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The Gambia

Author(s):
International Monetary Fund
Published Date:
May 2004
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I. Introduction

1. The Executive Board concluded the 2002 Article IV consultation with The Gambia on July 10, 2002. Directors noted that economic performance in 2001 continued to be mixed, with positive developments on real GDP growth and inflation counterbalanced by fiscal slippages and a widening of the external current account deficit. They urged the authorities to adhere to plans to achieve cumulative reductions in the overall fiscal deficit up to 2005 and to develop a medium-term expenditure framework. Steps to contain public expenditure—particularly from below-the-line accounts—and enhanced transparency and accountability should be supported by improvements and reforms in tax administration. Welcoming the full poverty reduction strategy paper (PRSP), Directors stressed the importance of refining sectoral priorities, strengthening governance, and improving macroeconomic and social data.

2. Substantial errors have since been notified to staff in data reported to the Fund for this period (Box 1). The Managing Director has issued a report to the Executive Board on misreporting and associated noncomplying Fund disbursements under the 1998–2001 PRGF arrangement. 1

3. In 1993, The Gambia accepted the obligations under Article VIII, Section 2(a), 3, and 4 of the Fund’s Articles of Agreement. The Gambia maintains an exchange system that is free of restrictions on payments and transfers for current transactions. Summaries of The Gambia’s relations with the Fund, World Bank Group, and African Development Bank are contained in Appendices I, II, and III, respectively. Outstanding statistical issues are discussed in Appendix IV.

II. Data Revisions

4. The data revisions notified to staff in October 2003 imply a sharply different performance of the Gambian economy during the latter part of the 1998–2001 PRGF arrangement than was previously reported to the Executive Board (Box 1). Few objectives of the program now appear to have been achieved. Inclusion of previously unrecorded payments of US$28.5 million in 2001 would raise the level of public expenditure from 24 percent to 31 percent of GDP and the fiscal deficit (excluding grants) from 8 percent to 15 percent of GDP (Table 1A and Figure 1). 2 Corrections to the previously reported level of gross official foreign exchange reserves for unrecorded public spending, commission payments and undelivered foreign exchange would reduce estimates of import cover at end 2003 to around 4½ months of imports, compared with the 7 months of imports implied by previously provided data.

