gambia monthly economic abstract july 2009

8/14/2019 Gambia Monthly Economic Abstract July 2009

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The Gambia Monthly Economic Bulletin- July 2009

THE GAMBIA MONTHLYECONOMIC ABSTRACT 1

July 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

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 currentstate of the Gambian economy. The Abstract has been prepared jointly by Dr. Tamsir Cham,Director, the Economic Management and Planning Unit (EMPU) and Dr. Tarun Das,Macroeconomic Adviser (ISPEFG); Ministry of Finance and Economic Affairs (MOFEA) under the overall direction and supervision by Mr. Mod A. K. Secka, Honorable Permanent Secretary-Iand Mr. Serign Cham, Honorable Permanent Secretary-II.

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

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


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Political and Administrative Structure

The Gambia is divided into seven regions comprising two Municipalities namely, Banjul CityCouncil (BCC) and the Kanifing Municipal Council (KMC) and five provincial administrativeregions 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: 1 st January to 31 st DecemberItems (Year) Units Value Rank in the World

from topin descending order

Area (2009) Sq. km. 11,300 171 out of 248countries

Population (2008) Million 1.735 148 out of 241countries

GDP PPP (2004) Million US$ 3284 167 out of 224countriesGDP Nominal (2006) Million US$ 511 199 out of 229

countriesGDP PPP per capita (2004) US$ 1945 177 out of 223

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

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

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

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


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HIGHLIGHTSCPI Inflation

Annual point-to-point CPI inflation accelerated significantly from 2.2% (food 2.6% and non-food1.8%) in June 2008 to 5.4% (food 6.5% and non-food 3.9%) in June 2009, and the 12-monthaverage inflation rate accelerated to 6.1% in June 2009 from 4.6% a year ago.

Given global economic slowdown, global crude oil prices were projected to remain soft and rulearound $51 per barrel in 2009. However, since April 2009 petroleum prices started rising andincreased to $60/barrel in May 2009 and S$70/barrel in June 2009. Recent forward marketsproject oil prices around $74 for 2010, which is not much above current price.

Government Financial Performance

Government Financial Performance in Jan-June 2009 was better than in Jan-June 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 (1% of GDP) in Jan-June 2009, higher thanthe fiscal deficit of 86 million Dalasi (0.5% of GDP) in Jan-June 2008, due to significant increaseof capital expenditure by 55.2% in Jan-June 2009 over Jan-June 2008.

Domestic Debt and Treasury Bills Yields

At the end of June 2009, outstanding domestic debt stood at D5.7 billion (28.8% of GDP),compared to D6 billion (33.4% of GDP) a year ago. The share of Treasury bills increased from80.5% at the end of June 2008 to 84.6% at the end of June 2009,

Despite significant decline of CPI inflation from 7% in Jan 2009 to 5.4% in June 2009, averageyield on 91-day increased from 10.5% in Jan 2009 to 13% in June 2009, yield of 182-day billsfrom 12.1% to 13.8% and that of 364-day bills from 14.4% to 15.6% over the period.

Money Supply and Bank Credits

Annual growth rate of money supply (M3) increased from 8.5% in June 2008 to 21.2% in June2009, aided by 18.1% growth in currency, 23% growth in demand deposits, 12.8% growth insavings deposits and 33.8% growth in time deposits. On the demand side, growth was mainlydue to 31.7% growth in domestic credits, while net foreign assets decreased by 4.8%.

Domestic credit increased from D5.3 billion in June 2008 to D6.9 billion in June 2009, supportedby 45.9% growth in government borrowing, 119.4% growth in credits to public entities and 18.2%growth in credits to the private sector, over a year ago.

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-June 2009, foreign assets constituted only8.8% of total assets and external sector related liabilities constituted only 2.6% of total liabilities.

Foreign Exchange Reserves and Exchange Rate

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

At end-July 2009, Dalasi has depreciated by 5.3% against British Pound, by 27.3% against US$,by 24.7% against CHF, by 17.4% against Euro and by 11.5% against CFA over end-July 2008.

