“The Dalasi remains stable in the Domestic Foreign Exchange Market” Central Bank Governor

By Awa B. Bah

According to the governor of the Central Bank of the Gambia, Bakary Jammeh, the country’s currency, the Dalasi, has so far remained stable in the domestic foreign market. Governor Jammeh made this remark on Friday 25 August 2017, during a press briefing on Monetary Policy at the Central Bank, in Banjul.

“The Dalasi remains stable in the Domestic Foreign Exchange Market. From May to end July 2017, the dalasi appreciated against the US Dollar and Pound Sterling by 0.9 percent and 0.4 % respectively. The dalasi however depreciated against the Euro by 4.3%,” he said.

According to Governor, the objective of the briefing by the Monetary Policy Committee of the Central Bank was meant to deliver the assessed development in the domestic and the international economy as well as set the policy date.

Mr. Jammeh said activities in the domestic foreign exchange market have stabilized support with improved conditions and confidence; that the volume of transactions remain unchanged at $51.2 billion in the year to end July 2017, relative to same period last year; that purchase indicating supply was $583.6 million while sales stood at $511.2 million.

Mr. Jammeh said the committee which met on Thursday 24thAugust, noted that economic condition is expected to improve in 2017 and it’s outlook remains broadly favorable against the backdrop of projected increase in agricultural production and increased inflows, rebound in tourism and trade as well as restoration of confidence in the domestic economy. He indicated that monetary and fiscal policies would remain prudent and well-coordinated as the International reserves of the bank have reached comfortable levels; that the Foreign exchange market conditions are expected to continue to improve and the dalasi would remain stable. In light of these developments, inflation is projected to continue to decline in the short-term.

According to a release, the data from the Gambia Bureau of Statistics, GBOS, revealed economic growth decline to 2.2% in 2016 from 4.3% due mainly to disappointing performance of the agricultural sector, the impact of the political impasse on tourism and related activities and the limited availability of foreign currencies in the domestic foreign market. The release however said economic conditions continue to improve in 2017 and there are increasing signs that growth may exceed ‘our projection of 3%.’

Mr. Jammeh said balance of payment estimates for the first half of 2017 registered a surplus of $3.2 million, compared to $1.0 million recorded in the same period last year. This he said, is attributed to the improvements in both the current, capital and financial accounts. The trade balance he said improved from a deficit of $104.3% million in the first half of 2016 to a deficit of $97.0 million during the review period.

He further noted that both exports and imports fell by 6.9 % and 6.8% to $45.7 million and $142.7 million in June 2017 respectively. The current account balance he said, improved from a deficit of $38.4 million in the first half of 2016, to a deficit of $38.8 million during the review period due mainly to improvement in services and net current transfers.

Gross official reserves he said have improved significantly, reaching 4.2 months of imports cover in August 2017, for the first time in many years. This Mr. Jammeh said is as a result of the unwavering support from our development partners in particular the IMF, WB, EU and the ADB.

‘‘As a result of the huge public debit inherited from the past regime, debit sustainability remains a priority. As at end July 2017, domestic debit stock declined to D28.8 billion (61.1% of GDP compared to D29.02 billion), GDP in the same period last year. The Treasury bills and Sukuk Al Salam combined, totaled D17.5 billion compared to D16.6 billion in 2016,’’ he said.

“Yields on 91, 182 and 364 day bills, stood at 8.0 %,8.92% and 10.59 in August 2017 from 16.12 5 and 20.08% in August 2016,” said governor Jammeh.

The financial sector he noted remains safe, sound and profitable indicating that a risk weighted capital adequacy ratio, stood at 32.5%, significantly higher than the statutory requirement of 10%. Total assets of the industry he said, amounted to D35.7 billion in June 2017, compared to D29.6 billion in June 2016. The non-performing loans ratio improved to 9.4% from 9.75 in March 2017.

Mr. Jammeh indicated that Money supply grew by 21.75 in June 2017 reflecting an increase in the net foreign assets and net domestic assets of the Banking system, while Net Foreign Assets of the central bank improved significantly from negative D530.5 million in December 2016 to D3.7 million in August 2017. Net International reserves he said has improved from $19.84 million in December 2016 to $112.2 million in August 2017. Mr. Jammeh said ‘Quasi Money’ that is savings and time deposits, has increased by 24.25% to D13.0 billion during the review period.

“Growth of reserve money and the bank’s operating target, remained the same at 16.35% in June 2017, compared to the same period last year. However, money supply growth has been contained within the bank’s target in August 2017,’’ said Jammeh.

He said Consumer price inflation as measured by the national consumer price index, NCPI. is trending downwards. “Headline inflation declined to 8.0% in July 2017 and forms a high of 8.85% in January 2017 due largely to the decline in food inflation from 10.1% to 8.7% during the review period”, he said. He said consumer price inflation of non-food products and services increased slightly to 6.9 % from 6.85 in July 2017.

The MPC noted that economic conditions continue to improve in 2017 and the outlook remains broadly favourable against the backdrop of projected increase in agricultural production, increased inflows, rebound in tourism and trade and restoration in tourism and trade.

It however cautioned that the major risk to economic outlook is the level of debt (120 of GDP) inherited from the past regime.

Taking all the above into consideration including inflation expectations which remained subdued, the MCP he assured, will consider the current stance of monetary policy to maintain the rate at 15%. The MPC he said will continue to monitor developments in the economy and stands ready to act in the interim if the economic conditions change.