Table 1A.The Gambia: Selected Economic and Financial Indicators, Scenario A, 2000–08
200020012002200320042005200620072008
Est.Est.Prog.Est.Proj.Proj.Proj.Proj.Proj.Proj.
(Annual percentage changes, unless otherwise indicated)
National income and prices
GDP at constant prices5.55.86.0-3.28.84.64.44.24.14.1
GDP deflator3.615.26.716.128.327.028.522.522.820.0
Consumer price index (period average)0.94.55.58.617.021.022.520.020.017.5
Consumer price index (end of period)0.28.13.813.017.625.020.020.020.015.0
External sector
Exports, f.o.b. (in U.S. dollars)5.3-19.710.19.2-8.134.05.95.24.24.2
Imports, c.i.f. (in U.S. dollars)0.5-23.84.510.7-3.922.41.72.01.73.1
Terms of trade 1/-3.5-0.41.49.613.8
Nominal effective exchange rate (period average)-3.7-14.1-22.6
Real effective exchange rate (period average)-4.8-12.2-17.6
Money and credit(Change in percent of beginning-of-year broad money, unless otherwise indicated)
Broad money34.819.413.235.343.431.530.723.420.319.3
Net foreign assets 2/22.5-33.818.313.029.214.53.34.82.76.8
Net domestic assets 2/12.353.2-5.122.314.217.027.418.617.612.5
Credit to the government3.125.50.81.012.523.821.513.39.97.2
CBG foreign currency advance to the government0.024.30.00.00.00.00.00.00.00.0
Credit to the private sector and public enterprises4.44.40.023.720.09.19.29.810.29.7
Claims on foreign exchange bureaus0.08.80.04.0-1.00.00.00.00.00.0
Other items, net4.9-9.9-6.0-6.4-17.4-15.9-3.3-4.5-2.5-4.4
Velocity (GDP/period avg. broad money)3.03.22.62.72.72.62.62.72.82.9
Treasury bill rate (in percent; end of period)12.015.020.031.0
Gross domestic investment and savings(In percent of GDP)
Gross investment17.317.419.421.219.618.017.917.417.117.4
Gross domestic savings9.011.34.814.711.614.716.417.117.918.6
Gross national savings14.113.914.419.014.516.414.814.915.615.7
Central government budget 2/3/
Balance, excluding grants 4/-3.7-14.9-5.0-8.1-6.0-8.3-7.5-4.2-2.7-1.4
Balance, including grants-1.4-13.9-2.2-4.6-5.4-7.4-6.6-3.5-2.2-1.0
Basic primary balance4.6-1.33.32.73.65.18.56.77.27.8
Total expenditure and net lending22.131.123.725.422.725.025.123.122.220.4
Domestic revenue 3/18.515.117.516.315.315.417.618.919.519.0
Net foreign financing-0.8-0.4-0.41.90.6-2.2-1.9-2.4-2.5-2.8
Net domestic financing2.714.82.32.55.29.68.56.04.73.8
Stock of domestic debt31.538.131.036.624.627.929.429.027.325.6
External sector
Current account balance
Excluding official transfers-10.6-10.8-13.2-12.8-13.8-10.6-10.2-9.2-8.0-7.9
Including official transfers-3.1-3.5-5.0-2.2-5.1-1.6-3.1-2.5-1.5-1.6
External debt service 5/(In percent of exports and travel income)
Including IMF15.418.511.97.89.810.311.411.812.212.4
(In millions of U.S. dollars, unless otherwise indicated)
Current account balance
Excluding official transfers-44.5-45.0-29.9-47.0-50.5-38.8-37.2-34.3-30.3-30.4
Including official transfers-13.2-14.5-11.2-8.0-18.8-5.9-11.4-9.2-5.8-6.3
Overall balance of payments 2/10.1-51.7-10.2-4.9-11.4-5.5-8.9-8.2-10.6-9.6
Gross official reserves 2/111.463.8119.364.158.756.145.433.116.54.5
In months of imports, c.i.f. 2/7.05.35.14.84.63.62.82.01.00.3
Use of IMF resources(In millions of SDRs)
Purchases/disbursements6.96.92.90.0
Repurchases/repayments1.21.10.00.0
Credit outstanding13.920.623.523.5
(Ratios in percent)
Net present value of debt/exports 6/196.4241.9197.8283.9303.4270.3246.4220.2213.0203.1
Net present value of debt/revenues 6/309.0404.6353.1476.9537.4551.1560.6537.4509.8471.0
Sources: The Gambian authorities; and staff estimates and projections.

Excluding reexports and imports for reexport.

Adjustments have been incorporated for previously unrecorded public spending and borrowing in 2001, financed by the Central Bank of The Gambia, and previously unrecorded depletion of foreign exchange reserves in 2001–03 as reported by the authorities on October 28, 2003.

Projection includes unspecified revenue measures in 2005–2008

Excluding HIPC Initiative and PRSP expenditure.

Servicing of public external debt after HIPC grants and debt relief in percent of exports and travel income. In 2000 and 2001, the increase in debt service reflects in part payments to Alimenta. Any accumulation of arrears is excluded.

Assumes completion point under the HIPC Initiative is not reached, and interim assistance is exhausted by end-2004. This series has been revised to reflect new loan disbursements since the debt sustainability analysis was completed in 2000.

Figure 1.The Gambia: Selected Economic and Financial Indicators, 1998-2003

(In percent, unless otherwise indicated)

Sources: The Gambian authorities; and IMF staff estimates. Data series have been revised to reflect previously unreported transactions from 2001 onwards.

5. The remainder of this report incorporates the main implications of these data revisions. However, as the staff is not yet in a position to confirm the precise magnitude or time path of the previously unreported transactions (see Section V below), the related assessments must be regarded as provisional.

Box 1.Revisions by the Central Bank of The Gambia to Data for the Foreign Exchange Reserves and Lending to the Central Government

Officials of the Central Bank of The Gambia (CBG) notified staff on October 28, 2003 of substantial revisions to data on foreign exchange reserves and lending to the central government submitted to the Fund during 2001-03, reflecting three major errors:

  • No account had been taken in 2001 of payments made by the CBG of US$28.5 million in foreign currencies on behalf of the government. This had led to an overstatement of gross foreign exchange reserves since the end of 2001 by 45 percent of the revised end-2001 level and an understatement of public spending and fiscal deficits equivalent to 6.8 percent of GDP.

