Quick Indicators
Overview:
The Gambian
economy is a highly open type as
measured by export and import ratios to GDP, however, as much as 80 percent of exports
consist of re-exports. The main domestically-originating exports
are groundnuts and tourism. The Gambia has recently run
substantial trade and current-account deficits financed largely
by official grants and loans, and increasingly foreign direct
investment inflows. Foreign direct investment in 2003-2005
averaged more than 10 percent of GDP. The country's economy is mainly
reliant mainly
agricultural exports as a
foreign currency earner.
Entrepot (re-export) trade from
Banjul Ports makes up a significant portion of economic
activity though the devaluation of the CFA Franc in 1994 reduced
it somewhat.
Tourism, which mostly takes the form of
sun seekers, birdwatchers and African-Americans, makes up about
about 18% of the Gambia's GDP.
Economic development is very reliant on
continued multilateral and bilateral aid and on prudent economic management
by the government as espoused by the International Monetary
Fund's fiscal
help and advice.
The Gambia is among the poorest countries of the world, ranking 155th out of 177 countries in the 2007/2008 UNDP
Human Development
Index rankings (HDI). According to the
UNDP's Human Poverty
Index (HPI-1) of 2004 poverty is was at 40.9 percent, with rural poverty
slightly exceeding urban poverty rates, except in Banjul where
the rate is much lower. The Gambia’s per capita
GDP measured at PPP is higher than Benin, Senegal or Togo, but
literacy is low by regional standards. Services account for over
50 percent of GDP, reflecting the importance of re-export trade
and tourism. Agriculture accounts for about a third of GDP but
more than 70 percent of employment. The manufacturing sector is
undeveloped even by West African standards, providing only 5
percent of GDP and displaying little dynamism.
Macroeconomic performance deteriorated in 2002–03, reflecting
the impact of loose fiscal policy, accommodating monetary policy
and a drought. Inflation rose from an average of less than 5
percent in 2001 to 17 percent in 2003, the highest level in
nearly two decades. The dalasi depreciated by 55 percent in
nominal effective terms between end-2001 and end-2003. The seeds
for the poor performance were sown in 2001 when a combination of
significant unbudgeted expenditures and a fall in tax revenues
led to a large increase in government borrowing from the Central
Bank of The Gambia (CBG) and a sharp rise in domestic debt. Real
GDP declined by 3 percent in 2002 because of a drought, but
recovered in 2003.
The 2002 IMF Poverty Reduction and Growth Facility (PRGF) loan
was cut off in 2002 following spending overruns and
irregularities at the CBG. The Gambian
government has sought to re-establish a program with the Fund
through a Staff-Monitored Program (SMP) as an interim step
towards re-establishing a PRGF. The IMF notes that fiscal and
monetary policies have been tightened lately, contributing the
sharp decline in inflation, from double digits in 2003-2004 to
4.5 percent in 2005. Nevertheless, the IMF expresses continued
concerns about slippages in fiscal discipline, extra-budgetary
expenditures, and inadequate auditing of both fiscal and
monetary accounts. The Gambia’s fiscal policy is also
constrained by a large domestic debt and high real interest
rates, such that a substantial primary surplus is required to
cover interest payments.
The Gambia currently ('08) has a Staff Monitored Programme
with the IMF, as part of a Medium Term Economic Framework Plan.
The agency has reported some modest progress on fiscal balance
and some improvements in financial management.
A tightening of fiscal and monetary policies from late-2003
restored macroeconomic stability and contributed to sustained
growth. The basic primary fiscal balance moved from a deficit of
over 1 percent of GDP in 2001 to an average surplus of nearly 9
percent of GDP during 2004–07. Yields on treasury bills
rose from 15 percent at end-2001 to 31 percent at end-2003
before declining to 10–15 percent from mid-2005. Inflation fell
to less than 1 percent at end-2006 before a spike in the prices
of some imported food items pushed it to around 6 percent during
most of 2007. Real GDP expanded at a robust average annual rate
of 6.5 percent, led by the tourism, telecommunication, and
construction sectors. Tourism infrastructure has been a major
beneficiary of foreign direct investment (FDI).
Gambia’s longer term policy objectives are sketched in the
ambitious Vision 2020 document which aims to turn Gambia into a
diversified middle income economy with the private sector as "a
serious partner in national development and the very engine of
growth."
