The Gambia Monthly Economic Abstract- June 2009

THE GAMBIA MONTHLY

ECONOMIC ABSTRACT1

June 2009

Institutional Support Project for Economic and Financial Governance (ISPEFG)

Department of State for Finance and Economic Affairs (DOSFEA)
The Republic of Gambia
The Quadrangle, Banjul, the Gambia

1
The Gambia Monthly Economic Abstract is an abridged version of the Gambia Monthly/ Quarterly
Economic Bulletin published every month. It provides a brief account of the current state of the Gambian
economy. The Abstract has been prepared jointly by Dr. Tamsir Cham, Director; Economic Management
and Planning Unit (EMPU) and Dr. Tarun Das, Macroeconomic Adviser (ISPEFG), Ministry of Finance
and Economic Affairs (MOFEA) under the overall direction of the Permanent Secretary, MOFEA.

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

1
 The Gambia Monthly Economic Abstract- June 2009

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 December
Items (Year) Units Value Rank in the World
from top
in descending order
Area (2009) Sq. km. 11,300 171 out of 248
countries
Population (2008) Million 1.735 148 out of 241
countries
GDP PPP (2004) Million US$ 3284 167 out of 224
countries
GDP Nominal (2006) Million US$ 511 199 out of 229
countries
GDP PPP per capita (2004) US$ 1945 177 out of 223
countries
GDP per capita (2006) US$ 329 192 out of 207
countries
Poverty Ratio (% of people Percent 59 7 out of 59 countries

2
 The Gambia Monthly Economic Abstract- June 2009

below One-US$) (2000)

Source: http://www.nationmaster.com

3
 The Gambia Monthly Economic Abstract- June 2009

HIGHLIGHTS
CPI Inflation and Oil Prices

• Annual point-to-point CPI inflation accelerated from 1.6% (Food 1.9% and non-food 1%) in May
2008 to 5.9% (Food 7.1% and non-food 4.5%) in May 2009. The 12-month average inflation rate
also accelerated to 5.8% in May 2009 from 4.9% a year ago.

• Given global economic slowdown, global crude oil prices were projected to remain soft and rule
around $51 per barrel in 2009. However, since April 2009 petroleum prices started rising and
increased to US$60/barrel in May 2009 and US$70/barrel in June 2009.

Government Financial Performance

• Government Financial Performance was mixed in the first half of 2009 (Jan-June 2009) than in
the first half of 2008. In Jan-June 2009 revenue and grants increased by 15.5% aided by 13.3%
increase in taxes, 8.9% increase in non-taxes and 63.7% increase in grants over Jan-June 2008.

• Overall, there was a fiscal deficit of 198 million Dalasi in Jan-June 2009, higher than the fiscal
deficit of 86 million Dalasi in Jan-June 2008, due to significant increase of capital expenditure by
55.2% in Jan-June 2009 over Jan-June 2008,

Domestic Debt and Treasury Bills Yields

• At the end of May 2009, outstanding domestic debt stood at D5.6 billion (28.4% of GDP),
compared to D6 billion (33.3% of GDP) a year ago. Treasury bills accounted for 84.5% of total
domestic debt at the end of May 2009, compared to 80.4% a year ago.

• Despite significant decline of CPI inflation from 7% in Jan 2009 to 5.9% in May 2009, average
yield on the 91-day increased from 10.5% in Jan 2009 to 12.5% in May 2009, yield of 182-day
bills from 12.1% to 13.8% and that of 364-day bills from 14.4% to 15.3% over the period.

Money Supply and Bank Credits

• Annual growth rate of broad money supply (M3) accelerated from 7.5% in May 2008 to 17.3% in
May 2009, supported by 18.1% growth in currency, 10.4% growth in demand deposits, 10.8%
growth in savings deposits and 38.1% growth in time deposits. On the demand side, growth was
mainly due to 35% growth in domestic credits.

• Domestic credit increased from D5.2 billion in May 2008 to D7 billion in May 2009, supported by
44.1% growth in government borrowing, 67.3% growth in credits to public entities and 33.3%
growth in credits to the private sector.