  • The international reserves had erroneously been credited, during 2001 and subsequently, with currency purchased from foreign exchange bureaus that had not been delivered. As a result, the reserves had been further overstated by up to US$16 million.

  • The CBG had paid an additional, unrecorded US$1.84 million from the foreign exchange reserves in 2003 to finance commissions on recent foreign currency transactions. These transactions included a loan for US$28 million from a commercial bank in the United States from March-May 2003 to secure a U.S. dollar deposit in order to mask the shortfall in the reserves.

Impact of Data Revisions on International Reserves, Government Spending and Lending by CBG
200020012002June 20031/
(In millions of U.S. dollars; end of period)
Net international reserves (as previously reported)91.375.975.363.0
Additional advances to government (newly identified)0.028.528.528.5 (30.3)
Advances outstanding to foreign exchange bureaus (previously classified as usable reserves)0.010.311.511.2
Net international reserves (reflecting revised CBG data)91.337.135.323.3 (21.5)
Gross international reserves (reflecting revised CBG data)110.163.067.356.2 (54.4)
(In percent of GDP)
Total government spending (as previously reported)22.124.325.4
Total government spending (reflecting revised CBG data)22.131.125.4
Fiscal deficit excluding grants (as previously reported)-3.7-8.1-8.1
Fiscal deficit excluding grants (reflecting revised CBG data)-3.7-14.9-8.1
Sources: Central Bank of The Gambia (CBG); and staff calculations.

Figures in parentheses include reported payments from the reserves of US$ 1.84 million for commissions for recent foreign exchange transactions, which CBG officials indicated would probably be classified as an additional advance to government.

III. Economic Developments and Performance Under the PRGF-Supported Program

6. The Gambia achieved an encouraging average GDP growth rate of 6 percent and an average inflation rate of below 3 percent under the 1998–2001 PRGF arrangement, largely reflecting a succession of good harvests (Figure 1). This favorable performance was expected to be maintained under the macroeconomic framework of the poverty reduction strategy paper (PRSP), supported by the PRGF arrangement approved in July 2002. 3

7. Performance in 2002–03 fell a long way short of the PRSP assumptions. GDP contracted in 2002, following a failure of the groundnut and other harvests, and recovered only to 6 percent above the 2001 level in 2003. Consumer price inflation surged, reaching 21 percent on a 12-month basis in August 2003. The exchange rate depreciated in terms of the euro by 60 percent in the two years to end-December 2003 (Figure 2).

Figure 2.The Gambia: Real and Nominal Effective Exchange Rates, January 1990 - December 2003

(Index, 1990=100)

Sources: The Gambian authorities; and IMF staff estimates.

1/ 1999=100

8. The declining internal and external value of the currency resulted largely from the poor execution of monetary and fiscal policy, reflecting serious deficiencies in governance. Economic imbalances, which reemerged in the latter part of 2001, coinciding with presidential and national elections and substantial unrecorded public expenditure payments, worsened in 2002–03. Critical quantitative performance targets and benchmarks under the PRGF-supported program were missed (Table 10). Large fiscal deficits, supplemented by quasi-fiscal spending including substantial losses on questionable foreign exchange transactions by the CBG, led to average rates of growth in reserve money of nearly 50 percent (Figure 1). Action to tighten monetary policy was late and inadequate. Downward pressure on the exchange rate was accentuated by the impact on external budgetary support and investor confidence of concerns about policy implementation and governance.

