The Gambia Monthly Economic Bulletin- October 2009

THE GAMBIA MONTHLY

ECONOMIC BULLETIN1

October 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

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The Gambia Monthly Economic Bulletin provides an update on recent economic developments and
policies in the Republic of the Gambia. The Bulletin is prepared by a research team comprising Tamsir
Cham, Director; Momodou Taal, Principal Economist, Amie Khan and Yaya Drammeh, Senior
Economists and Ceesay Chiel, Economist in the Economic Management and Planning Unit (EMPU) and
Tarun Das, Macroeconomic Adviser (ISPEFG); Ministry of Finance and Economic Affairs (MOFEA);
with key inputs from the Debt Management Adviser, Fiscal/Financial Adviser, the Central Bank of
Gambia (CBG), the Gambian Bureau of Statistics (GBOS), and the Gambian Revenue Authority (GRA).

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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 The Gambia Monthly Economic Bulletin- October 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

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 The Gambia Monthly Economic Bulletin- October 2009

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

below One-US$) (2000)
Source: http://www.nationmaster.com

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 The Gambia Monthly Economic Bulletin- October 2009

____________________________________________________________

Contents

Items Page

ISPEFG Project/ Research Team and Document History 4

Highlights 5-6

At a Glance 7

1. Global Economic Outlook 8-11

1.1 Global recovery is uneven, weak, slow and painful 8
1.2 Global Commodity Prices and Inflation 10

2. Current State of the Gambian Economy 12-25

2.1 Overall and Sectoral GDP Growth Rates 12
2.2 Consumer Price Index (CPI) and Inflation 14
2.3 Projection of CPI inflation for the year 2009 16

2.4 Government Fiscal Performance 17

2.5 Projections of Fiscal Outturn for 2009 19
2.6 Domestic Debt and Outstanding Treasury Bills 21
2.7 Treasury Bills Yields 22
2.8 Money Supply 23
2.9 Performance of Commercial Banks 24
2.10 BOP, Foreign Exchange Reserves and Exchange Rates 25

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 The Gambia Monthly Economic Bulletin- October 2009

ISPEFG Project and Monthly Report Research Team

Project Supervisor Honorable Mr. Serign Cham,

Permanent Secretary

Project Coordinator Mr. Momodou Cham

Director (EMPU) Mr. Tamsir Cham

Principal Economist Mr. Momodou Taal
Senior Economist Ms. Amie Khan
Senior Economist Mr. Yaya Drammeh
Economist Ms. Ceesay Chilel
Technical Assistant (Debt Management) Mr. Adam Aikuta
Technical Assistant (Fiscal/ Financial) Mr. Dan Mambule Mwanje
Technical Assistant (Macroeconomic) Mr. 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.

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 The Gambia Monthly Economic Bulletin- October 2009

HIGHLIGHTS
Impact of Global Financial Crisis and Economic Slowdown

• As per the IMF projections made in the WEO October 2009, global output is expected to
contract 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 since 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 world
commodity prices including food and petroleum since August 2008. However, since March 2009
commodity prices have started rising again in response to some increase in global demand, but
commodity 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 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$72.50 per barrel in August 2009, and stood at US$67.69 per barrel in September
2009. Recent forward markets project oil prices around $74 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 Gambian
economy was not an exception and witnessed a decline in exports, remittances, foreign
investment, tourist arrivals, manufacturing production and wholesale and retail trade in 2008.

• However, thanks to bumper crops contributed by favorable monsoon at home and very good
performance by electricity, telecom and financial sectors, the real GDP growth at constant market
prices 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 on
the 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 tourist’s 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% in
agriculture production, 3.5% in industry and 5.7% in services production.

CPI Inflation

• Annual point-to-point CPI inflation decelerated significantly to 2.3% (food 2.6% and non-food
1.9%) in Sep 2009 from 6.3% (food 8.1% and non-food 4%) in Sep 2008. On the contrary, the 12-
month average inflation rate accelerated to 5.6% in Sept 2009 from 4.3% a year ago.

• Among other groups in Sept 2009, housing and utilities recorded an annual inflation of 2.4%,
restaurants and hotels 2.2% and miscellaneous goods and services 4.7%.

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 The Gambia Monthly Economic Bulletin- October 2009

Government Fiscal Performance

• In Jan-Sep 2009 total revenue and grants increased by 15.6% aided by 16.1% increase in taxes,
marginal decline by 0.9% in non-tax revenues and 46.2% increase in grants.

• In Jan- Sep 2009, total expenditures and net lending increased by 22.3% over Jan- Sep 2008 due
to 13% increase in current expenditure and 54.4% increase of capital expenditure and net lending
over Jan- Sep 2008.

• Overall, there was a fiscal deficit of D321 million (amounting to 1.3% of GDP), and basic deficit of
D8.5 million in Jan-Sep 2009, compared to a lower fiscal deficit of D109 million (amounting to 0.5% of
GDP) and basic surplus of D143.6 million in Jan- Sep 2008.

Domestic Debt and Treasury Bills Yields

• At the end of Sept 2009, outstanding domestic debt stood at D5.9 billion (23.7% of GDP), down
from the outstanding domestic debt at D6.1 billion (27% of GDP) a year ago.

• The share of Treasury bills increased from 79.6% at end-Sep 2008 to 84.5% at end-Sep 2009,
share of Sukuk Al-Salam remained unchanged at 2%, that of Govt bonds increased marginally
from 4.1% to 4.2%, while that of NIB T.Bills declined from 14.2% to 9.2% over the period.

• Yields on treasury bills fluctuated widely in recent months. Despite stability in deposit rates and
significant decline of CPI inflation from 7% in January 2009 to 2.3% in Sep 2009, Average yields
on the 91-day and 364-dat treasury bills remained unchanged at 10.4% and 14.3% respectively
and yield of 182-day bills declined marginally from 12.1% in Jan 2009 to 11.7% in Sep 2009.

Money Supply and Bank Credits

• Annual growth rate of money supply (M2) increased from 11.1% in Sep 2008 to 20.7% in Sep
2009, aided by 4% growth in currency, 20.1% growth in demand deposits, 17.8% growth in
savings deposits and 40.7% growth in time deposits. On the demand side, growth was mainly
due to 32.7% growth in net foreign assets, while net domestic assets increased by only 12.7%.

• Domestic credit increased from D5.8 billion in Sept 2008 to D6.9 billion in Sept 2009, supported
by 21.3% growth in government borrowing, 82.9% growth in credits to public entities and 13.3%
growth in credits to the private sector, over a year ago.