• Gambian banks were least affected by global financial crisis as the Gambian banks do not have
large exposure to foreign assets or liabilities. At end- May 2009, foreign assets constituted only
7.5% of total assets and external liabilities constituted only 1.5% of total liabilities.

Foreign Exchange Reserves and Exchange Rate

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

• In June 2009, the Dalasi depreciated against the major currencies viz. the British Pound, Swedish
Kroner, CFA Franc, Euro and US dollar over June 2008.

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 The Gambia Monthly Economic Abstract- June 2009

At a Glance- June 2009

Economic Latest Status in the Status in the Outlook for 2009
Indicators Reference latest Corresponding
Period reference period in the
period previous year
Real GDP (FC) Calendar year Overall 7.2 Overall 6.1 Overall 3.6 to 4.5
Growth rate (%) 2008 Agriculture 28.4 Agriculture 3.9 Agriculture 4.0 to 6.0
Industry 0.7 Industry (-)3.1 Industry 2.0 to 2.4
Services (-)0.6 Services 10.4 Services 2.4 to 4.4
CPI inflation (%) May 2009 Overall 5.9 Overall 1.6 Expected to decline in
Food 7.1 Food 1.9 the remaining months of
Non-food 4.5 Non-food 1.0 the year
Brent crude oil price June 2009 Average US$50 Average May stabilize around
(US$/ brl) US$132 US$60 by the end-2009
Growth rate (%) of Jan-June 2009 15.5 -1.2 Fiscal performance in 2009
Revenue & grants may not be better than in
Growth rate (%) of Cap Jan- June 2009 67.8 -16.7 2008.
Exp & NL
Rev. and grants as % Jan-June 2009 11.1 10.7 As % of GDP at current
of nominal GDP market prices, revenues,
Exp & NL as % of Jan-June 2009 12.1 11.2 expenditures and basic
nominal GDP balance are off-track.
Overall fiscal bal. as % Jan-June 2009 -1.0 -0.5
of GDP
Basic Balance as % of Jan-June 2009 0.8 0.4
nominal GDP
Primary Bas. Bal, as % Jan-June 2009 2.8 2.5
of GDP
Domestic debt as % May 2009 28.4% 33.3% Likely to decline in 2009.
of GDP
Yield of 91-days May 2009 Yields may come down
(in %) 12.5 10.2 as CPI inflation has
Yield of 182-days May 2009 started decelerating.
(%) 13.8 11.3
Yield of 364-days May 2009
(%) 15.3 13.0
GR of Money supply May 2009 17.3 7.5 Money supply GR is
(M3) (%) likely to decelerate.
CBG Rediscount June 2009 16 15 Likely to remain stable.
rate (%)
Banks foreign assets May 2009 7.5 11.7 Likely to remain stable
as % of total assets
Foreign liabilities as May 2009 1.5 2.8
% of total liabilities
Dalasi /UK £ 10 July 2009 43.73 41.65 Dalasi is likely to
Dalasi/ US$ 10 July 2009 26.63 20.94 depreciate against major
Dalasi/ CHF 10 July 2009 24.50 19.90 currencies during the
Dalasi/ Euro 10 July 2009 37.50 32.21 year 2009.
Dalasi/ CFA (5000) 10 July 2009 274.00 251.05
Foreign Exchange End-May 2009 119.7 140.4 Likely to remain under
Reserves (US$ Mln) pressure.

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 The Gambia Monthly Economic Abstract- June 2009

1. Consumer Price Index and Inflation

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

• Food and drinks (with weights of 55.2% in overall CPI) recorded average inflation of
7.1% in May 2009, up from 1.9% a year ago, and contributed 70.8% to overall inflation in
May 2009.

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

• Among other groups, in May 2009, clothing and textiles recorded annual inflation of
4.7%, housing and utilities 5.5%, restaurants and hotels 5.8% and house rent 3.1%.

