Economic growth forecasted at 6.5%

Bamba Saho, the governor of the Central Bank of The Gambia, has said the country’s  economy is forecasted to grow at 6.5% in 2008, premised on a strong rebound in agricultural output and the continued growth in services and construction sectors. Money supply grew by 8.5% in the year ended June 2008, compared to 12.9% a year earlier.

Quasi money rose by 13.0% and narrow money by 4.0 percent. From end December 2007, money supply grew by 2.7 percent while reserve money contracted by 6.3 percent.

Governor Bamba Saho made this disclosure at the meeting of the Central Bank of The Gambia’s Monetary Policy Committee, held, yesterday, at the conference hall of the Central Bank of The Gambia.

According to him, the total revenue and grants for the first six months of 2008 declined to D1.9 billion or 3.6 percent compared to the corresponding period in 2007.  The decline is attributed to the lower than projected tax and non-tax revenue. Total expenditure and net lending increased to D2.0 million or 13.6 percent compared to the first half of 2007.  The overall budget balance including grants on commitment basis was a deficit of D113.0 million or 1.3 percent of GDP.  Excluding grants, the deficit widened to D164.4 million or 1.8 percent of GDP.

Bamba Saho added that the inter-bank foreign exchange market continues to be vibrant, saying that from the end of December 2007 to July 2008, the Dalasi strengthened by 7.1 percent, 4.9 percent, 1.9 percent and 1.5 percent against the US dollar, pound sterling, Euro and CFA franc respectively.  However, the Dalasi, he went on, depreciated slightly against all the major currencies between June and July 2008.  The banking industry’s total assets also increased to D11.3 billion or 12.2 percent from end June 2007.

Mr Saho noted that the commercial banks’ loans increased to 83.0 billion in June 2008 or 33.2 percent from a year ago.  Loans and advances to all the major economic sectors increased excepting agriculture, which decreased by 50.4 percent to D157.7 million. Credit, fishing, building, construction, transportation and distributive trade increased by 6.6 percent, 95.4 percent, 78.5 percent and 37.8 percent, respectively.

Tourism, personal loans and other loans rose by 14.7 percent, 25.5 percent and 65.0 percent from the previous year.

The Central Bank governor further revealed that from the beginning of the year 2008, total domestic debt increased to D6.1 billion (33.5 percent of GDP) or 10.4 percent of total outstanding treasury bills, amounting to 80.7 percent of total domestic debt, increasing to 4.9 billion or 2.4 percent.

The bulk of the treasury bills continue to be in the 364-day bills, constituting 68.9 percent, whilst 182-day bills and 91 day bills accounted for 20.5 percent and 10.5 percent of the stock, respectively.

The end period inflation measured by the National Consumer Price Index (NCPI) was 3.8 percent at the end of July 2008 compared to 6.3 percent in July 2007. On the inflation outlook, the governor said inflation is forecasted to remain in single digits; however, there were risks to the outlook relating to the persistent surge in global energy and food prices.  

The monetary policy committee has decided to maintain the rediscount rate, and the policy rate at 15.0 percent. The MPC would continue to monitor changes in economic conditions and respond appropriately in order to discharge its mandate to maintain price stability.  

The next meeting of the monetary policy committee would be held in October 2008, the Central Bank declared to the audience.