2.8 Treasury Bills Yields2.9 Money Supply2.10 Performance of Commercial Banks2.11 Commercial Banks Assets2.12 Commercial Banks Liabilities2.13 Interest Rates and Central Banks Policy Rates2.14 BOP, Foreign Exchange Reserves and Exchange Rates2.15 Exchange Rates

    212324252627282930313236

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    The Gambia Monthly Economic Bulletin- January 2010

    ISPEFG Project and Monthly Bulletin Research Team

    Project Supervisor Honorable Mr. Serign Cham,Permanent Secretary

    Project Coordinator Mr. Momodou Cham

    Director (EMPU)Principal EconomistSenior EconomistEconomistTechnical Assistant (Macroeconomic)

    Dr. Tamsir ChamMr. Momodou TaalMs. Amie KhanMs. Ceesay ChilelDr. Tarun Das

    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.

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    The Gambia Monthly Economic Bulletin- January 2010

    HIGHLIGHTS

    Impact of Global Financial Crisis and Economic Slowdown

    As per the IMF projections made in the WEO October 2009, global output is expected tocontract by about 1% in 2009 followed by a positive growth of 3% in 2010 . IMF concludes that

    although the global economy has started to pull out of the unprecedented recession witnessedsince the World War-II, recovery is uneven, slow, and jobless. In African developing economies,growth is projected to slow down significantly from 5.2 percent in 2008 to 2 percent in 2009.

    Global Food and Oil Prices

    Due to sluggish demand and economic slowdown, there were significant decline of 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, butcommodity prices still rule much below the peaks reached in 2008.

    At the beginning of 2009, given weakness in the Chinese demand and negative growth in the USand 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 pricesstarted rising and increased to US$74.67 per barrel in December 2009. Recent forward marketsproject oil prices around $75 for 2010, which is not much above current price.

    Impact on the Gambian Economy

    A global crisis of this magnitude is bound to have adverse impact on any country. The 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 contributed by favorable monsoon at home and very goodperformance by electricity, telecom and financial sectors, the real GDP growth at constant marketprices improved from 6% in 2007 to 6.3% in 2008, supported by a spectacular growth of 26.6% in

    agriculture GDP and a growth of 4.2% in services GDP despite decline by 1.2% in industrial GDP. Even though the Gambian economy was relatively insulated from the first round effects of the

    global financial crisis, its spread to the real sectors of the global economy had adverse impact onthe Gambian manufacturing production, selected services and trade sectors. In particular,exports, retail trade, tourism and foreign direct investment (FDI) declined since the second half of 2008 due to weak global demand.

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

    CPI Inflation

    As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflation deceleratedsignificantly from 6.8