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At a Glance- July 2009

EconomicIndicators

LatestReference

Period

Status in thelatest reference

period

Status in theCorresponding

period in the

previous year

Outlook for 2009

Real GDP (FC)Growth rate (%)

Calendar year 2008

Overall 7.2Agriculture 28.4Industry 0.7Services (-) 0.6

Overall 6.1Agriculture 3.9Industry (-) 3.1Services 10.4

Overall 3.6 to 4.5Agriculture 4.0 to 6.0Industry 2.0 to 2.4Services 2.4 to 4.4

CPI inflation (%) June 2009 Overall 5.4Food 6.5Non-food 3.9

Overall 2.2Food 2.6Non-food 1.7

Expected to decline inthe remaining months of the year

Brent crude oilprice (US$/ brl)

July 2009 AverageUS$68.50

Average US$133 May stabilize aroundUS$70 by the end-2009

Growth rate (%) of Revenue & grants

Jan-June 2009 15.5 -1.2

Growth rate (%) of Exp & Net Lending

Jan- June 2009 20.4 14.7

Overall fiscal bal.as % of GDP

Jan-June 2009 -1.0 -0.5

Basic Balance as% of GDP

Jan-June 2009 0.8 0.4

Primary Bas. Bal,as % of GDP

Jan-June 2009 2.8 2.5

Overall fiscal performancein 2009 may not be better than 2008.

Domestic debtas % of GDP

June 2009 28.8 33.4 Likely to decline in 2009.

Yield on 91-daysTBs (%)

June 200913.0 10.0

Yield on 182-days TBs (%)

June 200913.8 11.2

Yield on 364-

days TBs (%)

June 2009

15.6 13.3

Yields may come downas CPI inflation hasstarted decelerating.

GR of Moneysupply (M3) (%)

June 2009 21.2 8.5 Money growth rate islikely to decelerate.

CBG Rediscountrate (%)

June 2009 16 15

Banks Foreignassets as % of total assets

May 2009 7.5 11.7

Foreign liabilitiesas % of total

May 2009 1.5 2.8

Likely to remain stable

Dalasi/ UK End-July 2009 43.85 41.65Dalasi/ US$ End-July

200926.65 20.94

Dalasi/ CHF End-July2009 24.83 19.90

Dalasi/ Euro End-July2009

37.80 32.21

Dalasi/ CFA(5000)

End-July2009

280.00 251.05

Dalasi is likely todepreciate against major currencies during the

year 2009.

Foreign Exch.Reserve (US$)

End-May 2009 119.7 140.4 Likely to remain under pressure.

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1. Consumer Price Index and Inflation

As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflationaccelerated significantly from 2.2% in June 2008 to 5.4% in June 2009, and the 12-month average inflation rate accelerated to 6.1% in June 2009 from 4.6% a year ago.

Food and drinks (with weights of 55.2% in overall CPI) recorded average inflation of 6.5% in June 2009, up from 2.6% a year ago, and contributed 71.2% to overall inflationin June 2009.

Non-food items (with weights of 44.8% in overall CPI) recorded annual inflation of 3.9%in June 2009 compared to 1.8% a year ago and contributed 28.8% to inflation.

Among other groups, in June 2009, clothing and textiles recorded annual inflation of 4%,housing and utilities 5.1%, restaurants and hotels 5.9% and miscellaneous goods andservices 10.9%.