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

Items Weights May-2008 May-2009 Inflation Wi (CPIi1 – Contributio

Wi (%) Index Index (%) CPIi0) n2 (%)
Overall 100.0 113.81 120.51 5.9 652.2 100.0
Food 55.2 125.75
117.39 7.1 461.5 70.8
Tobacco 0.7 106.13
104.30 1.8 1.3 0.2
Clothing 11.3 106.25111.2 4.7 55.7 8.5
Utilities 3.4 122.11
115.77 5.5 21.6 3.3
Furnishing 5.2 114.97
111.52 3.1 18.1 2.8
Health 1.0 101.77
101.04 0.7 0.7 0.1
Transport 4.4 119.95
118.86 0.9 4.8 0.7
Telecom 3.0 101.98
101.54 0.4 1.3 0.2
Recreation 8.0 103.94
104.67 0.7 5.8 0.9
Education 1.5 101.87 102.25 0.4 0.6 0.1
Hotels 0.4 109.89 116.3 5.8 2.3 0.4
Misc. 5.9 112.56 125.79 11.8 78.4 12.0
non-food 44.8 109.08 114.03 4.5 221.7 29.2
Source of basic data: Gambian Bureau of Statistics (GBOS).

2
Contribution of an item to overall inflation is estimated by the following formula:
Contribution of Item (i) = Wi (CPIi1 – CPIi0) / ∑ Wi (CPIi1 – CPIi0) expressed as a percentage.
where CPIi1 = Consumer Price Index for Item (i) in the current period
CPIi0 = Consumer Price Index for Item (i) in the previous period
Wi = Weights for Item (i) and
W = Total weights = Σ Wi
For example, contribution of food is estimated as 100 X 525.0 / 746.7 = 70.3%.

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 The Gambia Monthly Economic Abstract- June 2009

Sub-group wise inflation in May2009(%)

Misc.
Education

Telecom

Health
Series1
Utilities

Tobacco
Overall
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

Contribution to Inflation in May2009(%)

Transport Others
1% 14%
Furnishing
3%
Utilities
3%

Clothing
9%

Food
70%

12.0

10.0

8.0
Food
6.0
All
4.0

2.0

0.0
07-Ja

08-Ja

09-Ja
Nv

Nv
Mar

Mar

Mar
Jul

Jul
May

May

May
Sp

Sp

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 The Gambia Monthly Economic Abstract- June 2009

2 World Commodity Prices and Inflation

As a result of the sharp downturn in global demand, commodity prices, especially for energy,
declined significantly since the last quarter of 2008. Inflation will continue to retreat due to the
combination of lower commodity prices and increasing economic slackness, with deflation risks
growing in advanced economies. IMF forecasts indicate that G-7 deflation vulnerability has risen
above its previous peak, reflecting high risks in Japan and the United States and moderate risks
in several euro area members— including Germany, Italy and France.

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

2.1 Trends of International Crude Oil Prices

During 2008 Brent crude oil prices ruled very high until July 2008 when prices increased to $147
per barrel. However, due to global financial crisis and economic slowdown oil prices started
declining thereafter. A recent report from the Paris based International Energy Agency (IEA) has
projected that the world oil demand in 2009 will decline by half a million barrels per day (bpd). In
their last meeting, the OPEC has decided not to have any cut in oil supply. Accordingly, oil
prices are expected to remain soft in the rest of the year 2009.

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

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

140

120
US$ per Barrel

100

80

60

40

20

0
9

9
1

7
9

Ja 0

8
-9

-0

-0

-0

-0

-0

0
0
-9

-0

-0

-0

-0

l-0

-0

-0

l-0

-0
n-

n-

n-

n-
n-
an

an

an

an

an

an
ul

ul

ul

ul

ul

ul

ul

ul
u

u
a

a
J

J
J

Months and Years 1999-2009

Series1

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 The Gambia Monthly Economic Abstract- June 2009