Balance of Payments, Foreign Exchange Reserves and Exchange Rate

• Preliminary BOP estimates for Jan-June 2009 indicated a lower overall deficit at D348.44 million
compared to D376.5 million in Jan-June 2008. The current account recorded a surplus of
D163.48 million in Jan-June 2009 compared to a deficit of D276.1 million in Jan-June 2008. The
capital and financial account balance worsened to deficit of D511.92 million in Jan-June 2009
from a deficit D100.4 million in Jan-June 2008.

• Gross official reserves, including SDR allocation from the International Monetary Fund (IMF), as
at end-September stood at US$141.3 million, equivalent to 6.0 months of import cover.

• Dalasi depreciated by 7.9% on the overall nominal exchange rate index of currencies compared
to an appreciation of 1.6% a year ago. During Dec 2008 to end-Sep 2009, the Dalasi depreciated
against the British £, US$, CFA Franc and euro by 7.1%, 17.5%, 9.4% and 8.2% respectively.

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 The Gambia Monthly Economic Bulletin- October 2009

At a Glance- October 2009

Economic Latest Status in the Status in the Outlook for 2009
Indicators Reference latest reference Corresponding
Period period period in the
previous year
Real GDP (MP) Calendar year Overall 5.0 Overall 6.3 Overall 5.0
Growth rate (%) 2009 Agriculture 5.5 Agriculture 26.6 Agriculture 5.5
Industry 3.5 Industry (-) 1.2 Industry 3.5
Services 5.7 Services 4.2 Services 5.7
CPI inflation (%) Sep 2009 Overall 2.3 Overall 6.3 Expected to remain
Food 2.6 Food 8.1 stable in the remaining
Non-food 1.9 Non-food 4.0 months of the year
Brent crude oil Sept 2009 Average Average US$100 May stabilize around
price (US$/ brl) US$67.69 US$70 by the end-2009
Growth rate (%) of Jan-Sep 2009 15.6 (-) 0.6 Overall fiscal performance
Revenue & grants in 2009 is not expected to
Growth rate (%) of Jan-Sep 2009 22.3 10.4 be better than in 2008 due
Exp & Net Lending to expenditure overruns,
Overall fiscal bal. Jan-Sep 2009 (-) 1.3 (-) 0.5 although revenue
as % of GDP performance in 2009 has
Basic Balance as Jan-Sep 2009 Negligible 0.6 been better than in 2008. .
% of GDP
Primary Bas. Bal, Jan-Sep 2009 2.3 3.1
as % of GDP
Domestic debt Sep 2009 23.7 27.0 Likely to decline in 2009.
as % of GDP
Yield on 91-days Sep 2009 Yields may come down
TBs (%) 10.4 8.9 as CPI inflation has
Yield on 182- Sep 2009 started decelerating.
days TBs (%) 11.7 11.0
Yield on 364- Sep 2009
days TBs (%) 14.3 13.1
GR of Money Sep 2009 20.7 11.1 Money growth rate is
supply (M2) (%) likely to remain high.
Banks’ assets End-Sep 2009 13.7 11.3 Likely to increase
(Billion Dalasi)
CBG policy rate Sep 2009 16.0 15% Kept unchanged in the
(%) MPC meeting held on
30-10-2009
Overall BOP Jan-June 2009 (-) 348.44 (-) 376.5 BOP is likely to improve
Balance (Mln D) in the second half.
Current A/C Jan-June 2009 163.48 (-) 276.1
Balance (Mln D)
Capital-Fin. A/C Jan-June 2009 (-) 511.92 (-) 100.4
Balance (Mln D)
Rate of change- End-Sep 2009 (-) 7.9 1.6 Dalasi is expected to
Overall Nominal depreciate against major
Eff. Exchange currencies in 2009.
Rate (%)

1. Global Economic Outlook

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 The Gambia Monthly Economic Bulletin- October 2009

1.1 Global recession is ending but recovery is weak, slow and painful

It is well known that the global economy is presently passing through a critical conjecture. It was
adversely affected by three worst crises in fuel, food and financial sectors (called F-3 Crisis) in a
single year in 2008 - the first massive F-3 crisis in the last 70 years since the great depression in
1930s. Both the advanced and developing countries have adopted various monetary and fiscal
stimulus packages (such as cuts in central bank policy interest rates, continued provision of bank
liquidity, credit easing, provision of public guarantees, bail outs and bank recapitalization etc.) to
boost both investment and consumption, output and employment. In their latest World Economic
Outlook (WEO)2 of October 2009, the International Monetary Fund (IMF) concludes that although
the global economy has started to pull out of the unprecedented recession, recovery is expected to
be weak and slow, and jobless for some time, as financial systems remain impaired, support from
public policies will gradually have to be withdrawn, and households that suffered asset price busts
will continue to rebuild savings.

As per the IMF projections made in the WEO October 2009, global growth is expected to reach
about 3 percent in 2010, following a contraction in activity of about 1 percent in 2009 (Table-1.1).
During 2010–14, global growth is expected to be just above 4 percent, appreciably less than the 5
percent growth rates in the years just ahead of the crisis. Achieving this turnaround will depend on
stepping up efforts by the governments of both developed and developing countries to heal the
financial sector, while continuing to support demand with monetary and fiscal easing.

In recent years African economies in general experienced an economic boom contributed by two
favorable 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 the developed countries have led to reversal of these positive factors and imposed serious
adverse impact on the African economies.

Growth projections in Sub-Saharan Africa have been revised downward to 1.3 percent in 2009
while growth projection for 2010 remains unchanged at 4.1 percent. Real GDP growth in Africa as a
whole is projected to decline from an average of 6 percent in 2004–08 to 1¾ percent in 2009,
before accelerating to 4 percent in 2010. This growth performance, while disappointing in light of
the experience of the mid-2000s, is still encouraging given the severity of the external shocks. An
important factor behind this outcome has been that many governments in the region have been
able to use fiscal balances as shock absorbers, sustaining domestic demand and helping contain
employment losses.

Table-1.1 IMF WEO (Oct 2009) Projections (Annual Growth Rate in Percentage)

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World Economic Outlook- Sustaining the Recovery, October 2009, IMF Washington D.C.

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 The Gambia Monthly Economic Bulletin- October 2009

Source: World Economic Outlook- Sustaining the recovery, October 2009,

International Monetary Fund, Washington D.C.

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 The Gambia Monthly Economic Bulletin- October 2009

1.2 World Commodity Prices and Inflation

Inflation pressures to remain low.

The global recession has caused a large drop in inflation and rising concern about mild
deflation. However, the decline in inflation pressures has been limited among some emerging
economies. Inflation in advanced economies is projected to be close to zero in 2009 and to
accelerate very modestly to about 1 percent in 2010, largely reflecting rising commodity prices.
Prices for many manufactured goods will probably continue to decline for some time.
Fortunately, inflation expectations have generally remained well anchored, providing some
protection against sustained large price declines. In emerging economies, inflation is forecast to
hover around 5 percent in 2009–2010, down from more than 9 percent in 2008. Only China, a
few of the ASEAN-5 and most emerging European economies are projected to see inflation fall
appreciably below 5 percent. Low potential growth and inflation will slow the process of
deleveraging, adding to contractionary forces.

