By Kebba AF Touray
The Governor of the Central Bank of the Gambia (CBG), Buah Saidy has said that government fiscal operations indicated an overall deficit of D9.3 Billion.
Governor Saidy was speaking at the Monetary Policy Committee’s Meeting (MPC), held at the CBG on Tuesday 27th August 2024.
“Preliminary estimates of government fiscal operations indicate an overall deficit, excluding grants, of D9.3 billion (6.5 percent of GDP) in the first half of 2024, compared to a deficit of D8.9 billion (6.2 percent of GDP) recorded in the corresponding period of 2023,” he said.
He explained that the current account balance deteriorated to a deficit of US$16.0 million (0.7 percent of GDP) in the second quarter of 2024, after recording a surplus of US$1.4 million (0.1 percent of GDP) in the first quarter of 2024.
“The goods account balance moderated somewhat to a deficit of US$244 million (11.2 percent of GDP), compared to the US$257.9 million (8.8 percent of GDP) reported in the first quarter of 2024, owing to a slight drop in import,” he said.
He said that the domestic foreign exchange market stood at US$563.0 million in the second quarter of 2024, compared to US$600.9 million reported in the first quarter of 2024.
He said that the decline in activity volumes is largely attributed to the lean period in tourism activities and the drop in remittance inflows.
“Total private remittance inflows, the largest source of foreign currency supply, slightly moderated by 1.6 percent in 4 the second quarter of 2024 to stand at US$200.9 million, compared to US$204.2 million registered in the first quarter of 2024,” he said.
He reported that the dalasi continues to be relatively stable, depreciating slightly against major traded currencies in the domestic foreign exchange market.
He stated that from March 2024 to June 2024, the dalasi depreciated against the US dollar by 0.5 percent, the euro by 1.2 percent and British pound sterling by 1.2 percent and CFA franc by 3.9 percent.
Similarly, he said the overall budget deficit, including grants, amounted to D5.1 billion (3.9 percent of GDP) in the first half of 2024, higher than the D4.8 billion (3.3 percent of GDP) reported in the same period of 2023.
The stock of domestic debt, he said increased to D42.1 billion (27 percent of GDP) in June 2024, from D41.3 billion (29.4 percent of GDP) in December 2023, and “short term government securities, with a maturity of one year or less, accounted for 47.5 percent of the total domestic debt stock”.
He averred that in June 2024, trade activity volumes in the interbank dalasi market reached D7.5 billion, compared to D10.6 billion reported in the same period of 2023.
He added that total trade volumes in the foreign currency interbank market amounted to US$3.0 million compared to US$5.0 million recorded in 2023.
He highlighted that the weighted average interest rate prevailing in the interbank market declined from 7.4 percent in 2023 to 5.2 percent in June 2024, following the three-month Treasury bills rate.
He reported that food inflation decelerated to 13.0 percent in July 2024, from 14.4 percent in June 2024 and 20.3 percent in March 2024.
The easing of food inflation, he remarked reflects moderation in major components in the food basket, including a deceleration in the price indices of bread and cereals, fish, vegetables, and fruits and nuts.
Non-food inflation he said, stands at 5.5 percent in the review period, unchanged from June 2024 figure, but lower than the 8.7 percent reported in March 2024.
He said the MPC among others observed the stronger growth prospects for the global economy, aided by robust international trade and improved supply conditions, the pace of disinflation has slowed, and the strong performance of the Gambian economy with this year’s growth expected to average 5.7 percent.
He said based on the abovementioned observations of the committee, the committee has decided thus;
The Monetary Policy Rate (MPR) will be maintained at 17.0 percent;
The Required Reserve (RR) ratio of commercial banks will be maintained at 13.0 percent;
The interest rate on the standing deposit facility will remain unchanged at 3.0 percent; and
The interest rate on the standing lending facility will remain at 18.0 percent or MPR plus 1.0 percentage points.
