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THE GAMBIA MONTHLY

ECONOMIC BULLETIN1

April 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 Bulletinprovides an update on recent economic developments andpolicies in the Republic of the Gambia. This Bulletin has been prepared by a research team comprisingTarun Das, Macroeconomic Adviser; Tamsir Cham, Director and Ami Khan and Momodou Taal, Principal

Economists in the Economic Management and Planning Unit (EMPU) of the Ministry of Finance and

Economic Affairs (DOSFEA); with key inputs from the Debt Management Adviser, Fiscal/Financial

Adviser, the Gambian Bureau of Statistics (GBOS), the Central Bank of Gambia (CBG) and the Gambian

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

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At a Glance- April 2009 Continued

EconomicIndicators

LatestReference

Period

Status in the latestreference period

in 2009

Status in theCorrespondingperiod in 2008

Outlook for 2009

5. Composition of Outstanding Domestic Public Debt (Percentage share in total)

Treasury bills Feb 2009 79.5 86.6Sukuk Al-Salam Feb 2009 1.5 1.3Govt Bonds Feb 2009 4.2 4.6Non-int. bearingTreasury Notes

Feb 2009 14.8 7.6

Total Feb 2009 100 100

Share of non-interestbearing Treasury notesis expected to decline.

6. Composition of Interest Bearing Domestic Debt By Holders (in percentage)

Central Bank Feb 2008 8 8

Banks Feb 2008 63 56Parastatals Feb 2008 15 18Other Non Banks Feb 2008 14 18Total Feb 2008 100 100

Likely to remain stable.

7. Composition of Interest Bearing Domestic Debt By Instruments (in percentage)

Treasury Bills Feb 2008 93 94Sukuk Al Salaam Feb 2008 2 1Govt Bonds Feb 2008 5 5Total dom. Debt Feb 2008 100 100

Expected to remainstable.

8. Maturity Composition of Treasury Bills (in Percentage)

91-days Feb 2008 15 11182-days Feb 2008 16 22364-days Feb 2008 69 67

9. Yields of Treasury Bills (in Percentage)

91-days Feb 2008 11.1 10.9182-days Feb 2008 12.8 11.9364-days Feb 2008 14.4 13.7

Yields may come downwhen CPI inflationdecelerates.

10. Annual Growth Rate of Money Supply (Percentage)

Broad Moneysupply (M3)

Jan-2009 19.3 3.9

Reserve Money Jan-2009 12.7 0.1

Broad money growthrate is likely todecelerate.

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At a Glance- April 2009 Continued

EconomicIndicators

LatestReference

Period

Status in the latestreference period

in 2009

Status in theCorrespondingperiod in 2008

Outlook for 2009

11. CBG Policy Rates and Banks Lending rates (Percentage per annum)

CBG Bank rate Mar 2009 10 10Rediscount rate Mar 2009 16 15Bank lendingrate

Mar 2009 18 to 27 18 to 27

Banks lending rates maydecline if the credit ratingsystem is strengthened.

12. Share of Banks Foreign Assets/ Liabilities in Total Assets/ Liabilities (%)

Foreign assets Jan 2009 9.2 14.4Foreign liabilities Jan 2009 3.1 4..1

Likely to remain stable

13. Balance of Payments (billion Dalasi)

Goods A/CBalance

2008 (-) 5.27 (-) 4.27

Goods exports 2008 2.16 2.27Goods imports 2008 7.41 6.54

Likely to remain underpressure.

Overall BOPBalance

2008 (-) 1.30 0.80 Likely to deterioratefurther in 2009.

14. Inter-bank Exchange Rate- End Period Mid-Market RatesDalasi per unit of foreign currency

US$ Mar 2009 26.14 19.46UK Mar 2009 37.25 40.87Euro Mar 2009 34.15 30.82CHF Mar 2009 22.59 19.15CFA (5000) Mar 2009 257.18 239.16

Dalasi is likely todepreciate against majorcurrencies.

