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.
As at 2008 The Gambia currently had 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."
Selected Indicators:
Agriculture:
Products: groundnuts (140,000 tonnes - 2005),
rice, millet,
sorghum, corn, sesame, cassava, palm kernels;
livestock: 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 37.7%, China 17.5%, UK 8.7%, France 5.1%,
Belgium 4.2% (2007)
Exports:
$111 million
f.o.b. (2008 est.)
External Debt:
$628.8 million
(2003 est.)
Foreign Exchange Reserves:
$142.8 million (31 December 2007 est.)
Gross Domestic Product (Estimates -
2008):
GDP (Official Exchange Rate)
$653 million
GDP (PPP)
$2.044 billion
GDP
Real Growth Rate
4.5%
GDP Per Capita (PPP)
Purchasing
Power Parity
$1,200
GDP Composition by Sector
agriculture: 33%
industry: 8.7%
services: 58.3%
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
23.7%, Senegal 11.5%, Cote d'Ivoire 8.3%, Brazil 8%,
Netherlands 5.2% (2007)
Imports:
$301 million
f.o.b. (2008 est.)
Inflation - Annual:
(consumer price index)
7.0 % per cent 2008
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 (January 21, 2011).
 The Gambian economy is projected to grow by 5.5 percent in
2010 reflecting strong growth of agriculture and industry by 14.4
percent and 12.3 percent respectively. The robust growth is expected
to be sustained in 2011.
Inflation:
End-period inflation, measured by the National Consumer Price Index (NCPI),
was 5.8 percent in December 2010, higher than the 2.7 percent in
December 2009. The annual average inflation rate was 5.0 percent
relative to 4.6 percent in 2009.
Food inflation increased significantly from 2.9 percent in December
2009 to 8.3 percent in December 2010. In contrast, non-food inflation
decelerated to 1.9 percent compared to 2.8 percent in December 2009.
Core inflation, which excludes the prices of energy, utilities and
volatile food items, increased from 2.8 percent in December 2009 to
5.7 percent in December 2010.
Outlook for Inflation
The recent moderation in headline inflation is consistent with the
deceleration in the monetary aggregates and the stability of the
Dalasi. In the near-term, inflation is forecast to remain in single
digit. However, there are risks to the outlook emanating mainly from
cost-push factors such as rising food and energy prices.
The recent moderation in headline inflation is consistent with the
deceleration in the monetary aggregates and the stability of the
Dalasi. In the near-term, inflation is forecast to remain in single
digit. However, there are risks to the outlook emanating mainly from
cost-push factors such as rising food and energy prices.
Taking the above factors into consideration, including the inflation
outlook, the MPC has decided to leave the policy rate unchanged at 15
percent.
Growth in the monetary
aggregates decelerated in the year to end-December 2010.
Money supply grew by 13.7 percent,
lower than the growth rate of 19.4 per cent in the previous year.
Quasi money increased by 19.3 percent and narrow money by 7.5 percent.
Reserve money, the Bank’s operating target, grew by 10.5 percent,
slightly higher than the 9.3 percent a year ago.
The banking industry is fundamentally
sound. The industry recorded growth in assets, deposits, capital and
profits in 2010. Total assets of the industry increased to D17.8
billion, or 22.7 percent from 2009. Return on assets was 1.5 percent
compared to negative 2.0 percent in the previous year.
Loans and advances, accounting for
29.8 percent of total assets, increased to D5.3 billion, or 8.6
percent. Credit to distributive trade increased by 29.3 percent,
agriculture (5.7 percent), construction (9.6 percent), fishing (0.4
percent), tourism (4.0 percent) and other commercial loans (24.4
percent).
The ratio of impaired advances to gross loans and advances declined
modestly to 14.0 percent in December 2010, lower than the 16.2 per
cent in September 2010.
Deposit liabilities rose to D11.3 billion (39.8 percent of GDP) in
2010 compared to D9.48 billion (36.7 percent of GDP) in 2009. The
average capital adequacy ratio increased to 46.3 percent, higher than
the 33.2 percent in 2009 and over and above the minimum requirement of
8.0 percent.
Preliminary budget estimates indicate
that revenue and grants totaled D4.3 billion (15.2 percent of GDP) in
2010, lower than the D4.9 billion (19.0 percent of GDP) in 2009, but
was 21.2 percent below the budget estimate. Total expenditure and net
lending, on the other hand, is estimated at D5.1 billion (18.1 percent
of GDP) compared to D6.0 billion (23.2 percent of GDP) in 2009. The
overall budget balance (including grants) on commitment basis was a
deficit of D834.6 million (2.9 percent of GDP), lower than the D1.1
billion (4.1 percent of GDP) in 2009.
Preliminary balance of payments (BOP)
estimates for the first nine months of 2010 indicate an overall
surplus of US$77.0 million compared to the deficit of US$32.7 million
in the corresponding period in 2009. Exports and imports decreased to
US$117.2 million and US$173.1 million, or 10.6 percent and 12.2
percent respectively.
The current account surplus, including official transfers, increased
to US$42.2 million, slightly higher than the surplus of US$41.9
million in the corresponding period in 2009. Similarly, the capital
and financial account was in a surplus of US$34.8 million compared to
a deficit of US$74.7 million in the corresponding period in 2009.
As at end-December 2010, gross international
reserves amounted to US$163.5 million, equivalent to 5.1 months
of import cover.
The domestic foreign exchange market
remains vibrant. The volume of transactions, measured by aggregate
sales and purchases, increased to US$1.65 billion in the year to
end-December 2010 compared to US$1.49 billion a year earlier.
In nominal effective exchange rate
terms, the Dalasi depreciated by 5.7 percent against a basket of
currencies. Against individual currencies, the Dalasi weakened by 5.3
percent and 1.3 percent against the US Dollar and British Pound
respectively but appreciated against the Euro by 4.7 percent.
The domestic debt increased to D8.7
billion (40.8 percent of GDP) in 2010, or 18.9 percent from 2009.
Treasury bills, accounting for 67.9 percent of domestic debt,
increased to D5.9 billion, or 13.9 percent.
The yield of the 91-day, 182-day and 364-day
bills declined to 10.01 percent, 10.6 percent and 13.18 percent
in December 2010 compared to 10.98 percent, 12.91 percent and 14.30
percent respectively in December 2009.
Data on the maturity structure indicate that the 364 day bills
accounted for 64 percent of the outstanding Treasury bills, 182-day
bills (17.1 percent) and 91-day bills (18.9 percent).
According to the readings of the latest
Business Sentiment Survey, majority of the respondents
indicated that economic and business activity were higher in the
fourth quarter compared to the third quarter of 2010, but expect
inflation to accelerate in the first quarter of 2011 reflecting in
large part rising energy and food prices.
Source: Summarised from the MPC of
CBG
See their full
PDF report.
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