Table-2.3 CPI Inflation Rates in June 2009 (in percentage)Items WeightsWi (%)

June-2008Index

June-2009Index

Inflation(%)

Wi (CPI i1 CPI i0)

Contribution 2 (%)

Overall 100.0 114.48 120.61 5.4 597.4 100.0Food 55.2 118.17 125.87 6.5 425.1 71.2Tobacco 0.7 104.64 106.16 1.5 1.1 0.2Clothing 11.3 107.10 111.35 4.0 47.9 8.0Utilities 3.4 116.38 122.3 5.1 20.1 3.4Furnishing 5.2 112.13 115.11 2.7 15.6 2.6Health 1.0 101.10 101.78 0.7 0.7 0.1Transport 4.4 118.87 119.77 0.8 4.0 0.7Telecom 3.0 101.55 101.97 0.4 1.2 0.2

Recreation 8.0 104.13 104.84 0.7 5.7 1.0Education 1.5 101.87 102.25 0.4 0.6 0.1Hotels 0.4 110.10 116.58 5.9 2.3 0.4Misc. 5.9 113.59 125.93 10.9 73.2 12.2non-food 44.8 109.99 114.23 3.9 189.9 28.8

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) = W i (CPI i1 CPI i0) / W i (CPI i1 CPI i0) expressed as a percentage.where CPI i1 = Consumer Price Index for Item (i) in the current period

CPI i0 = Consumer Price Index for Item (i) in the previous periodWi = Weights for Item (i) andW = Total weights = Wi

For example, contribution of food is estimated as 100 X 425.1 / 597.4 = 71.2%.

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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 thecombination of lower commodity prices and increasing economic slackness, with deflation risksgrowing in advanced economies. IMF forecasts indicate that G-7 deflation vulnerability has risenabove its previous peak, reflecting high risks in Japan and the United States and moderate risksin several euro area members including Germany, Italy and France.

Commodity prices have rebounded ahead of the recovery. The recent rally in commodity priceswas strong and broad-based, reflecting improved market sentiment, U.S. dollar depreciation,and commodity-specific supply-demand conditions.

2.1 Trends of International Crude Oil Prices

During 2008 Brent crude oil prices ruled very high until July 2008 when prices increased to $147per 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) hasprojected that the world oil demand in 2009 will decline by half a million barrels per day (bpd).

Given weakness in the Chinese demand and negative growth in the US and EU in March-April2009 Brent crude oil prices ranged around US$47 per barrel. However, o il prices respondedstrongly to improved demand prospects and OPEC members strict observance of lower production quotas, and increased to an average of $58 per barrel in May 2009 and further to anaverage of $69 per barrel in June 2009. Recent forward markets project oil prices at $74.50 for 2010, not much above current levels, with high excess capacity expected to buffer growingdemand.

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

0

20

40

60

80

100

120

140

J a n - 9

9

J u l - 9

9

J a n - 0

J u l - 0

J a n - 0

1

J u l - 0

1

J a n - 0

J u l - 0

J a n - 0

J u l - 0

J a n - 0

J u l - 0

J a n - 0

J u l - 0

J a n - 0

J u l - 0

J a n - 0

J u l - 0

J a n - 0

J u l - 0

J a n - 0

9

Months and Years 1999-2009

U S $ p e r

B a

Series1

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Table-2 Trends of World Commodity PricesQuarterly averages Monthly averages

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar

Apr-Jun Apr May Jun

Commodity Unit 2008 2008 2008 2009 2009 2009 2009 2009EnergyCoal, 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 68.62Crude oil, Dubai a/ $/bbl 116.67 113.47 53.67 44.56 58.93 50.18 57.40 69.21Natural gas, Europe a/ $/mmbtu 12.40 14.62 15.75 11.94 8.18 8.51 8.09 7.95Natural gas, US a/ $/mmbtu 11.35 9.03 6.40 4.57 3.71 3.50 3.81 3.81Beverages Cocoa b/ /kg 276.4 282.6 224.1 259.7 258.7 258.1 247.5 270.4Coffee, Arabica b/ /kg 315.1 321.2 267.8 283.9 320.2 297.4 332.9 330.2Tea, Mombasa auctions b/ /kg 221.6 252.8 190.8 214.9 228.0 221.0 222.3 240.8Fats and Oils Coconut oil b/ $/mt 1,499 1,246 772 677 781 747 843 754Copra $/mt 1,013 817 520 447 513 499 559 480Groundnut oil b/ $/mt 2,328 2,417 1,773 1,283 1,165 1,187 1,157 1,151Palm oil b/ $/mt 1,198 928 512 577 744 702 801 730Soybean oil b/ $/mt 1,466 1,353 830 755 859 801 892 885Soybeans b/ $/mt 585 566 377 394 460 414 465 502Grains