List:
Selected Indicators:
Agriculture:
Products: groundnuts (140,000 tonnes - 2005), rice, millet,
sorghum, corn, sesame, cassava, palm kernels; cattle, sheep,
goats
Budget:
revenues:
$181.1 million
expenditures: $163.4 million (2007 est.)
Current Account Balance:
-$70 million (2007 est.)
Export
Commodities:
Groundnut products, fish, raw
cotton, palm kernels, hides & entrepot trade
Export Partners (Principle):
India 36.5%, China 15%, UK 9%, Indonesia 7.8%, France 4.9%,
Belgium 4% (2006)
Exports:
$93 million
f.o.b. (2007 est.)
External Debt:
$628.8 million
(2003 est.)
Foreign Exchange Reserves:
$142.8 million (31 December 2007 est.)
Gross Domestic Product (Estimates -
2007):
GDP (Official Exchange Rate)
$653 million
GDP (PPP)
$2.106 billion
GDP
Real Growth Rate
7%
GDP Per Capita (PPP)
Purchasing
Power Parity
$1,300
GDP Composition by Sector
agriculture: 32.8%
industry: 8.7%
services: 58.5%
Industries:
Processing peanuts, fish, and hides; tourism; beverages; agricultural
machinery assembly, woodworking, metalworking & clothing
Imports:
Commodities: foodstuffs
incl. rice, flour, sugar, manufactured goods, petroleum, heavy fuel
oil, cement bulk & bags, auto vehicles, machinery equipment
.
Import Partners:
China
24.3%, Senegal 11.5%, Cote d'Ivoire 8.3%, Brazil 6.7%,
Netherlands 5.2% (2006)
Imports:
$271 million
f.o.b. (2007 est.)
Inflation - Annual:
(consumer price index)
4.9% per annum
Labour Force:
400,000
Labour Force by Occupation:
agriculture 75%, industry, commerce, and services 19%,
government 6%
Unemployment Rate:
The
Gambia's unemployment rate is very high though no exact figures
are available.
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Central Bank of The Gambia: (CBG)
MPC Press Release (30th October,
2008).
End-period inflation:
Reflecting the rise in global food and
energy prices, end-period inflation measured by the National Consumer
Price Index accelerated from 1.6 percent and 2.2 percent in May and
June to 3.7 percent and 5.0 percent in July and August 2008
respectively. As at end-September 2008, the rate of
inflation had
climbed to 6.4 percent, the highest since June 2007.
Food inflation in The Gambia picked up in May 2008 to 1.9 percent and
accelerated to 2.6 percent, 5.1 percent and 6.9 percent in June, July
and August respectively. As at end-September 2008 food inflation stood
at 8.3 percent.
Similarly, non-food inflation rose from 1.2 percent in May 2008 to 1.7
percent and 1.9 percent in June and July respectively. In August and
September 2008, non-food price inflation reached 2.6 percent and 4.0
percent respectively.
Core inflation, which excludes the prices of energy and volatile
food items increased from 1.6 percent, 2.9 percent and 4.9 percent in
May, June and July 2008 before climbing further to 6.2 percent and 7.8
percent in August and September respectively.
Inflationary Outlook:
Given the acceleration in inflationary pressures reflecting, in the
main, high food and energy prices, high inflationary expectations and
the weakening of the Dalasi, inflation is forecast to exceed the
end-December 2008 target of 6.0 percent.
Taking the above mentioned factors into consideration, including the
risk to the inflation outlook, the MPC has decided to increase the
Rediscount Rate by one percentage point to 16.0 percent.
Other Details:
In The Gambia, the banking industry continues to show strong
performance in terms of profitability, loan quality, capital adequacy
and liquidity. The average capital adequacy ratio was 29.7 percent in
September 2008, over and above the minimum requirement of 8.0 percent.
The ratio of non-performing loans to total loans improved to 7.2
percent compared to 8.3 percent in June 2008.
Total assets of the industry increased from D9.7 billion in September
2007 to D11.4 billion in September 2008. Of the components of total
assets, lending and holdings of Government securities rose by 44.0
percent and 22.5 percent to D3.3 billion and D3.0 billion whilst
external assets declined by 39.5 percent to D783.0 million in
September 2008 respectively. Total deposits of the industry grew from
D6.3 billion in September 2007 to D7.2 billion at end-September 2008.