Table-2 Trends of World Commodity Prices

Quarterly averages Monthly averages
Apr- Jul- Oct- Jan- Apr-
Jun Sep Dec Mar Jun Apr May Jun
Commodity Unit 2008 2008 2008 2009 2009 2009 2009 2009
Energy
Coal, Australia a/ $/mt 138.65 162.80 92.97 71.93 66.48 63.56 64.50 71.38
Crude oil, Brent a/ $/bbl 122.39 115.60 55.89 44.98 59.13 50.85 57.94 68.62
Crude oil, Dubai a/ $/bbl 116.67 113.47 53.67 44.56 58.93 50.18 57.40 69.21
Natural gas, Europe a/ $/mmbtu 12.40 14.62 15.75 11.94 8.18 8.51 8.09 7.95
Natural gas, US a/ $/mmbtu 11.35 9.03 6.40 4.57 3.71 3.50 3.81 3.81
Beverages
Cocoa b/ ¢/kg 276.4 282.6 224.1 259.7 258.7 258.1 247.5 270.4
Coffee, Arabica b/ ¢/kg 315.1 321.2 267.8 283.9 320.2 297.4 332.9 330.2
Tea, Mombasa auctions b/ ¢/kg 221.6 252.8 190.8 214.9 228.0 221.0 222.3 240.8
Fats and Oils
Coconut oil b/ $/mt 1,499 1,246 772 677 781 747 843 754
Copra $/mt 1,013 817 520 447 513 499 559 480
Groundnut oil b/ $/mt 2,328 2,417 1,773 1,283 1,165 1,187 1,157 1,151
Palm oil b/ $/mt 1,198 928 512 577 744 702 801 730
Soybean oil b/ $/mt 1,466 1,353 830 755 859 801 892 885
Soybeans b/ $/mt 585 566 377 394 460 414 465 502
Grains
Barley b/ $/mt 239.1 216.6 129.5 116.3 129.5 111.3 128.7 148.5
Maize b/ $/mt 259.0 244.7 168.4 166.9 176.0 168.5 179.9 179.5
Rice, Thailand, 35% $/mt n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Sorghum $/mt 246.9 214.7 151.0 145.3 148.1 154.1 160.1 130.0
Wheat, US, HRW b/ $/mt 346.5 317.7 228.1 231.6 250.5 234.2 262.3 255.1
Wheat US SRW $/mt 277.8 241.5 182.7 187.4 195.6 182.6 202.5 201.7
Other Food
Bananas EU $/mt 1,263 1,123 944 1,142 1,280 1,292 1,286 1,262
Fishmeal $/mt 1,185 1,198 1,023 1,013 1,096 1,040 1,103 1,146
Meat, beef b/ ¢/kg 332.7 372.4 268.0 245.2 262.8 255.5 263.7 269.2
Meat, chicken b/ ¢/kg 167.9 177.1 174.7 173.5 174.1 171.2 174.5 176.7
Meat, sheep ¢/kg 493.2 477.3 410.0 378.5 428.8 404.4 427.7 454.4
Oranges b/ $/mt 1,322 1,163 842 799 864 905 888 798
Shrimp, Mexico b/ ¢/kg 1,109 1,048 1,014 976 970 970 970 970
Sugar EU domestic b/ ¢/kg 77.59 74.70 51.97 51.44 53.75 52.09 53.84 55.34
Sugar, world b/ ¢/kg 27.01 31.14 26.28 28.85 33.89 30.09 35.36 36.22
Raw Materials
Logs, Cameroon $/cum 554.4 548.5 473.8 426.8 394.6 382.5 395.4 406.0
Plywood ¢/sheets 647.3 648.6 645.5 572.8 565.5 567.7 565.9 562.7
Sawnwood, Cameroon $/cum 1,052.3 974.5 770.8 689.2 721.4 684.3 717.6 762.5
Cotton Memphis ¢/kg 171.6 170.0 130.1 129.8 142.4 135.6 150.2 141.4
Rubber RSS1, US ¢/kg 311.7 329.1 202.8 165.8 187.0 183.6 189.8 187.6
Fertilizers
DAP b/ $/mt 1,191.6 1,153.7 663.3 362.2 303.6 335.4 297.5 277.8
Phosphate rock b/ $/mt 367.5 409.2 371.3 193.3 113.3 125.5 117.5 96.9
Potassium chloride b/ $/mt 511.1 635.0 766.7 865.2 726.7 745.0 717.5 717.5
Urea b/ $/mt 575.7 745.4 292.2 267.3 241.1 245.2 240.8 237.4
Metals and Minerals
Aluminum b/ $/mt 2,940 2,787 1,821 1,360 1,485 1,421 1,460 1,574
Copper b/ $/mt 8,443 7,680 3,905 3,428 4,663 4,407 4,569 5,014
Gold $/toz 896 870 795 909 922 890 929 946
Iron ore b/ ¢/dmtu 140.6 140.6 140.6 101.0 101.0 101.0 101.0 101.0
Lead b/ ¢/kg 230.7 191.2 124.5 115.7 149.9 138.3 144.0 167.4
10,84 10,47 12,92 12,63
Nickel b/ $/mt 25,682 18,961 3 1 0 11,166 5 14,960
Silver ¢/toz 1,720 1,495 1,020 1,265 1,376 1,252 1,411 1,466
Steel cr coilsheet c/ $/mt 900 1,100 1,100 1,033 700 700 700 700
Steel, rebar c/ $/mt 838 934 630 473 450 425 450 475
Steel wire rod c/ $/mt 950 1,135 1,200 1,200 1,007 1,100 1,020 900
Tin b/ ¢/kg 2,265 2,051 1,310 1,103 1,351 1,174 1,379 1,499
Zinc b/ ¢/kg 211.3 177.0 118.5 117.2 147.3 137.9 148.4 155.7
Source: World Bank Pink Sheet July 2009