Barley b/ $/mt 239.1 216.6 129.5 116.3 129.5 111.3 128.7 148.5Maize b/ $/mt 259.0 244.7 168.4 166.9 176.0 168.5 179.9 179.5Rice, Thailand, 35% $/mt n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.Sorghum $/mt 246.9 214.7 151.0 145.3 148.1 154.1 160.1 130.0Wheat, US, HRW b/ $/mt 346.5 317.7 228.1 231.6 250.5 234.2 262.3 255.1Wheat US SRW $/mt 277.8 241.5 182.7 187.4 195.6 182.6 202.5 201.7Other Food Bananas EU $/mt 1,263 1,123 944 1,142 1,280 1,292 1,286 1,262Fishmeal $/mt 1,185 1,198 1,023 1,013 1,096 1,040 1,103 1,146Meat, beef b/ /kg 332.7 372.4 268.0 245.2 262.8 255.5 263.7 269.2Meat, chicken b/ /kg 167.9 177.1 174.7 173.5 174.1 171.2 174.5 176.7Meat, sheep /kg 493.2 477.3 410.0 378.5 428.8 404.4 427.7 454.4Oranges b/ $/mt 1,322 1,163 842 799 864 905 888 798Shrimp, Mexico b/ /kg 1,109 1,048 1,014 976 970 970 970 970Sugar EU domestic b/ /kg 77.59 74.70 51.97 51.44 53.75 52.09 53.84 55.34Sugar, world b/ /kg 27.01 31.14 26.28 28.85 33.89 30.09 35.36 36.22

Raw Materials Logs, Cameroon $/cum 554.4 548.5 473.8 426.8 394.6 382.5 395.4 406.0Plywood /sheets 647.3 648.6 645.5 572.8 565.5 567.7 565.9 562.7Sawnwood, Cameroon $/cum 1,052.3 974.5 770.8 689.2 721.4 684.3 717.6 762.5Cotton Memphis /kg 171.6 170.0 130.1 129.8 142.4 135.6 150.2 141.4Rubber RSS1, US /kg 311.7 329.1 202.8 165.8 187.0 183.6 189.8 187.6FertilizersDAP b/ $/mt 1,191.6 1,153.7 663.3 362.2 303.6 335.4 297.5 277.8Phosphate rock b/ $/mt 367.5 409.2 371.3 193.3 113.3 125.5 117.5 96.9Potassium chloride b/ $/mt 511.1 635.0 766.7 865.2 726.7 745.0 717.5 717.5Urea b/ $/mt 575.7 745.4 292.2 267.3 241.1 245.2 240.8 237.4Metals and Minerals Aluminum b/ $/mt 2,940 2,787 1,821 1,360 1,485 1,421 1,460 1,574Copper b/ $/mt 8,443 7,680 3,905 3,428 4,663 4,407 4,569 5,014Gold $/toz 896 870 795 909 922 890 929 946Iron 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

Nickel b/ $/mt 25,682 18,96110,84

310,47

112,92

0 11,16612,63

5 14,960Silver /toz 1,720 1,495 1,020 1,265 1,376 1,252 1,411 1,466Steel cr coilsheet c/ $/mt 900 1,100 1,100 1,033 700 700 700 700Steel, rebar c/ $/mt 838 934 630 473 450 425 450 475Steel wire rod c/ $/mt 950 1,135 1,200 1,200 1,007 1,100 1,020 900Tin b/ /kg 2,265 2,051 1,310 1,103 1,351 1,174 1,379 1,499Zinc 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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3. Government Fiscal Performance in Jan-June 2009

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

It may be observed from the table that, the governments fiscal performance has been tosome extent better in Jan-June 2009 than in Jan-June 2008, but still it is under pressure. InJan-June 2008 total revenues and grants declined by 1.2%, as tax revenues decreased by3.8% and non-tax revenues declined by 26.3% over Jan-June 2007. On contrast, Jan-June2009 has witnessed 15.5% increase in total revenue and grants aided by 13.3% increase intaxes, 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 capitalexpenditure 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 inJan-June 2008.