Commodity Prices

Commodity prices have rebounded ahead of the recovery (Table 1.2). The recent rally in
commodity prices was strong and broad-based, reflecting improved market sentiment, U.S.
dollar depreciation, and commodity-specific supply-demand conditions. Oil prices have
responded strongly to improved demand prospects but also to Organization of Petroleum
Exporting Countries (OPEC) members’ strict observance of lower production quotas. Forward
markets project oil prices at $74.50 for 2010, not much above current levels, with high excess
capacity expected to buffer growing demand.

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 The Gambia Monthly Economic Bulletin- October 2009

Table-1.2 Trends of World Commodity Prices

Quarterly averages Monthly averages
Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Jul Aug Sep
Commodity Unit 2008 2008 2009 2009 2009 2009 2009 2009
Energy
Coal, Australia $/mt 162.80 92.97 71.93 66.48 71.31 73.80 72.50 67.64
Crude oil, average $/bbl 115.68 56.00 44.11 59.19 68.21 64.67 71.63 68.35
Crude oil, Brent $/bbl 115.60 55.89 44.98 59.13 68.37 64.91 72.50 67.69
Crude oil, Dubai $/bbl 113.47 53.67 44.56 58.93 68.07 64.97 71.32 67.91
Natural gas, Europe $/mmbtu 14.62 15.75 11.94 8.18 6.91 6.67 6.92 7.13
Natural gas, US $/mmbtu 9.03 6.40 4.57 3.70 3.17 3.39 3.15 2.96
Beverages
Cocoa ¢/kg 282.6 224.1 259.7 258.7 295.5 277.5 295.7 313.3
Coffee, Arabica ¢/kg 321.2 267.8 283.9 320.2 322.7 310.6 330.2 327.5
Tea, Mombasa auctions ¢/kg 252.8 190.8 214.9 228.0 283.1 267.3 281.4 300.7
Food
Coconut oil $/mt 1,246 772 677 779 711 685 747 701
Copra $/mt 817 520 447 513 469 448 492 466
Groundnut oil $/mt 2,417 1,773 1,283 1,166 1,133 1,149 1,131 1,120
Palm oil $/mt 928 512 577 743 679 639 723 674
Soybean oil $/mt 1,353 830 755 863 856 836 886 846
Soybeans $/mt 566 377 394 461 455 462 474 430
Barley $/mt 216.6 129.5 116.3 129.5 122.0 140.3 122.2 103.5
Maize $/mt 244.7 168.4 166.9 176.0 151.3 151.6 152.0 150.4
Rice, Thailand, 35% $/mt n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Sorghum $/mt 214.7 151.0 145.3 155.8 139.3 133.8 142.4 141.8
Wheat, US, HRW $/mt 317.7 228.1 231.6 250.5 208.6 224.9 210.4 190.4
Wheat, US SRW $/mt 241.5 182.7 187.4 195.6 165.2 175.6 161.7 158.4
Bananas EU $/mt 1,123 944 1,142 1,288 1,118 1,147 1,076 1,130
Fishmeal $/mt 1,198 1,023 1,013 1,097 1,276 1,207 1,272 1,348
Meat, beef ¢/kg 372.4 268.0 245.2 262.8 273.2 273.4 273.4 272.7
Meat, chicken ¢/kg 177.1 174.7 173.5 174.1 173.9 177.5 173.9 170.1
Meat, sheep ¢/kg 477.3 410.0 378.5 428.7 453.3 453.7 456.0 450.1
Oranges $/mt 1,163 842 799 870 853 715 836 1,007
Shrimp, Mexico ¢/kg 1,048 1,014 976 970 970 970 970 970
Sugar EU ¢/kg 74.70 51.97 51.44 53.76 55.43 55.63 56.34 54.30
Sugar, world ¢/kg 31.14 26.28 28.85 33.89 46.98 40.63 49.47 50.84
Raw Materials
Logs, Cameroon $/cum 548.5 473.8 426.8 394.8 414.9 408.6 413.8 422.3
Plywood ¢/sheets 648.6 645.5 572.8 565.8 561.5 561.9 562.0 560.7
Sawnwood, Cameroon $/cum 974.5 770.8 689.2 721.2 779.0 776.0 785.6 775.5
Cotton Memphis ¢/kg 170.0 130.1 129.8 142.4 149.9 142.2 152.5 154.9
Rubber RSS1, US ¢/kg 329.1 202.8 165.8 187.0 221.0 191.4 223.1 248.7
Fertilizers
DAP $/mt 1,153.7 663.3 362.2 303.6 309.6 293.3 318.6 316.8
Phosphate rock $/mt 409.2 371.3 193.3 113.3 90.0 90.0 90.0 90.0
Potassium chloride $/mt 635.0 766.7 865.2 726.7 505.6 655.5 432.5 428.9
Urea $/mt 745.4 292.2 267.3 241.1 241.6 243.7 247.1 233.9
Metals and Minerals
Aluminum $/mt 2,787 1,821 1,360 1,485 1,812 1,668 1,934 1,834
Copper $/mt 7,680 3,905 3,428 4,663 5,859 5,216 6,165 6,196
Gold $/toz 870 795 909 922 960 934 949 997
Iron ore ¢/dmtu 140.6 140.6 101.0 101.0 101.0 101.0 101.0 101.0
Lead ¢/kg 191.2 124.5 115.7 149.9 192.8 167.9 190.0 220.5
Nickel $/mt 18,961 10,843 10,471 12,920 17,700 15,985 19,642 17,473
Silver ¢/toz 1,495 1,020 1,265 1,376 1,477 1,339 1,443 1,648
Steel cr coilsheet $/mt 1,100 1,100 1,033 700 700 700 700 700
Steel rebar $/mt 934 630 473 450 500 500 500 500
Steel wire rod $/mt 1,135 1,200 1,200 1,007 857 870 850 850
Tin ¢/kg 2,051 1,310 1,103 1,351 1,459 1,404 1,487 1,487
Zinc ¢/kg 177.0 118.5 117.2 147.3 176.1 157.9 182.2 188.4

2. Current State of the Gambian Economy

2.1 Overall and Sectoral GDP Growth Rates
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 The Gambia Monthly Economic Bulletin- October 2009

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

• However, thanks to bumper crops contributed by favorable monsoon at home and high
international prices of food grains, and very good performance by electricity, telecom
and financial sectors, the real GDP growth at constant 2004 market prices improved
from 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 constant
market prices is expected to be 5% supported by a growth of 5.5% in agricultural
production, 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 of
industry declined from 14.7% to 13.2% and that of services declined from 63.7% to
61.5% during the same period. Increase of agricultural share was contributed by
increase in share of crops, while decline of services share was mainly due to decline of
share of wholesale and retail trade, and transport and communications.