Table 1B.The Gambia: Selected Economic and Financial Indicators, Scenario B, 2000-2008
200020012002200320042005200620072008
Est.Est.Prog.Est.Proj.Proj.Proj.Proj.Proj.Proj.
(Annual percentage changes, unless otherwise indicated)
National income and prices
GDP at constant prices5.55.86.0-3.28.85.35.04.84.64.6
GDP deflator3.615.26.716.128.315.46.04.62.92.7
Consumer price index (period average)0.94.55.58.617.013.57.24.23.73.2
Consumer price index (end of period)0.28.13.813.017.610.04.54.03.53.0
External sector
Exports, f.o.b. (in U.S. dollars)5.3-19.710.19.2-8.134.45.95.24.24.2
Imports, c.i.f. (in U.S. dollars)0.5-23.84.510.7-3.925.84.84.94.05.0
Terms of trade 1/-3.5-0.41.49.613.8
Nominal effective exchange rate (period average)-3.7-14.1-22.6
Real effective exchange rate (period average)-4.8-12.2-17.6
Money and credit(Change in percent of beginning-of-year broad money, unless otherwise indicated)
Broad money34.819.413.235.343.420.811.39.16.96.7
Net foreign assets 2/22.5-33.818.313.029.219.611.79.08.78.7
Net domestic assets 2/12.353.2-5.122.314.21.2-0.40.1-1.9-2.0
Credit to the government3.125.50.81.012.51.31.21.21.21.2
CBG foreign currency advance to the government0.024.30.00.00.0-0.7-0.6-0.5-0.5-0.4
Credit to the private sector and public enterprises4.44.40.023.720.08.34.53.63.12.8
Claims on foreign exchange bureaus0.08.80.04.0-1.0-1.0-0.9-0.8-0.7-0.7
Other items net4.9-9.9-6.0-6.4-17.4-6.7-4.7-3.4-5.0-4.9
Velocity (GDP/period avg. broad money)3.03.22.62.72.72.52.42.42.42.4
Treasury bill rate (in percent; end of period)12.015.020.031.0
Gross domestic investment and savings(In percent of GDP)
Gross investment17.317.419.421.219.618.319.019.019.019.3
Gross domestic savings9.011.34.814.711.614.416.316.617.117.5
Gross national savings14.113.914.419.014.518.118.618.619.219.1
Central government budget 2/3/
Balance, excluding grants 4/-3.7-14.9-5.0-8.1-6.0-2.8-1.50.11.52.3
Balance, including grants-1.4-13.9-2.2-4.6-5.4-1.7-1.7-0.40.81.5
Basic primary balance4.6-8.13.32.73.64.02.42.52.73.1
Total expenditure and net lending22.131.123.725.422.724.823.021.320.219.4
Domestic revenue 3/18.515.117.516.315.318.916.816.716.917.2
Net foreign financing-0.8-0.4-0.41.90.6-0.40.60.0-0.4-0.7
Net domestic financing2.714.82.32.55.22.11.00.4-0.4-0.8
Stock of domestic debt31.538.131.036.624.622.021.019.617.715.4
External sector
Current account balance
Excluding official transfers-10.6-10.8-13.2-12.7-13.8-11.0-10.7-9.9-8.9-8.8
Including official transfers-3.1-3.5-5.0-2.2-5.1-0.2-0.5-0.40.2-0.2
External debt service 5/(In percent of exports and travel income)
Including IMF15.418.511.97.89.89.66.16.97.27.6
(In millions of U.S. dollars, unless otherwise indicated)
Current account balance
Excluding official transfers-44.5-45.0-29.9-47.0-50.5-41.7-42.3-42.0-39.8-41.3
Including official transfers-13.2-14.5-11.2-8.0-18.9-0.9-1.8-1.70.9-1.1
Overall balance of payments 2/10.1-51.7-10.2-4.9-11.48.99.66.46.43.8
Gross official reserves 2/111.463.8119.364.158.780.5101.2115.6118.8118.3
In months of imports, c.i.f. /27.05.35.14.84.65.06.06.56.46.1
Use of IMF resources(In millions of SDRs)
Purchases/disbursements6.96.92.90.0
Repurchases/repayments1.21.10.00.0
Credit outstanding13.920.623.523.5
(Ratios in percent)
Net present value of debt/exports 6/196.4241.9197.8283.9300.3270.8219.8200.3195.2188.2
Net present value of debt/revenues 6/309.0404.6353.1476.9531.7489.0431.5421.8404.8385.6
Sources: The Gambian authorities; and staff estimates and projections.

Excluding reexports and imports for reexport.

Adjustments have been incorporated for previously unrecorded public spending and borrowing in 2001, financed by the Central Bank of The Gambia, and previously unrecorded depletion of foreign exchange reserves in 2001–03 as reported by the authorities on October 28, 2003.

