By: Kebba AF Touray
The Central Bank of The Gambia has convened its 64th Monetary Policy Committee meeting yesterday, 23rd November 2017, to assess development in the domestic and international economy and policy rate that has been set.
Governor Bakary Jammeh said since the last MPC meeting, the outlook of the global economy continues to improve, underpinned by notable increase in investment, trade and industrial production in advanced economies, supported by high business and consumer confidence and the global financial environment and recovery in advanced economies, which is expected to support growth in emerging economies.
“The slowdown in sub-Saharan Africa appears to be easing, due mainly to recoveries in oil production and the easing of drought conditions in Eastern and Southern Africa”, said Governor Jammeh.
He said in light of these developments, the international Monetary Fund (IMF), revised upwards its forecast for the global economic growth for 2017 and 2018, to 3.6 percent and 3.7 percent respectively. “Despite strong global demand, inflation is expected to remain subdued and projected at 3.2 percent for 2017”, he said.
On real sector growth, he revealed that economic growth is projected to increase from 2.2 percent in 2016 to 3.0 percent in 2017 and that this predicated on improved agriculture, production, trade and tourism and the implementation of sound macroeconomic policies and improved business confidence, whilst in the medium term, growth is projected to reach 5 percent against the backdrop of implementation of strong reform measures.
On the External sector, he highlighted that preliminary balance of payments estimates 2017 indicates improvement, compared to last year and the current account deficit narrowed to US$ 46.2 million compared to US$ 59.9 million a year ago; that imports and exports (including re-export) increased by 26.6 and 38.6 percent to US$ 105.5 million and US$ 281.8 million respectively, in the same year, whereas the gross international reserves of the Bank remained at 4 months of imports cover for goods and services.
“The dalasi remains stable in the domestic foreign exchange market from September 2016 to 2017, as it appreciated against the US dollar by 2.7 percent, the pound sterling by 0.9 percent and the Euro by 4.7 percent”, he said on exchange rate development.
On domestic debt, Governor Jammeh explained that as at end October 2017, the debt stock remained stable at D29.2 billion compared to the same period last year; that Treasury bills and Sukuk Al Salam combined account for 58.3 percent of the domestic debt, which declined from 18.1 billion dalasis or 17.9 billion dalasis over a period of one year; that government’s position at the CB was a net repayment of 3.6 billion from a new borrowing (net) of 2.3 billion at end December 2016 and yields on all short term government securities declined markedly in 2017, reflecting reduced government borrowing in the domestic market.
Liquid ratio of the Banking industry stood at 99 percent in September from 98.2 percent a year ago and significantly higher than the requirement of 30 percent. Return on assets and equity stood at 2.03 percent and 13.24 percent respectively”, he cited on the financial sector.
On Monetary development, he said money supply grew by 22 percent in September 2017 mainly due to increase in net foreign assets of banking system from 0.96 billion, while the reserved money, the bank’s operating target, grew by 20.2 percent in November 2017 from 21.8 percent, at the same period.
“Consumer price inflation measured by the National Consumer Price Index (NCPI) is trending down as has declined from 8.8 percent in January 2017 to 7.4 percent in October, due largely to the decline in food inflation from 10.1 percent to 7.9 percent, whilst nonfood inflation also decreased from 6.8 percent to 6.7 percent during the review period”, said Jammeh.
He further said that the committee observed near term outlook for inflation as favorable against the backdrop of lower global commodity prices, stable exchange rate in the domestic foreign exchange market, increased inflows from tourism and remittances and implementation of sound macroeconomic policies; that it has also observed the risks to macroeconomic outlook relates on the high public debt (120 percent of GDP), inherited form the past regime.
He concluded that cognizant of these factors, the committee will continue to monitor developments in the domestic economy and stands ready to act if the economic conditions change.
The next MPC Meeting is scheduled to take place on the 28th of February 2018.
See the next edition of Foroyaa on the Questions and Answer session with journalists.