GDP Composition(%) in 2009

Others
Business 7%
11%

Agriculture
Transport 26%
12% Mining
2% Manufacturing
Hotels 6%
4% Trade
26% Utilities
2% Construction
4%

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

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 The Gambia Monthly Economic Bulletin- October 2009

30.0

20.0

10.0

0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
-10.0

-20.0

-30.0

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 Sectoral Shares in GDP
(in percentage) (in percentage)
Items 2006 2007 2008 2009 2009 2006 2007 2008 2009
Actual Actual Actual Estd. IMF-Proj Actual Actual Actual Estd.
GDP at 2004 basic price 3.1 6.0 6.3 5.0 3.6 100.0 100.0 100.0 100
Agriculture and allied -14.3 -1.9 26.6 5.5 4.0 23.1 21.6 25.3 25.3
-- Crops -26.3 -15.2 55.2 5.5 4.0 11.8 9.5 13.6 13.7
-- Livestock 2.4 11.9 4.3 4.5 4.0 8.8 9.4 9.0 9.0
-- Forestry 3.0 -4.0 1.0 0.7 3.0 0.7 0.6 0.6 0.5
-- Fishing 7.8 18.0 3.5 11.3 3.0 1.9 2.1 2.0 2.1
Industry 4.5 2.5 -1.2 3.5 2.6 15.1 14.7 13.4 13.2
-- Mining and quarrying 1.2 -14.1 8.8 8.8 2.0 2.4 1.9 1.9 2.0
-- Manufacturing 4.1 3.9 -8.3 0.4 4.0 7.0 7.0 5.9 5.6
-- Electricity, gas, water 8.7 59.1 1.7 10.0 5.0 1.1 1.6 1.5 1.6
-- Construction 6.0 -4.3 5.0 3.0 5.0 4.6 4.2 4.1 4.0
Services 10.0 8.3 4.2 5.7 2.4 61.8 63.7 61.3 61.5
-- Wholesale/retail trade 16.1 9.7 -2.3 1.0 2.7 28.2 29.5 26.6 25.5
-- Hotels/ restaurants 15.7 14.3 2.9 3.0 -10.0 3.6 3.9 3.7 3.6
-- Transport / telecom 2.7 7.0 -8.0 8.0 3.5 12.8 13.0 11.0 11.3
-- Financial 5.7 -0.9 28.2 3.0 1.0 7.5 7.0 8.3 8.2
-- Real est., business -3.9 1.4 0.0 2.5 1.0 3.4 3.3 3.0 3.0
-- Public administration 11.1 12.9 42.1 2.0 5.0 2.6 2.8 3.7 3.6
-- Other service 11.0 17.8 27.0 37.1 3.0 3.7 4.1 4.9 6.3
Source: Gambian Bureau of Statistics (GBOS) for the years 2006-2009 and IMF projections for 2009 by
the IMF Mission to the Gambia in May 2009.

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 The Gambia Monthly Economic Bulletin- October 2009

2.2 Consumer Price Index and Inflation

• As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflation
decelerated significantly from 6.3% in Sept 2008 to 2.3% in Sept 2009, while the 12-
month average inflation rate accelerated to 5.6% in Sept 2009 from 4.3% a year ago.

• Food and drinks (with weights of 55.2% in overall CPI) recorded an annual point-to-point
inflation rate of 2.6% in Sept 2009, down from 8.1% a year ago, and contributed 68.1%
to overall inflation in Sept 2009.

• Non-food items (with weights of 44.8% in overall CPI) recorded annual inflation rate of
1.9% in Sept 2009, down from 4% a year ago and contributed 31.9% to overall inflation.

• Among other groups in Sept 2009, housing and utilities recorded an annual inflation of
2.4%, restaurants and hotels 2.2% and miscellaneous goods and services 4.7%.

Table-2.2 CPI Inflation Rates in September 2009 (in percentage)

Items Weights Sept-2008 Sept-2009 Inflation Wi (CPIi1 – Contributio
Wi (%) Index Index (%) CPIi0) n3 (%)
Overall 100.0 118.96 121.75 2.3 265.8 100.0
Food 55.2 124.11 127.39 2.6 181.1 68.1
Tobacco 0.7 104.64 106.4 1.7 1.2 0.5
Clothing 11.3 110.46 111.82 1.2 15.3 5.8
Utilities 3.4 119.76 122.64 2.4 9.8 3.7
Furnishing 5.2 113.38 115.7 2.0 12.2 4.6
Health 1.0 101.10 101.8 0.7 0.7 0.3
Transport 4.4 119.97 119.97 0.0 0.0 0.0
Telecom 3.0 101.55 102.02 0.5 1.4 0.5
Recreation 8.0 104.13 105.07 0.9 7.5 2.8
Education 1.5 101.87 102.99 1.1 1.7 0.6
Hotels 0.4 114.52 117.08 2.2 0.9 0.3
Misc. 5.9 121.01 126.75 4.7 34.0 12.8
non-food 44.8 112.68 114.82 1.9 95.9 31.9
Source of basic data: Gambian Bureau of Statistics (GBOS).

3
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 181.1 / 265.8 = 68.1%.

15
 The Gambia Monthly Economic Bulletin- October 2009

Sub-group wise inflation in Sept 2009 (%)

Misc.
Education
Telecom
Health Series1
Utilities
Tobacco
Overall

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Contributionto Inflationin Sept 2009 (%)

Recreation
3% Others
Furnishing 15%
4% Utilities
4%
Clothing Food
6% 68%

25.0

20.0

15.0

10.0

5.0

0.0

Food Non -Food All

16
 The Gambia Monthly Economic Bulletin- October 2009

2.3 Projection of CPI inflation during October-December 2009

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

(1) Alternative-1: It is assumed that the CPI variation for a month over the previous month
in 2009 will be the average CPI variation for the month over the previous month in last
two years (2008 and 2007). Thus, Oct 2009 CPI is estimated by the following formula:

Projected CPI for Oct 2009 = Sept 2009 CPI + (Oct 2008 CPI + Oct 2007 CPI – Sept 2008 CPI
– Sept 2007 CPI)/ 2. For the 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 previous
month in 2009 will be the same as that for the respective month over the previous month
in 2008. For example, CPI for Oct 2009 is estimated by the following formula:

Projected CPI for Oct 2009 = Actual CPI for Sept 2009 + (Oct 2008 CPI – Sept 2008 CPI). For
the subsequent months, CPI is projected by the similar formula.