Projection includes unspecified revenue measures in 2004

Excluding HIPC Initiative and PRSP expenditure.

Servicing of public external debt after HIPC grants and debt relief in percent of exports and travel income. In 2000 and 2001, the increase in debt service reflects in part payments to Alimenta. Any accumulation of arrears is excluded.

The calculations are based on the working assumption of a completion point for the enhanced HIPC Initiative in early 2005, although in practice this would not be possible before late 2005. The NPV of debt for 2000–2004 shows only the effect of interim assistance.

Table 2A.The Gambia: Selected National Accounts Indicators, Scenario A, 2000-08(Annual percentage change)
200020012002200320042005200620072008
Prel.Proj.Proj.Proj.Proj.Proj.
Agriculture10.58.9-28.229.53.74.74.74.74.5
Groundnuts12.39.4-52.677.5-5.53.03.03.03.0
Other crops14.210.0-32.030.08.05.05.05.04.8
Livestock3.06.05.05.05.05.05.05.05.0
Forestry3.95.05.05.05.05.05.05.05.0
Fishing2.910.05.07.07.07.07.07.05.0
Industry5.16.19.86.45.05.04.14.14.1
Manufacturing2.02.74.52.65.05.04.04.04.0
Large and medium manufacturing2.03.05.02.05.05.04.04.04.0
Small manufacturing2.02.03.54.05.05.04.04.04.0
Construction and mining10.010.015.010.05.05.04.04.04.0
Electricity and water supply-3.04.010.05.05.05.05.05.05.0
Services3.47.24.34.14.94.24.03.94.0
Trade6.87.24.10.45.04.74.74.74.7
Groundnuts12.315.05.03.05.03.03.03.03.0
Others6.06.04.00.05.05.05.05.05.0
Hotels and restaurants-12.810.07.015.015.08.06.05.05.0
Transport and communications5.18.84.65.05.04.04.04.04.0
Transport3.77.04.05.05.04.04.04.04.0
Communications6.110.05.05.05.04.04.04.04.0
Real estate and business services2.25.04.03.03.03.03.03.03.0
Public administration4.65.03.02.01.03.03.03.02.0
Other services3.03.03.03.03.03.03.03.08.0
GDP at factor costs5.47.5-3.89.54.64.44.24.14.1
Indirect tax (net)6.7-7.71.72.84.54.44.24.14.1
GDP at market prices5.55.8-3.28.84.64.44.24.14.1
GDP deflator3.615.216.128.327.028.522.522.820.0
Sources: The Gambian authorities; and staff estimates and projections.
Table 2B.The Gambia: Selected National Accounts Indicators, Scenario B, 2000-2008(Annual percentage change)
200020012002200320042005200620072008
Est.Proj.Proj.Proj.Proj.Proj.
Agriculture10.58.9-28.229.53.74.74.74.74.5
Groundnuts12.39.4-52.677.5-5.53.03.03.03.0
Other crops14.210.0-32.030.08.05.05.05.04.8
Livestock3.06.05.05.05.05.05.05.05.0
Forestry3.95.05.05.05.05.05.05.05.0
Fishing2.910.05.07.07.07.07.07.05.0
Industry5.16.19.86.45.95.95.95.05.0
Manufacturing2.02.74.52.66.06.06.05.05.0
Large and medium manufacturing2.03.05.02.06.06.06.05.05.0
Small manufacturing2.02.03.54.06.06.06.05.05.0
Construction and mining10.010.015.010.06.06.06.05.05.0
Electricity and water supply-3.04.010.05.05.05.05.05.05.0
Services3.47.24.34.15.85.04.64.54.5
Trade6.87.24.10.47.55.65.64.74.7
Groundnuts12.315.05.03.05.03.03.03.03.0
Others6.06.04.00.08.06.06.05.05.0
Hotels and restaurants-12.810.07.015.020.010.06.06.06.0
Transport and communications5.18.84.65.05.05.05.05.05.0
Transport3.77.04.05.05.05.05.05.05.0
Communications6.110.05.05.05.05.05.05.05.0
Real estate and business services2.25.04.03.03.03.03.03.03.0
Public administration4.65.03.02.01.03.03.03.02.0
Other services3.03.03.03.03.03.03.03.08.0
GDP at factor costs5.47.5-3.89.55.35.04.84.64.6
Indirect tax (net)6.7-7.71.72.85.35.04.84.64.6
GDP at market prices5.55.8-3.28.85.35.04.84.64.6
GDP deflator3.615.216.128.315.46.04.62.92.7
Sources: The Gambian authorities; and staff estimates and projections.
Table 3 A.The Gambia: Central Government Operations (Scenario A), 2000-2008(In millions of dalasis)
200020012002