Provisional data from the Gambia Bureau of Statistics (GBoS),
indicates that output growth of the Gambian economy has been revised
to 6.1 percent in 2008. The projected output growth is premised on the
30.2 percent and 7.2 percent increase in the valueadded of agriculture
and industry, higher than the 4.0 percent and 6.1 percent growth in
2007. The value-added of the services sector, on the other hand, is
forecast to contract by 0.6 percent in 2008 compared to the growth
rate of 10. 4 percent in 2007.
Money supply grew by 11.1 percent in the year to end-September 2008,
lower than the growth rate of 12.6 percent a year earlier. Growth in
reserve money was 0.9 percent at end-September 2008 relative to 10.2
percent a year earlier.
Domestic credit grew to D5.8 billion or by 40.6 percent in the year to
end-September 2008. Private sector credit, accounting for 52.1 percent
of domestic credit, rose strongly by 35.1 percent to D3.0 billion.
Credit to distributive trade, building and construction and
transportation increased by 31.1 percent, 105.3 percent and 91.2
percent respectively from a year earlier. Loans and advances to
agriculture, fishing and tourism, on the other hand, contracted by
47.0 percent, 1.9 percent and 8.6 percent respectively during the same
period.
The CBG observed all the end-September 2008 quantitative
targets agreed with the International Monetary Fund under the Poverty
Reduction and Growth Facility (PRGF). The net usable reserves
totalling
US$124.4 million was above target by US$2.6 million. The net domestic
assets of the CBG, amounting to D257.4 million on September
30, 2008 was below target (ceiling) by D247.3 million.
Preliminary data on the execution of the government budget indicate
that total revenue and grants amounted to D2.7 billion in the first
nine months of 2008, or 3.3 percent below the outturn in the
corresponding period in 2007. Expenditure and net lending was D2.9
billion, an increase of 9.8 percent compared to the same period a year
ago. The overall budget balance (including grants) on commitment
basis, was a deficit of D175.8 million (1.2 percent of GDP) in the
first nine months of this year, compared to a surplus of D178.2
million (1.3 percent of GDP) in the same period in 2007.
As at end-September 2008, the total outstanding stock of
domestic debt
rose to D6.1 billion (27.0 percent of GDP) or 5.7 percent from a year
ago. Outstanding Treasury bills, which accounted for 79.6 percent of
the total debt stock, fell slightly by 1.2 percent to D4.8 billion.
Interest rates in the money market edged upwards from September 2008.
The yield on the 91-day and 182-day Treasury bills rate increased from
8.9 percent and 11.0 percent in September 2008 to 10.4 percent and
13.4 percent in October 2008. The yield on the 364-day bills also
increased to 14.2 percent in October 2008 from 13.1 percent in
September 2008.
Owing to the strengthening of the US dollar, reflecting investor
flight to US dollar assets viewed as safe haven, reduced foreign
currency inflows and rising cost of imports, the Dalasi depreciated
against the major currencies traded in the inter-bank market. Between
end-December 2007 and end-September 2008, the domestic currency
appreciated against the British Pound by 6.3 percent but depreciated
against the US dollar and Euro by 2.6 percent and 0.6 percent
respectively. Volume of transactions in the inter-bank market measured
by aggregate sales and purchases of foreign exchange in the year to
end-September 2008 increased slightly to US $1.7 billion compared to
US $ 1.6 billion a year ago.
Balance of Payments projections indicate an overall surplus of D301.2
million ($13.1 million) in 2008 compared to a revised estimate of
D741.7 million ($29.8 million) in 2007, reflecting the deterioration
in both the current and the capital and financial accounts. The
merchandise trade balance is estimated to narrow to a deficit of D3.0
billion in 2008, or by 13.6 percent from the previous year. Exports
are projected to decline to D2.9 billion in 2008, or by 13.1 percent
from 2007. Domestic exports are projected to decrease to D253.0
million in 2008 from D266.3 million in 2007. Total value of imports is
projected to decline to D5.9 billion, or by 13.4 percent from D6.8
billion in 2007.
Source: CBG
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