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

Results are presented in Table 2.3 which indicates that inflation is expected to remain stable
and low around 2.2% during the remaining months of the year 2009 and the year-end 12-
month average inflation rate is expected to be 4.5%, the same as in last year.

Table-2.3: Projections of CPI inflation during October-December 2009 (in percentage)

2007 2008 2009- 2009- 2007 2008 2009- 2009- 2009
Index Index Alt1 Alt2 Inf. rate Inf. rate Alt1 Alt2 Alt3
Jan 106.86 112.31 120.1 120.1 2.0 5.1 7.0 7.0 7.0
3 3
Feb 107.01 112.34 120.2 120.2 2.1 5.0 7.0 7.0 7.0
5 5
Mar 109.36 112.73 120.3 120.3 4.2 3.1 6.7 6.7 6.7
0 0
Apr 111.64 113.21 120.36 120.36 6.3 1.4 6.3 6.3 6.3
May 112.0 113.8 120.51 120.51 6.6 1.6 5.9 5.9 5.9
5 3
Jun 111.9 114.4 120.61 120.61 6.4 2.2 5.4 5.4 5.4
8 8
July 111.95 116.21 120.84 120.84 6.3 3.8 4.0 4.0 4.0
Aug 112.09 117.65 121.15 121.15 6.4 5.0 3.0 3.0 3.0
Sep 111.86 118.96 121.75 121.75 6.0 6.3 2.3 2.3 2.3
Oct 111.95 119.29 121.96 122.08 6.0 6.6 2.2 2.3 2.3
Nov 112.13 119.54 122.18 122.33 6.0 6.6 2.2 2.3 2.3
Dec 112.26 119.93 122.44 122.72 6.0 6.8 2.1 2.3 2.2
Q1 107.7 112.5 120.2 120.2 2.8 4.4 6.9 6.9 6.9
Q2 111.9 113.8 120.5 120.5 6.4 1.7 5.8 5.8 5.8
Q3 112.0 117.6 121.2 121.2 6.2 5.0 3.1 3.1 3.1
Q4 112.1 119.6 122.2 122.4 6.0 6.7 2.2 2.3 2.3
17
 The Gambia Monthly Economic Bulletin- October 2009

Average 5.4 4.5 4.5 4.5 4.5

18
 The Gambia Monthly Economic Bulletin- October 2009

2.4 Government Fiscal Performance in Jan-Sept 2009

• Columns (4), (5) and (6) of Table-2.4.1 present major item-wise revenue realization and
expenditure of the government in the first three quarters (i.e. Jan-Sep) of 2007, 2008 and
2009 respectively. Column (8) indicates annual percentage changes of major items of
revenues and expenditure in Jan-Sep 2009 over those in Jan-Sept 2008 (column 7).

• It may be observed from the table that, the government’s fiscal performance has been
mixed in Jan-Sep 2009 compared to Jan-Sep 2008, and it is still under pressure. In Jan-Sep
2008 total revenues and grants declined by 0.5%, as tax revenues increased marginally by
0.3% while non-tax revenues declined by 18.2% over Jan-Sep 2007. On contrast, Jan-Sep
2009 has witnessed an increase in total revenue and grants by 15.6% aided by 16.1%
increase in taxes, marginal decline by 0.9% in non-tax revenues and 46.2% increase in
grants.

• During Jan- Sep 2009, total expenditures and net lending has increased by 22.3% over
Jan- Sep 2008 due to 13% increase in current expenditure and 54.4% increase of capital
expenditure and net lending over Jan- Sep 2008.

• Overall, there is a fiscal deficit of D321 million, and basic deficit of D8.5 million in Jan-
Sep 2009, compared to a lower fiscal deficit of D109 million and basic surplus of D143.6
million in Jan- Sep 2008.

Table-2.4.1 Govt Financial Performance in Jan-Sep 2009 compared with Jan-Sep 2008
2008 2009 2007 2008 2009 % change % change
Items Actual Budget Jan-Sep Jan-Sep Jan-Sep In Jan- In Jan-
Mln Dal. Estimate Actual Actual Actual Sep 2008 Sep 2009
Mln. Dal. Mln Dal. Mln Dal. Mln Dal. over Jan- over Jan-
Sep 2007 Sep 2008
(1) (2) (3) (4) (5) (6) (7) (8)
Revenue and grants 3645 4582 2823.9 2810.7 3249.8 -0.5 15.6
Domestic Revenue 3479 3771 2747.7 2690.3 3073.8 -2.1 14.3
Tax Revenue 3161 3391 2389.3 2397.2 2783.3 0.3 16.1
Nontax Revenue 318 380 358.4 293.1 290.5 -18.2 -0.9
Grants 166 811 76.2 120.4 176.0 58.0 46.2
Exp & Net Lending 4135 5363 2645.8 2919.7 3571.0 10.4 22.3
Current Expenditure 3011 3838 1906.1 2262.4 2556.1 18.7 13.0
Personnel Emoluments 906 1035 488.0 681.9 787.7 39.7 15.5
Other Charges 1398 1958 779.7 1033.3 1181.9 32.5 14.4
Interest 708 845 638.4 547.2 586.5 -14.3 7.2
External 154 147 202.1 111.6 126.7 -44.8 13.5
Domestic 555 698 436.3 435.5 459.8 -0.2 5.6
Cap Exp & Net Lending 1123 1525 739.7 657.3 1014.9 -11.1 54.4
Capital Expenditure 1017 1468 664.1 586.2 905.8 -11.7 54.5
Net Lending 107 57 75.7 71.1 109.1 -6.1 53.5
Overall Bal Inc. grants -490 -781 178.2 -109.0 -321.2 -161.2 194.6
Basic balance -156 -268 687.2 143.6 -8.5 -79.1 -105.9
Basic Primary Bal 553 577 1325.5 690.8 578.0 -47.9 -16.3
Nominal GDP (GBOS) 22590 25023 20413 22590 25023 10.7 10.8
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

19
 The Gambia Monthly Economic Bulletin- October 2009

• Column (2) of Table-2.4.2 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 budgeted at 3.1% of GDP compared to 2.2% of GDP recorded in 2008.

• Columns (4), (5) and (6) of Table-2.4.2 present the major item-wise performance of
revenues and expenditure in Jan-Sep of 2007, 2008 and 2009 respectively, as percentages
of the corresponding nominal GDP (as estimated by GBOS) 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-Sep 2009 than those in Jan-Sep 2008.

• The revenue and expenditure ratios to GDP are also observed to be on track in Jan-Sep
2009 (column-6) as compared with the 2009 budget estimates (column-3).