Prel.
2003

Proj.
2004

Proj.
2005

Proj.
2006

Proj.
2007

Proj.
2008

Proj.
Revenue and grants1,117.21,125.71,528.71,776.42,396.12,982.43,829.24,976.96,421.6
Domestic revenue995.4989.91,201.81,569.12,101.72,815.03,673.74,820.46,269.6
Tax revenue869.9853.81,040.21,371.41,763.52,361.33,064.54,002.95,173.2
Direct tax223.6251.0318.0414.8494.1660.1882.71,181.41,582.0
Of which: personal90.4102.6122.4149.3176.8237.2318.4427.2573.4
corporate115.0132.7176.8244.9292.8393.0527.4707.8949.8
Indirect tax646.3602.8722.2956.61,269.41,701.22,181.82,821.63,591.3
Domestic tax on goods and services72.873.9124.9233.6284.7382.1512.8688.2923.5
Tax on international trade573.5528.9597.3722.9984.61,319.11,669.02,133.42,667.7
Nontax revenue125.4136.0161.5197.8338.2453.7609.2817.51,096.3
Grants121.8135.9326.9207.2294.4167.5155.5156.5152.1
Program60.30.094.90.00.00.00.00.00.0
Projects61.567.9109.997.2119.0167.5155.5156.5152.1
HIPC0.068.0122.1110.0175.40.00.00.00.0
Expenditure and net lending 1/1,192.112,037.41,870.72,327.93,407.44,593.55,406.86,640.17,633.3
Current expenditure985.81,237.11,318.21,703.32,787.63,909.94,760.75,884.16,787.4
Wages and salaries341.2342.0395.2450.4528.1708.7904.41,156.21,444.6
Other charges397.4533.4512.5561.5665.6893.21,140.01,457.31,820.8
Interest247.3293.8370.5620.81,523.82,308.02,716.33,270.63,521.9
External60.268.784.0186.2271.6311.7386.6480.3569.9
Domestic187.1225.0286.6434.61,252.21,996.32,329.72,790.32,952.0
HIPC expenditure68.039.970.770.20.00.00.00.0
Capital expenditure and net lending 1/206.3800.3552.5624.6619.8683.6646.1756.0845.9
Capital expenditure245.6732.5585.3656.2653.8717.6680.1790.0879.9
External196.7224.5495.2511.0484.6624.0591.4687.0765.2
GLF (Gambia Local Fund)48.960.957.777.463.993.688.7103.0114.8
HIPC funded32.467.9105.30.00.00.00.0
PRSP-related expenditure0.00.00.00.00.00.00.0
Extrabudgetary expenditure 1/0.0447.10.00.00.00.00.00.00.0
Net lending-39.367.8-32.8-31.6-34.0-34.0-34.0-34.0-34.0
Overall balance (commitment basis), without new measures-75.0-911.6-342.0-551.5-1,011.3-1,611.0-1,577.6-1,663.2-1,211.6
Excluding grants-196.8-1,047.5-668.9-758.7-1,305.8-1,778.5-1,733.1-1,819.7-1,363.7
Excluding grants, HIPC and PRSP expenditure-196.8-979.5-596.6-620.2-1,130.3-1,778.5-1,733.1-1,819.7-1,363.7
Overall balance (cash basis), without new measures
Including grants-98.7-946.3-324.2-590.9-1,011.3-1,611.0-1,577.6-1,663.2-1,211.6
Unspecified measures0.0400.0750.01,000.0850.0
Overall balance (after measures)-1,011.3-1,211.0-827.6-663.2-361.6
Financing98.7946.3324.2590.91,011.31,211.0827.6663.2361.6
External (net)-45.6-23.6140.957.9-298.1-349.5-567.7-747.9-1,049.8
Borrowing135.2233.6725.8413.8365.6456.5435.9530.5613.1
Project135.2156.6368.4413.8365.6456.5435.9530.5613.1
Program0.00.00.00.00.00.00.00.00.0
Other loans 2/0.077.0357.40.00.00.00.00.00.0
Amortization-180.8-257.2-598.9-368.3-663.8-806.0-1,003.6-1,278.4-1,662.9
HIPC debt relief0.014.012.40.00.00.00.00.0
Domestic144.3969.9183.3533.01,309.41,560.61,395.21,411.11,411.4
Bank 1/45.0952.822.9399.91,092.81,299.11,052.6964.1844.9
Nonbank139.568.1197.095.1218.8293.7374.8479.1598.7
Accumulation / repayment (minus) of arrears-40.2-51.0-36.7-6.50.00.00.00.00.0
Privatization proceeds0.00.00.04.530.00.00.00.00.0
Repayment of domestic debt0.00.00.00.0-32.2-32.2-32.2-32.2-32.2
CBG (unrealized profits)40.00.00.00.00.00.0
Basic primary balance, excl. measures 3/247.2-529.2196.8373.0702.61,153.41,574.62,137.92,923.4
Memorandum items:
Nominal GDP5,382.46,555.97,364.310,275.213,646.918,314.523,373.429,879.537,333.1
Overall balance, incl. measures-1,011.3-1,211.0-827.6-663.2-361.6
Excluding grants, HIPC and PRSP expenditure-1,130.3-1,378.5-983.1-819.7-513.7
Stock of domestic debt1,693.52,496.12,694.22,524.73,804.25,383.26,788.38,167.39,546.5
Sources: The Gambian authorities; and staff estimates and projections.