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 The Gambia Monthly Economic Abstract- June 2009

3. Government Fiscal Performance in Jan-June 2009

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

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

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

• During Jan-June 2009, total expenditures and net lending has increased by 20.4% over Jan-
June 2008 due to 18% increase in personnel emoluments, 55.2% increase of capital
expenditure and 6.3% increase by interest payments over Jan-June 2008.

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

Table-3.1 Govt Financial Performance in Jan-June 2009 compared with Jan-June 2008
2008 2009 2007 2008 2009 % change % change
Items Actual Budget Jan-June Jan-June Jan-June In Jan- In Jan-
Mln Dal. Estimate Actual Actual Actual Jun 2008 Jun 2009
Mln. Dal. Mln Dal. Mln Dal. Mln Dal. over Jan- over Jan-
Jun 2007 Jun 2008
(1) (2) (3) (4) (5) (6) (7) (8)
Revenue and grants 3645 4582 1941 1919 2216 -1.2 15.5
Domestic Revenue 3479 3771 1893 1820 2055 -3.8 12.9
Tax Revenue 3161 3391 1637 1631 1849 -0.3 13.3
Nontax Revenue 318 380 256 189 206 -26.3 8.9
Grants 166 811 49 99 161 102.5 63.7
Exp & Net Lending 4135 5363 1748 2005 2414 14.7 20.4
Current Expenditure 3011 3838 1194 1544 1640 29.3 6.3
Personnel Emoluments 906 1035 336 450 531 34.0 18.0
Other Charges 1398 1958 450 710 701 57.7 -1.2
Interest 708 845 409 385 409 -5.9 6.3
External 154 147 104 80 98 -23.5 22.7
Domestic 555 698 305 305 311 0.1 2.1
Cap Exp & Net Lending 1123 1525 553 461 773 -16.7 67.8
Capital Expenditure 1017 1468 488 396 614 -18.9 55.2
Net Lending 107 57 66 65 159 -0.8 144.4
Overall Bal Inc. grants -490 -781 194 -86 -198 -144.4 129.7
Basic balance -156 -268 590 70 158 -88.1 125.3
Basic Primary Bal 553 577 999 455 567 -54.5 24.7
Nominal GDP (IMP Prg) 17959 19904 16007 17859 19904 11.6 11.5
Notes: (1) Overall balance= (Revenue and grants) minus (expenditure and net lending).
(2) Basic balance= Domestic revenue minus (expenditure and net lending) plus externally
financed capital expenditure; (3) Basic primary balance= Basic balance plus interest
payments

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 The Gambia Monthly Economic Abstract- June 2009

• Column (2) of Table-3.2 indicates the item-wise actual fiscal performance in 2008 as
percentage of GDP and the column (3) indicates the item-wise budget estimates in 2009 as
percentage of GDP. It is observed from these columns that 2009 budget estimates assume
better performance of grants and expenditure as percentages of GDP. Overall fiscal deficit
for 2009 is estimated as 3.9% of GDP compared to 2.7% of GDP in 2008.

