“Financing the fiscal gap created sustained pressure on the exchange and interest rates in 2013” CBG Governor told PAC/PEC

By Muhammad Bah

The Governor of the Central Bank of the Gambia (CBG), Mr. Amadou Colley, recently told the joint Public Accounts and Public Enterprises Committee (PAC/PEC) of the National Assembly that the financing of the fiscal gap has created and sustained pressure on the exchange and interest rates throughout 2013.

The CBG Governor said the volume of transactions in the domestic foreign exchange market stands at 1.3 billion US dollars in 2013 from 1.6 billion in 2012 as measured by the aggregated purchase and sales of foreign exchange in the year.

He said the Dalasi was weakened against all the major trading international currencies in 2013 and that the Dalasi depreciated against the US Dollars by 14.8%, Euro by 21.0%, Pounds Sterling by 14.7% and CFA by 15.1%.

Governor Colley said the exchange rate came under pressure in 2013 which emanated from the larger-than-expected increase in import bill of food and energy, adding that the supply constraints also emerge and which is related to foreign direct investment and the groundnut trade.
The level of external reserves, he revealed, declined markedly and that the gross international reserves amounted to 70.3 million dollars or equal to 4.8 months of import cover, representing a reduction from 195.8 million or 5 months of import for the year.

He told the law makers that the bank knows that a stable financial system is a prerequisite for sustainable economic growth and that this needs a sound policy framework and reforms to preserve financial stability.

On the banking industry, the CBG Governor said the country has twelve banks and one Islamic bank. He added that the capital adequacy ratio of the banks in 2013 has dropped by 2% from 2012 but that all the banks met the statutory capital requirement of 10% in 2013.

On the insurance industry, he said 13 insurance companies, 9 brokers and about 50 agents are operating in the country, adding that the industry grew from 513.74 million in 2012 to 528.13 million in 2013. He revealed that the current assets of the industry stands at 270.31 million, which indicates an increase of 24.73% in 2013, while the total external liabilities increased from 190.86 million in 2012 to 219.17 million in 2013. He added that the gross premium income rose from 206, 12 million to 227.16 million, or 10.21% in 2012.

He concluded that a lot of reform is required and that CBG will work with stakeholders to implement the agreed agenda of reforms which is aimed at achieving an effective industry.