Data for 2001 include US$ 28.5 million capital expenditure financed by a retroactive loan by the Central Bank of The Gambia (CBG) which the authorities indicated in October 2003 had not been recorded in official accounts.

Includes loan disbursements (D 287.8 million in January and D 94.7 million in April) from Taiwan Province of China for electricity generators and improvement of distribution network. The generators were delivered to the National Water and Electricity Corporation in October 2001. The inflows were used to pay the suppliers.

Domestic revenue minus total expenditure and net lending, excluding interest payments and externally financed capital expenditure.

Table 3 B.The Gambia: Central Government Operations (Scenario B), 2000-2008(In millions of dalasis)
200020012002200320042005200620072008
Prel.Proj.Proj.Proj.Proj.Proj.Proj.
Revenue and grants1,117.21,125.71,528.71,776.42,620.02,967.43,185.53,437.23,684.2
Domestic revenue995.4989.91,201.81,569.12,101.72,335.82,546.82,775.73,026.6
Tax revenue869.9853.81,040.21,371.41,763.51,959.52,128.32,310.22,508.9
Direct tax223.6251.0318.0414.8494.1549.4610.8679.1755.2
Of which: personal90.4102.6122.4149.3176.8196.8219.0243.8271.4
corporate115.0132.7176.8244.9292.8325.9362.8403.8449.5
Indirect tax646.3602.8722.2956.61,269.41,410.21,517.51,631.11,753.7
Domestic tax on goods and services72.873.9124.9233.6284.7316.9352.8392.7437.1
Tax on international trade573.5528.9597.3722.9984.61,093.31,164.71,238.41,316.6
Nontax revenue125.4136.0161.5197.8338.2376.2418.5465.5517.7
Grants121.8135.9326.9207.2518.3631.6638.7661.5657.6
Program60.30.094.90.0245.0262.1267.3272.7278.2
Projects61.567.9109.997.2119.0133.1126.9126.9126.9
HIPC0.068.0122.1110.0154.3236.4244.5261.9252.6
Expenditure and net lending 1/1,192.112,037.41,870.72,327.93,095.33,202.13,248.13,305.73,416.8
Current expenditure985.81,237.11,318.21,703.32,277.92,112.22,183.52,257.52,345.5
Wages and salaries341.2342.0395.2450.4528.1565.7619.9666.8716.4
Other charges397.4533.4512.5561.5665.6740.9811.8873.3938.2
Interest247.3293.8370.5620.81,022.5711.1654.0612.6589.9
External60.268.784.0186.2224.9206.0209.0210.1207.5
Domestic187.1225.0286.6434.6797.6505.1445.0402.6382.4
HIPC expenditure68.039.970.761.794.697.8104.8101.0
Capital expenditure and net lending 1/206.3800.3552.5624.6817.41,089.91,064.61,048.31,071.3
Capital expenditure245.6732.5585.3656.2851.41,123.91,098.61,082.31,105.3
External196.7224.5495.2511.0467.4489.4422.0359.8351.0
GLF (Gambia Local Fund)48.960.957.777.461.473.463.354.052.7
HIPC funded32.467.992.6141.8146.7157.1151.5
PRSP-related expenditure0.00.0230.0419.3466.7511.4550.1
Extrabudgetary expenditure 1/0.0447.10.00.00.00.00.00.00.0
Net lending-39.367.8-32.8-31.6-34.0-34.0-34.0-34.0-34.0