Table-3.1 Govt Financial Performance in Jan-June 2009 compared with Jan-June 2008

Items2008

ActualMln Dal.

2009Budget

EstimateMln. Dal.

2007Jan-June

ActualMln Dal.

2008Jan-June

ActualMln Dal.

2009Jan-June

ActualMln Dal.

% changeIn Jan-

Jun 2008over Jan-Jun 2007

% changeIn Jan-

Jun 2009over Jan-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 12.9Tax Revenue 3161 3391 1637 1631 1849 -0.3 13.3Nontax Revenue 318 380 256 189 206 -26.3 8.9Grants 166 811 49 99 161 102.5 63.7

Exp & Net Lending 4135 5363 1748 2005 2414 14.7 20.4Current Expenditure 3011 3838 1194 1544 1640 29.3 6.3

Personnel Emoluments 906 1035 336 450 531 34.0 18.0Other Charges 1398 1958 450 710 701 57.7 -1.2Interest 708 845 409 385 409 -5.9 6.3

External 154 147 104 80 98 -23.5 22.7Domestic 555 698 305 305 311 0.1 2.1

Cap Exp & Net Lending 1123 1525 553 461 773 -16.7 67.8Capital Expenditure 1017 1468 488 396 614 -18.9 55.2Net Lending 107 57 66 65 159 -0.8 144.4

Overall Bal Inc. grants -490 -781 194 -86 -198 -144.4 129.7Basic balance -156 -268 590 70 158 -88.1 125.3Basic Primary Bal 553 577 999 455 567 -54.5 24.7

Nominal GDP (IMP Prg) 17959 19904 16007 17859 19904 11.6 11.5Notes: (1) Overall balance= (Revenue and grants) minus (expenditure and net lending).(2) Basic balance= Domestic revenue minus (expenditure and net lending) plus externallyfinanced capital expenditure; (3) Basic primary balance= Basic balance plus interestpayments

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Column (2) of Table-3.2 indicates the item-wise actual fiscal performance in 2008 aspercentage of GDP and the column (3) indicates the item-wise budget estimates in 2009 aspercentage of GDP. It is observed from these columns that 2009 budget estimates assumebetter performance of grants and expenditure as percentages of GDP. Overall fiscal deficitfor 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 revenuesand expenditure in the first half (Jan-June) of 2007, 2008 and 2009 respectively, aspercentages of the corresponding nominal GDP (IMF Program estimate) for the full year. It isobserved from the table that, in terms of the percentages of GDP, the total revenues andexpenditures 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-June2009 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

Items

2008Actualas % of

GDP

2009Budgetas % of

GDP

2007Jan-Junas % of

GDP

2008Jan-Junas % of

GDP

2009Jan-Junas % of

GDP

2008Jan-Junas % of Actual

2009Jan-Junas % of 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 54.5Tax Revenue 17.6 17.0 10.2 9.1 9.3 51.6 54.5Nontax 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 19.9Exp & 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 42.7Personnel 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 35.8Interest 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 66.3Domestic 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 50.7Capital Expenditure 5.7 7.4 3.0 2.2 3.1 38.9 41.8Net Lending 0.6 0.3 0.4 0.4 0.8 61.0 281.0

Overall BalInc.grants 3

-2.7 -3.9 1.2 -0.5 -1.0 17.6 25.3

Basic balance 4 -0.9 -1.3 3.7 0.4 0.8 -45.2 -59.1Basic Prim. Balance 5 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 externallyfinanced capital expenditure;5 (3) Basic primary balance= Basic balance plus interest payments

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4. Domestic Debt and Treasury Bills Outstanding

At the end of June 2009, outstanding domestic debt stood at D5.7 billion (amounting to28.8% of GDP), down by 4.4% from the outstanding domestic debt at D6 billion(amounting to 33.4% of GDP) a year ago.