15. Foreign Exchange Reserves (US$ Million)

FER End-Jan2009

116.8 140.4

Inter-bank FEtransactions

Jan 2009 1300 1700

Likely to remain underpressure.

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volumes continue to shrink rapidly, while production and employment data suggest that theglobal activity continues to contract in the current quarter.

Figure-1: Trends of Global Growth Rates and World Trade

Emerging Asia

Emerging Asia is being hurt through its reliance on manufacturing exports. The regionsmanufacturing activity has been particularly hurt by collapsing IT exports and decline of

automobile and electronics production. Growth in China is also slowing, albeit from a high rate(13 percent in 2007), and domestic demand is being supported by strong policy stimulus.

Africa and the Middle East

In Africa and the Middle East, growth is also projected to slow, but more modestly than in otherregions. In Africa, growth is expected to moderate particularly in commodity exporting countries,and several countries are experiencing reduced demand for their exports, lower remittances,and foreign direct investment (FDI), while aid flows are under threat. In the Middle East, theeffects of the financial crisis have been more limited so far. Despite the sharp drop in oil prices,government spending is largely being sustained to cushion the toll on economic activity.

Global Responses and Risks

Governments and central banks across countries have responded to the crisis through large,aggressive and unconventional fiscal and monetary measures to bail out failed financial andother strategic sectors and to boost domestic consumption and investment demand. However,there is a contentious debate on whether these measures are adequate and appropriate, andwhen, if at all, they will start to show some positive and encouraging results.

1.2 Deflation Risks and Prospects of Emerging Economies

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Deflation risks, concentrated in the major advanced economies, could reinforce a deeper andlonger downturn for the global economy. Expectations of falling prices could encourage bothhouseholds and business houses to postpone consumption and investment spending and pushthe economy into deeper recession. With policy rates already near the zero limits, monetaryauthorities in many countries have limited capacity to counteract deflationary pressures throughtraditional means, while the effectiveness of less conventional approaches is uncertain.

There is a serious risk that emerging economies will not be able to secure adequate externalfinancing, especially given global deleveraging, potentially large borrowing needs of advancedeconomies and increased domestic bias guided by growing feeling of strong nationalism.Overall, risks are largest for emerging economies that relied on cross-border flows to financecurrent account deficits or to fund the activities of their financial or corporate sectors.

1.3 Decisions of G20 Meeting at London on April 2, 2009

The Group of Twenty (G20) Leaders in their meeting on April 2, 2009 at London agreed to takecollective action to strengthen financial regulation and supervision for improving transparencyand accountability, enhancing sound regulation, promoting integrity in financial markets and

reinforcing international cooperation. Amongst others, major actions include the following:

(a) To expand the Financial Stability Forum with broadened mandate and re-established with astronger institutional basis and enhanced capacity as the Financial Stability Board (FSB).

(b) Concrete measures for strengthening international cooperation and prudential regulation toassure economic recovery and to maintain quality of capital thereafter.

(c) Hedge funds or their managers will be registered and will be required to disclose appropriate

information on an ongoing basis.

(d) Principles on pay and compensation in significant financial institutions to ensure thatcompensation structures are consistent with firms long-term goals and prudent risk taking.

(e) Information exchange on tax havens and non-cooperative jurisdictions to protect public

finances and international standards against the risks posed by non-cooperative jurisdictions.

(f) Reviewing tax treaty policies according to agreed principles of tax transparency and

information exchange.

(g) To improve accounting standards for realistic and fair valuation of financial instruments

based on their liquidity and investors holding horizons.

(h) To improve accounting standards for recognition and provisioning of loan-loss, off-balancesheet contingent liabilities and valuation uncertainty;

(i) More effective oversight of the activities of the Credit Rating Agencies, as they are essentialfinancial market participants.

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1.4 India-Africa Partnership Conclave held in New Delhi on 23-