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

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

Table-3.2 Govt Financial Performance in Jan-June 2009 compared with Jan-June 2008
2008 2009 2007 2008 2009 2008 2009
Actual Budget Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun
Items as % of as % of as % of as % of as % of as % of as % of
GDP GDP GDP GDP GDP Actual Budget
(1) (2) (3) (4) (5) (6) (7) (8)
Revenue and grants 20.3 23.0 12.1 10.7 11.1 52.6 48.4
Domestic Revenue 19.4 18.9 11.8 10.2 10.3 52.3 54.5
Tax Revenue 17.6 17.0 10.2 9.1 9.3 51.6 54.5
Nontax Revenue 1.8 1.9 1.6 1.1 1.0 59.4 54.0
Grants 0.9 4.1 0.3 0.6 0.8 59.5 19.9
Exp & Net Lending 23.0 26.9 10.9 11.2 12.1 48.5 45.0
Current Expenditure 16.8 19.3 7.5 8.6 8.2 51.3 42.7
Personnel Emoluments 5.0 5.2 2.1 2.5 2.7 49.7 51.2
Other Charges 7.8 9.8 2.8 4.0 3.5 50.8 35.8
Interest 3.9 4.2 2.6 2.2 2.1 54.3 48.4
External 0.9 0.7 0.7 0.4 0.5 51.8 66.3
Domestic 3.1 3.5 1.9 1.7 1.6 55.0 44.6
Cap Exp & Net Lending 6.3 7.7 3.5 2.6 3.9 41.0 50.7
Capital Expenditure 5.7 7.4 3.0 2.2 3.1 38.9 41.8
Net Lending 0.6 0.3 0.4 0.4 0.8 61.0 281.0
Overall Bal -2.7 -3.9 1.2 -0.5 -1.0 17.6 25.3
Inc.grants3
Basic balance4 -0.9 -1.3 3.7 0.4 0.8 -45.2 -59.1
Basic Prim. Balance5 3.1 2.9 6.2 2.5 2.8 82.2 98.2
Source: Economic Planning and Management Unit (EMPU), DODFEA.

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

11
 The Gambia Monthly Economic Abstract- June 2009

4. Domestic Debt and Treasury Bills Outstanding

• At the end of May 2009, outstanding domestic debt stood at D5.6 billion (amounting to
28.4% of GDP), down by 5.5% from the outstanding domestic debt at D6 billion
(amounting to 33.3% of GDP) a year ago.

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

• On contrary, the share of Non-interest bearing Treasury Notes declined from 14.6% to
9.7% over the period

Table-4.1: Outstanding Domestic Public Debt as on 30 April 2009

Type of debt Million Dalasi % change in Composition (in
30 May 30 May April 09 percentage)
2008 2009 over April 2008 30 May 30 May
2008 2009
Treasury bills 4806 4772 -0.7 80.4 84.5
Sukuk Al-Salam 47 76 61.5 0.8 1.4
Government Bonds 250 250 0.0 4.2 4.4
NIB Treasury Notes 873 547 -37.4 14.6 9.7
Total 5977 5645 -5.5 100 100
Memo Item: Domestic debt as % of nominal GDP (As per IMF Program, nominal GDP equals
D17959 for 2008 and D19904 for 2009)
As % of nominal 33.3 28.4
GDP

Domestic Debt Sustainability

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

Table-4.2 Primary Benchmarks for Domestic Debt Sustainability Ratios (%)

Item Threshold 2006 2007 2008 2009
Projected
1. Debt service to 28-63 142 124 118 91
revenue ratio
2. Debt to GDP ratio 20-25 33 30 27 31
3. Debt to revenue 92-167 180 158 166 147
ratio
Note: (1) Debt service the sum of interest payments plus the amortization (i.e. repayment of principal)
including the rollover of treasury Bills. (2) There are no internationally agreed levels of thresholds. The
thresholds used here are those used by the Debt Relief International (DRI) for many HIPC countries.
Source: Central Bank of Gambia