The share of Treasury bills increased from 80.5% at the end of June 2008 to 84.6% at theend of June 2009, share of Sukuk Al-Salam from 0.8% to 1.5% and that of Governmentbonds increased from 4.2% to 4.4% over the period.

On the contrary, the share of Non-interest bearing Treasury Notes declined from 14.6% to9.5% over the period

Table-4.1: Outstanding Domestic Public Debt as on 30 June 2009Type of debt Million Dalasi

30 June2008

30 June2009

% change in June2009

over June 2008

Composition(in percentage)

30 June2008

30 June2009

Treasury bills 4,829 4,854 0.5 80.5 84.6Sukuk Al-Salam 48 85 79.3 0.8 1.5Government Bonds 250 250 0.0 4.2 4.4NIB Treasury Notes 873 547 -37.4 14.6 9.5Total 6,000 5,736 -4.4 100 100

Memo Item: Domestic debt as % of nominal GDP (As per IMF Program, nominal GDP equalsD17959 for 2008 and D19904 for 2009)

As % of nominalGDP

33.4 28.8

Domestic Debt Sustainability

As per the analysis made by the CBG, the Gambias domestic debt is unsustainable. Out of three sustainability indicators given in Table-2.8.2, only one indicator viz. debt to revenue ratio issatisfied. 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

Projected1. Debt service torevenue ratio

28-63 142 124 118 91

2. Debt to GDP ratio 20-25 33 30 27 313. Debt to revenueratio

92-167 180 158 166 147

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

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5. Treasury Bills Yields

Yields on treasury bills fluctuated widely in recent months. Despite stability in depositrates and significant decline of CPI inflation from 7% in January 2009 to 5.4% in June2009, Average yield on the 91-day increased from 10.5% in Jan 2009 to 13% in June2009, yield of 182-day bills increased from 12.1% to 13.8% and that of 364-day billsincreased from 14.4% to 15.6% over the period.

This implies that the margins of yields over inflation rates or over deposit rates areincreasing over time and need to be corrected by adopting appropriate monetarypolicies.

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-MJan 10.5 12.7 13.6 10.6 11.4 13.6 10.5 12.1 14.4Feb 12.0 13.4 13.8 10.9 11.9 13.7 11.1 12.8 14.4Mar 12.6 13.4 13.7 11.0 12.1 13.6 11.4 12.7 14.4Apr 13.0 13.4 13.8 10.9 11.9 13.3 12.0 13.0 14.6May 12.8 13.3 13.8 10.2 11.3 13.0 12,.5 13.8 15.3Jun 12.6 13.1 13.9 10.0 11.2 13.3 13.0 13.8 15.6Jul 12.5 13.2 13.9 9.6 10.6 12.6Aug 12.6 12.9 13.6 8.8 10.2 12.1Sep 11.6 12.2 12.9 8.9 11.0 13.1Oct 10.6 11.7 12.5 10.3 11.4 13.6Nov 10.5 11.5 12.5 10.1 13.4 13.7Dec 10.4 11.6 13.6 9.9 12.5 14.0

Trends of Yields of Treasury Bills during 2007-2009

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6. Money Supply

Annual growth rate of broad money supply (M3) accelerated from 8.5% in June 2008 to21.2% in June 2009. Reserve money increased by 10.6% in June 2009 over June 2008.

On the supply side, 21.2% growth in money supply in June 2009 was supported by18.1% growth in currency, 23% growth in demand deposits, 12.8% growth in savingsdeposits and 33.8% growth in time deposits.

On the demand side, growth was mainly due to 31.7% growth in domestic credits, whilenet foreign assets decreased by 4.8% over a year ago.

Domestic credit increased from D5.3 billion in June 2008 to D6.9 billion in June 2009,supported by 45.9% growth in government borrowing, 119.4% growth in credits to publicentities and 18.2% growth in credits to the private sector, over a year ago.

