By: Kebba AF Touray
The Central Bank of The Gambia (CBG) yesterday held Monetary Policy Committee (MPC) meeting, to assess domestic and international economic developments, set the key policy interest rate and highlight key economic indicators that informed the Committee’s decision.
The Governor of the Central Bank, Bakary Jammeh said real GDP growth has increased form 2.2 % in 2016 to 3.0 % in 2017 and that economic activity is projected to 3.8 % in 2018, due mainly to increase in agricultural production, construction, tourism and improved business sentiments.
On the exchange market developments, he informed that the foreign exchange market has stabilized and that the volume of transactions in the domestic exchange market in the year 2018 stood at US$1.5 billion compared to US$1.48 billion in 2017, with purchase indicating a supply of US$758.4 million compared to US$737.8 million a year ago and sales indicating demand, increase by 1.0 % to US$ 744.27 million.
“Money supply grew from 15.3 % in 2016 to 20.9 % in 2017, reflecting a crucial improvement in the net foreign assets of the banking system and this stood at D6.4 billion compared to D1.3 billion a year earlier and contracted by 1.4 % to 21.6 billion, reflecting reduced borrowing by government”, he said on monetary development.
On reserve money, he explained that the Bank’s operating target grew by 22.6 % in 2017, lower than 25.2 % recorded a year earlier; that net foreign assets of the CBG increased from negative D530.5 million in 2016 to positive D2.8 billion in 2017.
“Government overall debt management strategy has stabilized the Gambia’s domestic debt, which decreased from D28.7 billion or 66.3 of GDP in 2016 to D28.1 billion or 63.1 % of GDP in 2017. Stock of treasury and Sukuk Al Salam bills contracted greatly by 13.6 % to D15.5 billion in 2017. Government’s position at the Central Bank, was a net repayment of 1.7 billion in December 2017, from a new borrowing (net) of D2.2 billion at end December 2016”, he said.
He also said yields on all Treasury and Sukuk Al Salam bills declined, reflecting reduced borrowing by Government; that the 91 day, 182 day and 364 day fell from 13.67 percent, 16.25 %and 17.71 % in December 2016 to 5.03 %, 5.52 % and 6.73 % respectively in December 2017.
On price development, he averred that headline inflation measured by the National Consumer Price Index (NCPI), decelerated to 6.4 % in January 2018 from 8.8 % during the same period in 2017, whereas food inflation also decelerated to 6.2 % in January 2018 from 10.1 percent in 2017 and Non-Food inflation increased to 6.9 % compared to 6.8 % in the review period, mainly due to the increase in prices of clothing, textile and footwear.
He said the committee noted economic growth prospect improvement, with expectation of a rebound in agriculture, construction, tourism, trade and business sentiments; that the Central Bank financing of fiscal deficit was zero in 2017 and this translated to lower inflationary pressures; that headline inflation and inflation have been broadly trending downwards, which is expected to continue with fiscal consolidation, moderate prices of imported goods and the continued stability of the exchange rate and risks in rising global oil prices and the high level of domestic debt.
“Taking these factors into consideration, the committee judged that the risk of inflation outlook remains moderate and decided to have the Monetary Policy Rate (MPR), unchanged at 15 % and the committee would continue to monitor risks and take the necessary policy action to drive inflation towards the medium term target”, he concludes.
The next MPC meeting is slated for May 30th 2018. See next edition for a report on the question and answer session with Journalists.