Table-2.4.2 Govt Financial Performance in Jan-Sep 2009 compared with Jan-Sep 2008
2008 2009 2007 2008 2009 2008 2009
Actual Budget Jan-Sep Jan-Sep Jan-Sep Jan-Sep Jan-Sep
Items as % of as % of as % of as % of as % of as % of as % of
GDP GDP GDP GDP GDP Outturn Budget
(1) (2) (3) (4) (5) (6) (7) (8)
Revenue and grants 16.1 18.3 13.8 12.4 13.0 77.1 70.9
Domestic Revenue 15.4 15.1 13.5 11.9 12.3 77.3 81.5
Tax Revenue 14.0 13.5 11.7 10.6 11.1 75.8 82.1
Nontax Revenue 1.4 1.5 1.8 1.3 1.2 92.3 76.4
Grants 0.7 3.2 0.4 0.5 0.7 72.7 21.7
Exp & Net Lending 18.3 21.4 13.0 12.9 14.3 70.6 66.6
Current Expenditure 13.3 15.3 9.3 10.0 10.2 75.1 66.6
Personnel Emoluments 4.0 4.1 2.4 3.0 3.1 75.3 76.1
Other Charges 6.2 7.8 3.8 4.6 4.7 73.9 60.4
Interest 3.1 3.4 3.1 2.4 2.3 77.2 69.4
External 0.7 0.6 1.0 0.5 0.5 72.7 86.0
Domestic 2.5 2.8 2.1 1.9 1.8 78.5 65.9
Cap Exp & Net Lending 5.0 6.1 3.6 2.9 4.1 58.5 66.6
Capital Expenditure 4.5 5.9 3.3 2.6 3.6 57.7 61.7
Net Lending 0.5 0.2 0.4 0.3 0.4 66.6 192.5
Overall Bal -2.2 -3.1 0.9 -0.5 -1.3 22.2 41.1
Inc.grants4
Basic balance5 -0.7 -1.1 3.4 0.6 0.0 -92.3 3.2
Basic Prim. Balance6 2.4 2.3 6.5 3.1 2.3 124.9 100.1
Source: Economic Planning and Management Unit (EMPU), DODFEA.

4
(1) Overall balance= (Revenue and grants) minus (expenditure and net lending).
5
(2) Basic balance= Domestic revenue minus (expenditure and net lending) plus externally
financed capital expenditure;
6
(3) Basic primary balance= Basic balance plus interest payments
20
 The Gambia Monthly Economic Bulletin- October 2009

2.5 Projection of Fiscal Outturn for the Year 2009

Column (2) of the Table-2.5.3 below presents detailed item-wise revenues and expenditure in
Jan-Sep 2009. The ratios of actual realization for any item in Jan-Sep to the final outturn for the
item during the complete year for the last five years viz. 2004, 2005, 2006, 2007 and 2009 are
presented 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
seasonality, expected revenue and expenditure outcomes for the full year 2009 are estimated
by the following formula and are presented in column (9).

Expected outturn for an item in 2009 = 100 X (actual realization in Jan-June 2009) /
average realization ratio (in percentage) in Jan-June in the last five years (2004-2008)

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

(a) Total domestic revenue and tax revenue targets as given in the Appropriation Budget for
2009 are expected to be realized by actual collections in 2009.
(b) It is understood that Table 2.5.3 does not fully capture the inflows of grants, which have
already been over realized as compared to budget estimates. This underestimation of
grants will not affect the fiscal balance or basic balance as the grants balance each other
on revenue and expenditure sides.
(c) There is likely to be marginal shortfall in non-tax revenues.
(d) There is likely to be expenditure overrun of capital expenditure, while actual current
expenditure is expected to show some surplus over the budgeted current expenditure.
(e) Overall, it is expected to have a fiscal deficit of D1082 million (amounting to 4.3% of
nominal GDP) compared to budget estimate of fiscal deficit at D780.7 million (amounting
to 3.1 percent of GDP). However, basic balance is likely to show some surplus.

2.5.3 Government Fiscal Performance in Jan-Sep 2009 and Expected Outturn for 2009
Items 2009- Ratio of Jan-Sep performance in Ave. 2009 2009
Jan- Annual Outturn (in Percentage) ratio Proj. Budget
Sep 2004- 2005- 2006- 2007- 2008- 2004- Out- Esti-
mate
Actual Ja-Sp Ja-Sp Ja-Sp Ja-Sp Ja-Sp 2009 turn7
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
1.Rev & grants (2+5) 3249.6 77.4 75.5 76.7 77.1 75.0 4610.1 4582.2
2.Dom. Revenue (3+4) 3073.6 75.3 75.0 76.0 79.2 76.8 4013.1 3771.1
3.Tax Rev (3.1+3.2) 2783.2 75.6 76.1 76.3 78.3 76.2 3639.9 3390.6
3.1 Direct Tax (a to e) 831.7 80.2 74.7 81.0 83.2 82.1 1023.3
(a) Personal 331.9 79.8 81.1 78.1 77.3 77.6 78.8 421.3
(b) Corporate 423.9 79.8 69.5 81.8 86.3 93.1 82.1 516.3
(c) Capital Gains 20.9 82.6 81.2 81.4 84.1 42.5 74.4 28.1
(d) Payroll 36.9 91.9 94.3 95.1 96.7 93.4 94.3 39.1
(e) Other 18.1 - 97.6 97.2 99.4 98.9 98.3 18.4
2.5.3 Government Fiscal Performance in Jan-Sep 2009 and Expected Outturn for 2009
Items 2009 Ratio of Jan-Apr performance in Ave. 2009 2009

7
Expected outturn for an item in 2009 = 100 X (actual realization in Jan-June 2009) / average realization ratio (in
percentage) during the last five years (2004-2008)