Table-6: Money Supply in June 2009

Components Jun 2007MillionDalasi

Jun 2008MillionDalasi

Jun 2008MillionDalasi

Jun 2008% share Jun 2008% share Jun 2008% changeover Jun

2007

Jun 2009% changeover Jun

2008

1.Money Supply (M3) (2+3) 7832 8495 10298 100.0 100.0 8.5 21.22.Narrow Money (2.1+2.2) 3972 4132 5009 48.6 48.6 4.0 21.22.1 Currency 1644 1484 1753 17.5 17.0 -9.7 18.12.2 Demand deposits (a+b) 2328 2648 3256 31.2 31.6 13.7 23.0

(a) Private sector 2120 2380 2731 28.0 26.5 12.3 14.7(b) Official 209 268 525 3.2 5.1 28.3 95.9

3.Quasi money (3.1+3.2) 3860 4363 5290 51.4 51.4 13.0 21.23.1 Savings deposits (a+b) 2701 2603 2935 30.6 28.5 -3.6 12.8

(a) Private sector 2696 2595 2924 30.6 28.4 -3.7 12.7

(b) Official 5 8 11 0.1 0.1 61.8 46.33.2 Time deposits (a+b) 1160 1760 2354 20.7 22.9 51.8 33.8

(a) Private sector 783 1300 1740 15.3 16.9 66.0 33.8(b) Official 376 460 615 5.4 6.0 22.2 33.7

Demands for money (1+2) 7832 8495 10298 100.0 100.0 8.5 21.21.Net foreign assets (1.1+1.2) 4471 3627 3453 42.7 33.5 -18.9 -4.81.1 Monetary Authorities 2636 2746 2727 32.3 26.5 4.2 -0.71.2 Commercial banks 1834 881 726 10.4 7.0 -52.0 -17.62.Net Dom. Assets (2.1+2.2) 3361 4867 6845 57.3 66.5 44.8 40.62.1 Domestic credit 4009 5261 6929 61.9 67.3 31.2 31.7

(a) Credits to government 1327 1959 2858 23.1 27.7 47.7 45.9(b) Credits to public entities 212 381 835 4.5 8.1 79.9 119.4

(c) Credits to private sector 2287 2738 3236 32.2 31.4 19.7 18.2(d) Credits to forex bureau 183 183 0 2.2 0.0 0.0 -100.02.2 Other items, net -647 -394 -83 -4.6 -0.8 -39.2 -78.9Reserve Money 2636 2572 2844 -2.5 10.6

Source: Economic Research and Statistics Department of CBG.

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8. Balance of Payments (BOP) and Foreign Exchange Reserves

8.1 BOP Situation in 2008

(a) Overall BOP outcome in 2008 was not as bad as they were anticipated earlier. Year endforeign exchange reserves at US$125.2 million were still equal to 5.7 months of c.i.f. importscompared 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 ($29.8million), amounting to 3.6 percent of GDP in 2007, reflecting the deterioration in both thecurrent and the capital and financial accounts. The Net Usable Reserve of the CBG stood atUS$95.6 million at end-March 2009 and was above the IMF Program target (floor) by US$3.6million.

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

(d) Exports of goods at D3.18 billion amounted to 14% of GDP in 2008 compared to D3.29 billionamounting 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 fromUS$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 to7.2 percent of GDP, in 2007 to (-) D1.11 billion, amounting to 4.9 percent of GDP in 2008.

8.2 BOP Situation in 2009

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

Revised balance of payments projections for 2009 by the CBG indicate an overall deficit of D13.8million (US$0.5 million) in 2009 compared to D811.30 million (US$30.3 million) in 2008. Thecurrent 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 accountbalance is expected to improve from a surplus of D2.7 billion in 2008 to D3.8 billion in 2009.

8.3 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. Atend-May 2009, gross international reserves stood at D2.6 billion (US$119.7 million) equivalent to4.0 months of import cover.

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gambia monthly economic abstract july 2009

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