| The Gambia has registered an estimated fiscal deficit of more than D50 million (fifty million dalasis) because the government’s expenditure is far more than its revenue.|
The country’s fiscal performance continues to be challenged by higher-than-projected expenditures by the government that is not matched by revenue performance of the country.
The governor of Central Bank of The Gambia, Amadou Kolley, while speaking at the quarterly Monetary Policy Committee press briefing held on Friday at the Central Bank in Banjul, has revealed that the preliminary estimates indicate that the country has a fiscal deficit of D58.3 million (fifty-eight million and three hundred thousand dalasis) equivalent to 0.18 percent of Gross Domestic Product (GDP), in the first quarter of 2011.
However the current fiscal deficit is lower than the D84.0 million (eight-four million dalasis) which was equivalent to 0.3 percent of GDP in the corresponding quarter in 2010.
The total fiscal deficit of The Gambia for 2011 is estimated at D466.36 million or 1.47 percent of GDP. The deficit would be financed by foreign and domestic borrowing amounting to D833.82 million and D120.00 million respectively.
The country’s balance of payments, which is the difference between the export and import of goods and services, indicates an overall deficit of US$15.2 million in 2010 compared to the revised surplus of US$54.6 million in 2009.
Exports and imports increased to US$100 million and US$315 million, or 5 percent and 6 percent respectively, in the first quarter of 2011.
Governor Kolley said at the end-March 2011, gross international reserves amounted to US$164.6 million, equivalent to 4.9 months of import cover.
“The domestic debt increased to D9.3 billion, equivalent to 28.7 percent of GDP, in March 2011, or 23.9 percent from a year ago. Treasury bills, accounting for 63.0 percent of the debt, rose to D5.9 billion or 12.4 percent,” he said.
The yield on the 91-day, 182-day and 364-day Treasury bills decelerated from 10.01 percent, 10.60 percent and 13.09 percent respectively in March 2011. Data on the maturity structure of Treasury bills indicate that 364-day bills accounted for 70.4 percent of the debt stock, while the 182-day bills and 91-day bills accounted for 19.2 percent and 10.4 percent respectively.
The Gambian dalasi has depreciated against some major international currencies. Governor Kolley explained that year-on-year to end March 2011, the Dalasi depreciated by 1.9 percent in nominal effective exchange rate terms.
“Against individual currencies, the Dalasi weakened by 5.3 percent and 1.3 percent against the US dollar and the British Pound but appreciated by 4.7 percent against the Euro,” he said.
Money supply increases
In the year to end-March 2011, Gambia’s money supply grew by 14.9 percent, lower than the 21.7 percent a year earlier.
CBG governor explain that of the components of money supply, quasi money rose by 21.7 percent and narrow money by 7.8 percent. Reserve money, the CBG’s operating target, grew by 15.9 percent relative to 15.7 percent a year ago.
“The banking industry remains fundamentally sound,” he remarked, adding: “The key financial soundness indicators show that the average capital adequacy ratio was 49.0 percent in March 2011 compared to 46.3 percent in December 2010, and over and above the minimum requirement of 8.0 percent.”
He said all the banks had now met the requirement of D150 million from D60 million. The banking industry’s assets increased to D17.7 billion, or 14.0 percent from March 2010.
Commercial banks’ loans and advances increased to D5.4 billion, or 17.4 percent from March 2010. Credit to all sectors increased with loans to distributive trade, agriculture and building and construction increasing by 25.9 percent, 10.0 percent and 10.4 percent respectively.
Similarly, credit to transportation, tourism and other commercial loans rose by 6.3 percent, 5.0 percent and 23.1 percent respectively, despite increased lending, impaired advances to gross and advances declined to 14 percent in March 2011 compared to 16 percent in December 2010.
Data from the latest Business Sentiment Survey indicate that inflationary expectations remain high.
End-period inflation, measured by the National Consumer Price Index, was 5.4 percent in March 2011 compared to 4.0 percent in March 2010. Annual inflation was 5.4 percent, higher than the 3.8 percent a year earlier.
Food price inflation accelerated to 7.5 percent in March 2011 compared 5.0 percent in March 2010, but lower than the 8.4 percent and 8.3 percent readings in September and December 2010 respectively.
Non-food inflation, on the other hand, decelerated to 2.0 percent compared to 2.6 percent in March 2010. Core inflation, which excludes the prices of energy, utilities and volatile food items, increased from 4.0 percent in March 2010 to 5.3 percent in March 2011.
Headline inflation was slightly below the CBG’s inflation target of 6 percent, reflecting in the main, the deceleration in food prices. Although the outlook for inflation is uncertain, high energy and food prices as well as elevated inflationary expectations remain upside risks.
Revised estimates from the Gambia Bureau of Statistics indicate that the Gambian economy grew by 5.0 percent in 2010 driven by the strong growth of the agricultural sector. Growth in real GDP is projected at 5.5 percent in 2011.