Gambia has increased its policy rate by 2% to 14% as it forecasts a further depreciation of the currency, the delasi, on account of economic challenges.
Central Bank Governor, Mr Amadou Colley, speaking at a Monetary Policy Committee briefing in Banjul on Tuesday, said the currency was under pressure because of internal factors and challenges posed by the recovery of the global economy.
“Inflation outcomes evolved largely in line with expectations. Inflation is projected to accelerate but to remain in single digit in the short-term,” he said.
“Headline inflation increased from 4.3 per cent in June 2012 to 4.9 per cent in December 2012.”
The Monetary Policy Committee (MPC) has, therefore, decided to increase the policy rate, the re-discount rate, by 2 percentage points to 14 per cent.
Mr Colley said that the Gambia Bureau of Statistics (GBOS) had estimated that the economy grew by 6.3 per cent in 2012 following a contraction of 4.6 per cent in 2011.
He said money supply grew by 8.8 per cent in the year to end-March 2013, lower than the 14.9 per cent in 202.
“Exports are estimated to have increased to US$176.5 million, or 14.7 per cent and imports also rose but at a stronger pace of 21.7 per cent to US$359 million.”
Mr Colley said that reserve money grew by 3.4 per cent, lower than 8.7 per cent in March 2012 and the target of 4.8 per cent and provisional data on government fiscal operations in the first quarter of 2013 indicated that revenue and grants amounted to 1.5 billion delasis (4.6 per cent of GDP) compared to 1.9 billion delasis (5.9 per cent of GDP) in the same period in 2012. (US$1=35 delasis)
“Domestic revenue totalled D1.4 billion (4.2 per cent of GDP), higher than the D1.2 billion (3.7 per cent of GDP) recorded in the corresponding period of 2012 and expenditure and net lending amounted to D1.9 billion (5.5 per cent of GDP).
Mr Colley said in contrast, capital expenditure declined to D337.0 million (1.0 per cent of GDP), or 62.7 per cent.
The overall fiscal deficit, including grants, widened to D330.4 million (1.0 per cent of GDP) in the first three months of 2013, compared to D200 million (0.7 per cent of GDP) during the same period in 2012.
Mr Colley said that preliminary balance of payments estimates for 2012 indicated an overall surplus of US$62.3 million compared to US$98.7 million in 2011. Merchandise trade deficit widened to US$176.4 million compared to deficit of US$133.5 million a year ago.