21
 The Gambia Monthly Economic Bulletin- October 2009

Jan- Annual Outturn (in Percentage) ratio Proj. Budget

Sep 2004- Out- Esti-
Actual 2004- 2005- 2006- 2007- 2008- 2009 turn8 mate
Ja-Sp Ja-Sp Ja-Sp Ja-Sp Ja-Sp
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
3.2 Indirect Tax 1951.5 73.9 76.8 74.3 76.3 72.9 2616.6
3.2.1 Dom Tax on G&S 448.0 73.4 78.5 73.7 77.4 75.5 597.2
(a) Stamp Duties 12.8 82.7 78.2 89.5 88.2 85.2 84.8 15.1
(b) Excise Duties 109.4 68.3 66.3 67.3 70.1 75.1 69.4 157.6
(c) Dom Sales Tax 325.8 73.8 80.5 74.9 79.8 74.8 76.8 424.5
3.2.2 Tax on Ext Trade 1503.5 74.0 76.2 74.5 75.9 71.7 2019.4
(a) Duty (i+ii) 891.0 75.1 77.8 75.7 75.3 70.2 1189.9
(i) Oil 504.9 80.3 75.4 77.2 77.9 63.6 74.9 674.5
(ii) Non-oil 386.1 73.4 78.8 74.9 73.9 73.5 74.9 515.4
(b) Sale tax on imp (i+ii) 612.5 72.6 74.5 73.1 76.5 73.2 829.6
(i) Oil 104.1 73.9 74.2 75.4 75.9 78.7 75.6 137.7
(ii) Non-oil 508.4 72.4 74.6 72.4 76.6 71.3 73.5 691.9
4. Nontax Rev (a to d) 290.4 72.5 67.8 71.8 86.2 82.9 76.3 373.2 380.5
(a) Govt Charges 139.1 75.0 83.6 76.9 93.5 90.1 83.8 166.0
(b) NTR from CRD 2.4 - 83.0 83.9 82.3 87.0 84.1 2.9
(c) NTR from CED 78.2 - 76.0 - 74.4 75.0 75.1 104.1
(d) Others 70.7 - 55.0 64.7 84.4 77.9 70.5 100.3
5. Grants 176.0 87.1 80.8 89.0 39.2 49.3 69.1 597.0 811.1
6. Exp & Net Lend (7+8) 3571.2 75.5 78.9 79.0 72.8 69.0 5691.5 5362.9
7. Cur. .Exp (7.1 to 7.3) 2556.1 67.7 75.6 74.9 73.7 73.1 3529.8 3838.0
7.1 Pers. Emoluments 787.7 73.3 72.8 69.0 71.7 69.4 71.2 1105.7 1035.2
7.2 Other Charges 1181.9 69.4 72.6 73.2 71.5 73.9 72.1 1638.9 1957.5
7.3 Interest (a+b) 586.5 63.1 78.9 80.8 78.3 76.7 785.1 845.3
(a) External 126.7 71.2 84.1 81.7 87.5 72.7 79.4 165.0 147.3
(b) Domestic 459.8 60.3 77.4 80.5 74.7 77.8 74.1 620.1 698
8. Cap Exp & Net Lend. 1015.1 85.6 83.6 85.6 70.6 57.5 2161.7 1524.9
8.1 Capital Exp. (a+b) 906.0 85.0 82.8 85.0 68.3 57.7 2006.0 1468.2
(a) Ext. Financed (i+ii) 517.5 88.9 83.2 86.4 75.0 73.8 81.5 1558.0
(i) Loans 341.5 89.6 83.9 86.0 86.9 74.4 961.0
(ii) Grants 176.0 87.3 79.2 89.0 39.2 72.7 597.0
(b) GLF Capital 388.5 51.4 77.1 58.3 41.0 41.7 53.9 448.0
8.2 Net lending 109.1 49.4 44.6 100.0 100.0 56.3 70.1 155.7 56.7
9. Overall fis. bal (1-6) -321.6 -1081.5 -780.7
10. Basic balance 195.9 476.5 -267.7
11. Basic Primary Bal. 782.4 1261.7 577.6
Memorandum Items: As percentage of IMF Program Nominal GDP (equal to D19904 million)
12. Fiscal bal (1-6) -1.3 -4.3 -3.1
13. Basic balance 0.8 1.9 -1.1
14. Basic Primary 3.1 5.0 2.3
Balance

8
Expected outturn for an item in 2009 = 100 X (actual realization in Jan-Sep 2009) / average realization ratio in Jan-
Sep (in percentage) during the last five years (2004-2008)

22
 The Gambia Monthly Economic Bulletin- July 2009

2.6 Domestic Debt and Treasury Bills Outstanding

• At the end of Sept 2009, outstanding domestic debt stood at D5.9 billion (amounting to
23.7% of GDP), down from the outstanding domestic debt at D6.1 billion (amounting to
27% of GDP) a year ago.

• The share of Treasury bills increased from 79.6% at the end of Sep 2008 to
84.5% at the end of Sep 2009, share of Sukuk Al-Salam remained unchanged at 2%, that
of Government bonds increased marginally from 4.1% to 4.2%, while that of NIB treasury
bills declined from 14.2% to 9.2% over the period.

Table-2.6-A Outstanding Domestic Public Debt as on 30 Sep 2009

Type of debt Million Dalasi % change in Composition

June2009 (in percentage)
30 Sep 30 Sep over June 2008 30 Sep 30 Sep
2008 2009 2008 2009
Treasury bills 4,860 5,005 3.0 79.6 84.5
Sukuk Al-Salam 122 120 -1.7 2.0 2.0
Government Bonds 250 250 0.0 4.1 4.2
NIB Treasury Notes 873 547 -37.4 14.3 9.2
Total 6,105 5,922 -3.0 100 100
Nominal GDP 22590 25023
(GBOS)
As % of nominal 27.0 23.7
GDP

Domestic Debt Sustainability

As per the analysis made by the CBG, the current level of Gambia’s domestic debt is
unsustainable. Out of three sustainability indicators given in Table-2.6.B, only one indicator viz.
debt to revenue ratio is satisfied. However, debt to GDP ratio may be satisfied during 2009.

Table-2.6-B 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 30
3. Debt to revenue 92-167 180 158 166 147
ratio
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. The
thresholds used here are those used by the Debt Relief International (DRI) for many HIPC countries.

Source: Central Bank of Gambia

23
 The Gambia Monthly Economic Bulletin- July 2009

2.7 Treasury Bills Yields

• Yields on treasury bills fluctuated widely in recent months. As expected, the higher the
maturity of treasury bills, the higher is the yield. However, despite stability in deposit
rates and significant decline of CPI inflation from 7% in January 2009 to 2.3% in Sep
2009, Average yields on the 91-day and 364-dat treasury bills remained unchanged at
10.4% and 14.3% respectively and yield of 182-day bills declined marginally from 12.1%
in Jan 2009 to 11.7% in Sep 2009.

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

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

2007 2008 2009
91-D 162-D 364-D 91-D 162-D 364-D 91-D 162-D 364-D
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 13.0 13.8 15.6
Jul 12.5 13.2 13.9 9.6 10.6 12.6 11.5 12.0 14.4
Aug 12.6 12.9 13.6 8.8 10.2 12.1 10.2 11.2 13.3
Sep 11.6 12.2 12.9 8.9 11.0 13.1 10.4 11.7 14.3
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

45
40
35
30
25
20
15
10
5
0

91-D 162-D 364-D

24
 The Gambia Monthly Economic Bulletin- July 2009

2.8. Money Supply

• Broad money supply (M2) recorded an annual growth of 20.7%, compared to 11.1
percent a year ago. While quasi money increased by a faster pace of 27.1 percent,
narrow money increased by 14.2 percent. Reserve money grew by 2.7 percent, higher
than an increase of 0.9 percent recorded a year ago.

• On the supply side, 20.7% growth in broad money supply in Sept 2009 was supported
by 4% growth in currency, 20.1% growth in demand deposits, 17.8% growth in savings
deposits and 40.7% growth in time deposits.