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 The Gambia Monthly Economic Abstract- June 2009

5. Treasury Bills Yields

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

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

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

2007 2008 2009
3-M 6-M 12-M 3-M 6-M 12-M 3-M 6-M 12-M
Jan 10.5 12.7 13.6 10.6 11.4 13.6 10.5 12.1 14.4
Feb 12.0 13.4 13.8 10.9 11.9 13.7 11.1 12.8 14.4
Mar 12.6 13.4 13.7 11.0 12.1 13.6 11.4 12.7 14.4
Apr 13.0 13.4 13.8 10.9 11.9 13.3 12.0 13.0 14.6
May 12.8 13.3 13.8 10.2 11.3 13.0 12,.5 13.8 15.3
Jun 12.6 13.1 13.9 10.0 11.2 13.3
Jul 12.5 13.2 13.9 9.6 10.6 12.6
Aug 12.6 12.9 13.6 8.8 10.2 12.1
Sep 11.6 12.2 12.9 8.9 11.0 13.1
Oct 10.6 11.7 12.5 10.3 11.4 13.6
Nov 10.5 11.5 12.5 10.1 13.4 13.7
Dec 10.4 11.6 13.6 9.9 12.5 14.0

Trends of Yields of Treasury Bills during 2007-2009

13
 The Gambia Monthly Economic Abstract- June 2009

6. Money Supply in May 2009

• Annual growth rate of broad money supply (M3) accelerated from 7.5% in May 2008 to
17.3% in May 2009.

• On the supply side, 17.3% growth in money supply in May 2009 was supported by
18.1% growth in currency, 10.4% growth in demand deposits, 10.8% growth in savings
deposits and 38.1% growth in time deposits.

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

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

Table-6 Money Supply in May 2009

Components May 2007 May 2008 May2009 May2008 May2009 May2008 May2009
Mill.D. Mill.D. Mill.D. % Share % Share % change % change
over over
May2007 May2008
1.Broad Money Supply (M3) 7982.95 8580.60 10063.47 100.0 100.0 7.5 17.3
(2+3)
2.Narrow Money (2.1+2.2) 4166.13 4360.90 4929.14 50.8 49.0 4.7 13.0
2.1 Currency 1721.53 1495.11 1765.32 17.4 17.5 -13.2 18.1
2.2 Demand deposits (a+b) 2444.6 2865.79 3163.82 33.4 31.4 17.2 10.4
(a) Private sector 2226.34 2553.18 2636.51 29.8 26.2 14.7 3.3
(b) Official 218.26 312.61 527.31 3.6 5.2 43.2 68.7
3.Quasi money (3.1+3.2) 3816.82 4219.70 5134.33 49.2 51.0 10.6 21.7
3.1 Savings deposits (a+b) 2656.37 2534.74 2807.56 29.5 27.9 -4.6 10.8
(a) Private sector 2652.32 2526.35 2795.28 29.4 27.8 -4.7 10.6
(b) Official 4.05 8.39 12.28 0.1 0.1 107.2 46.4
3.2 Time deposits (a+b) 1160.45 1684.96 2326.77 19.6 23.1 45.2 38.1
(a) Private sector 756.41 1275.15 1673.49 14.9 16.6 68.6 31.2
(b) Official 404.04 409.81 653.28 4.8 6.5 1.4 59.4
Demands for money (1+2) 7982.96 8580.6 10063.47 100.0 100.0 7.5 17.3
1.Net foreign assets (1.1+1.2) 4657.68 3557.09 3341.49 41.5 33.2 -23.6 -6.1
1.1 Monetary Authorities 2626.1 2644.07 2656.77 30.8 26.4 0.7 0.5
1.2 Commercial banks 2031.58 913.02 684.72 10.6 6.8 -55.1 -25.0
2.Net Domestic Assets 3325.28 5023.51 6721.98 58.5 66.8 51.1 33.8
(2.1+2.2)
2.1 Domestic credit 4078.76 5184.13 7000.52 60.4 69.6 27.1 35.0
(a) Credits to government 1471.47 1895.83 2731.16 22.1 27.1 28.8 44.1
(b) Credits to public entities 197.52 385.71 645.3 4.5 6.4 95.3 67.3
(c) Credits to private sector 2226.48 2719.3 3624.06 31.7 36.0 22.1 33.3
(d) Credits to forex bureau 183.29 183.29 0 2.1 0.0 0.0 -100.0
2.2 Other items, net -753.48 -160.62 -278.54 -1.9 -2.8 -78.7 73.4
Source: Economic Research and Statistics Department of CBG.