• On the demand side, growth was mainly due to 32.7% growth in net foreign assets,
while net domestic assets increased by only 12.7% over a year ago.

• Domestic credit increased from D5.8 billion in Sept 2008 to D6.9 billion in Sept 2009,
supported by 21.3% growth in government borrowing, 82.9% growth in credits to public
entities and 13.3% growth in credits to the private sector, over a year ago.

Table-2.8 Money Supply and Demand in Sept 2009

Components Sep 2008 Sep Sep 2008 Sep Sep 2009 %
Million 2009 % share 2009 change over Sep
Dalasi Million Dalasi % share 2008
1.Money Supply (M2) (2+3) 8770 10585 100 100 20.7
2.Narrow Money (2.1+2.2) 4360 4979 50 47 14.2
2.1 Currency 1599 1663 18 16 4.0
2.2 Demand deposits 2760 3315 31 31 20.1
3.Quasi money (3.1+3.2) 4410 5606 50 53 27.1
3.1 Savings deposits 2617 3083 30 29 17.8
3.2 Time deposits 1793 2523 20 24 40.7
Demands for money (1+2) 8770 10585 100 100 20.7
1.Net foreign assets (1.1+1.2) 3494 4637 40 44 32.7
1.1 Monetary Authorities 3087 3934 35 37 27.4
1.2 Commercial banks 407 703 5 7 72.8
2.Net Dom. Assets (2.1+2.2) 5277 5949 60 56 12.7
2.1 Domestic credit 5835 6909 67 65 18.4
(a) Credits to government 2132 2587 24 24 21.3
(b) Credits to public entities 482 881 5 8 82.9
(c) Credits to private sector 3038 3442 35 33 13.3
(d) Credits to forex bureau 183 0 2 0 -100.0
2.2 Other items, net -558 -961 -6 -9 72.2
Reserve Money 2572 2844 10.6
Source: Central Bank of Gambia

25
 The Gambia Monthly Economic Bulletin- July 2009

2.9 Performance by Commercial Banks

• The Gambian banking industry consists of 13 banks with highly skewed distribution of
assets. The industry continues to be dominated by three large banks which accounted
for 64.4% of the total assets at the end of September 2009, although their share has
declined from 67% a year ago.

• The banking industry remains sound. Total industry assets increased by 21% on year-
on-year basis from D11.3 billion at end-Sep 2008 to D13.7 billion at end-Sep 2009.

• Gambian banks do not have large exposure to foreign assets or foreign liabilities. Banks
also do not have large contingent liabilities. At end-Sep 2009 contingent liabilities
constituted 13.2% of total liabilities, compared to 10.3% a year ago.

• At end-Sept 2009, loans and advances constituted 30% of total assets and the ratio
remained fairly stable during 2009. The notable sectoral increases of bank loans in
September 2009 were for manufacturing, construction, tourism and fishing, while loans
to agriculture recorded decline over last year’s lending.

• At end-Sept 2009, investments in government Treasury Bills by the banks constituted

about 26% of their total assets. As expected, three large banks had the dominant share.

• The Banking sector continues to function efficiently with sufficient capital and liquidity.
The industry’s risk-weighted capital adequacy ratio stood at 34.84% in March 2009, and
33.22% in Sept 2009 significantly above the statutory requirement of 8%.

• Non-performing loans rose from 7.3% in Sep 2008 to 9.5% in Dec 2008, but declined to
7% in Sept 2009 compared to 9.95 percent a year ago, and were adequately provisioned
in compliance with the statutory norms and requirements.

• However, commercial banks’ Return on Assets (ROA) declined from 2.10% in March
2008 to 0.9% in Sep 2008. ROA declined further to 0.49% at the end of Sep 2009.

Table-2.9 Banks’ total loans and non-performing loans (NPL) by sectors in Sept 2009
Sectors Sep 2008 Sep 2009 Sep Sep 2009 Sep 2009 NPL NPL
Million Million 2008 % % share % change Ml. D. as %
Dalasi Dalasi share over Sep of
2008 Total
1. Agriculture 148 136 5 3 -8.4 5.9 4.3
2. Fishing 17 25 1 1 43.0 10.4 42.0
3. Manufacturing 117 195 4 5 67.4 3.1 1.6
4. Building 342 512 11 12 49.6 62.8 12.3
5. Transport 281 355 9 8 26.3 21.4 6.0
6. Distribution 831 931 26 22 12.0 103.1 11.1
7. Tourism 195 293 6 7 50.5 22.2 7.6
8. Financial sector 125 126 4 3 0.8 12.9 10.2
9. Others 1140 1624 36 39 42.5 71.8 4.4
10. Total 3196 4197 100 100 31.3 313.5 7.5

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 The Gambia Monthly Economic Bulletin- July 2009

2.10 BOP, Foreign Exchange Reserves and Exchange Rates

(a) 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 a 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%.

(b) BOP Situation in 2009-Q1

• Provisional BOP 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 first quarter of 2008 to D234.53 million in the first quarter of 2009.

(c) BOP Situation in 2009-Q2

Preliminary BOP estimates for the first half of 2009 (i.e. Jan-June 2009) indicated that the
overall deficit narrowed to D348.44 million in 2009 from D376.5 million in Jan-June 2008. The
current account recorded a surplus of D163.48 million in Jan-June 2009 compared to a deficit of
D276.1 million in Jan-June 2008. The capital and financial account balance worsened to deficit
of D511.92 million in Jan-June 2009 from a deficit D100.4 million in Jan-June 2008 reflecting the
decline in reinvested earnings and equity capital.

The goods account balance improved from a deficit of D1.4 billion in Jan-June 2008 to D1.1
billion in Jan-June 2009 attributed to the surge in exports which more than offset the increase in
imports. Exports, including re-exports rose to D2.2 billion in Jan-June 2009 compared to D1.4
billion Jan-June 2008.
(d) Foreign Exchange Reserves and Exchange Rates

Volume of transactions in the domestic foreign exchange market contracted to US$1.3 billion in
the year to end-September 2009 from US$1.6 billion a year earlier. The domestic currency
depreciated by 7.9 percent on the overall nominal exchange rate index of currencies compared
to an appreciation of 1.6 percent in the preceding year. From December 2008 to end-September
2009, the Dalasi depreciated against the British Pound, US Dollar, CFA Franc and euro by 7.1
percent, 17.5 percent, 9.4 percent and 8.2 percent respectively.

Gross official reserves, including Special Drawing Rights (SDR) allocation from the International
Monetary Fund (IMF), as at end-September stood at US$141.3 million, equivalent to 6.0 months
of import cover.

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The Gambia Monthly Economic Bulletin- July 2009

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