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 The Gambia Monthly Economic Abstract- June 2009

7. Sectoral Distribution of Bank Credits

Bank credits increased by 40.2% in March 2009 over March 2008. There was significant
increase across all sectors. While credits to agriculture increased by 66.2%, manufacturing
credits increased by 76.9%, building credits by 39.3%, transport credits by 27.4% and
distributive trade credits by 27.5% in March 2009 over March 2008. Credits to financial
institutions and other commercial credits also registered significant increases, while tourism
credits recorded the lowest increase by 16.5% among all the sectors.

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

Table-7 Sectoral Distribution of Bank Credits in March 2009

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

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 The Gambia Monthly Economic Abstract- June 2009

8. Balance of Payments and Foreign Exchange Reserves

(i) BOP Situation in 2008

(a) Overall BOP outcome in 2008 was not as bad as they were anticipated earlier. Year end
foreign exchange reserves at US$125.2 million were still equal to 5.7 months of c.i.f. imports
compared to US159.4 million equal to 6.2 months at end-2007

(b) BOP estimates indicate an overall deficit of D767.3 billion (-) $34.2 million), amounting to (-)
3.4 percent of GDP in 2008 compared to an estimated surplus of D741.7 million ($29.8
million), amounting to 3.6 percent of GDP in 2007, reflecting the deterioration in both the
current and the capital and financial accounts. The Net Usable Reserve of the CBG stood at
US$95.6 million at end-March 2009 and was above the IMF Program target (floor) by US$3.6
million.

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

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

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

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

(ii) BOP Situation in 2009

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

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

(iii) Foreign Exchange Reserves

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

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 The Gambia Monthly Economic Abstract- June 2009

9. Exchange Rate

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

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

• At the end of May 2009, Dalasi has appreciated marginally against British Pound by
0.1%, while it depreciated by 29.7%, 16.9% , 12.4% and 4.3% against US$, CHF, Euro
and CFA respectively over May 2008.

Table-9 Inter-bank exchange rates - end of period mid-market rates

(Dalasi per unit of foreign currency)
Year Month UK US$ CHF Euro CFA
(5000)
2008 Jan 44.27 22.34 19.91 32.89 252.85
Feb 42.58 21.88 19.57 32.28 243.98
Mar 40.87 19.46 19.15 30.83 239.16
Apr 39.52 20.12 19.16 31.43 235.95
May 40.25 20.64 19.46 32.1 245.84
June 40.77 20.65 19.27 32.07 245.51
July 41.65 20.94 19.9 32.21 251.05
Aug 40.73 21.37 20.08 32.23 249.47
Sept 41.65 23.12 19.86 33.02 249.30
Oct 40.49 24.89 20.15 32.89 258.09
Nov 40.56 26.26 20.07 33.28 258.31
Dec 40.14 26.54 22.94 35.67 259.15
2009 Jan 37.25 26.07 20.85 33.52 262.81
Feb 37.38 26.11 22.04 33.6 257.78
Mar 38.18 26.38 23.31 35.22 259.30
Apr 38.94 26.56 22.8 35.07 259.13
May 40.20 26.78 22.75 36.09 256.38
July 10 43.73 26.63 24.50 37.50 274.00
Rate of appreciation (-) / depreciation (+) of Dalasi
over the corresponding month in 2008 (%)
2009 Jan -15.9 16.7 4.7 1.9 3.9
Feb -12.2 19.3 12.6 4.1 5.7
Mar -6.6 35.6 21.7 14.2 8.4
Apr -1.5 32.0 19.0 11.6 9.8
May -0.1 29.7 16.9 12.4 4.3
July 10 5.0 27.1 23.1 16.4 9.1
Source: Central Bank of Gambia (CBG)

17