Overall balance (commitment basis), without new measures-75.0-911.6-342.0-551.5-475.3-234.7-62.7131.5267.4
Excluding grants-196.8-1,047.5-668.9-758.7-993.6-866.3-701.3-530.1-390.2
Excluding grants, HIPC and PRSP expenditure-196.8-979.5-596.6-620.2-609.3-210.69.8243.2412.4
Overall balance (cash basis), without new measures
Including grants-98.7-946.3-324.2-590.9-475.3-234.7-62.7131.5267.4
Unspecified measures265.40.00.00.00.0
Overall balance (after measures)-209.9-234.7-62.7131.4267.4
Financing98.7946.3324.2590.9209.9234.762.7-131.4-267.4
External (net)-45.6-23.6140.957.9-48.089.24.0-71.9-119.8
Borrowing135.2233.6725.8413.8453.4468.6409.7349.8343.3
Project135.2156.6368.4413.8348.4356.3295.1232.9224.1
Program0.00.00.00.0105.0112.3114.6116.9119.2
Other loans 2/0.077.0357.40.00.00.00.00.00.0
Amortization-180.8-257.2-591.9-368.3-535.6-512.3-513.7-524.0-566.4
HIPC debt relief0.07.012.434.2132.9108.0102.3103.2
Domestic144.3969.9183.3533.0257.8145.558.7-59.5-147.6
Bank 1/45.0952.822.9399.960.066.873.278.784.6
Nonbank139.568.1197.095.1200.0222.6243.9262.4281.9
Accumulation / repayment (minus) of arrears-40.2-51.0-36.7-6.50.00.00.00.00.0
Privatization proceeds0.00.00.04.530.00.00.00.00.0
Repayment of domestic debt0.00.00.00.0-32.2-143.9-258.4-400.7-514.1
CBG (unrealized profits)40.00.00.00.00.00.0
Basic primary balance, excl. measures 3/247.2-529.2196.8373.0496.3334.1374.7442.4550.8
Memorandum items:
Nominal GDP5,382.46,555.97,364.310,275.212,486.813,899.115,230.116,382.917,601.3
Overall balance, incl. measures-209.9-234.7-62.7131.4267.4
Excluding grants, HIPC and PRSP expenditure-343.9-210.79.7243.2412.5
Stock of domestic debt1,693.52,496.12,694.22,524.72,752.52,916.62,985.12,893.42,713.7
Sources: The Gambian authorities; and staff estimates and projections.

Data for 2001 include US$ 28.5 million capital expenditure financed by a retroactive loan by the Central Bank of The Gambia (CBG) which the authorities indicated in October 2003 had not been recorded in official accounts.

Includes loan disbursements (D 287.8 million in January and D 94.7 million in April) from Taiwan Province of China for electricity generators and improvement of distribution network. The generators were delivered to the National Water and Electricity Corporation in October 2001. The inflows were used to pay the suppliers.

Domestic revenue minus total expenditure and net lending, excluding interest payments and externally financed capital expenditure.

Table 4 A.The Gambia: Central Government Operations (Scenario A), 2000-2008(In percent of GDP, unless otherwise indicated)
200020012002200320042005200620072008
Prel.Proj.Proj.Proj.Proj.Proj.Proj.
Revenue and grants20.817.220.817.317.616.316.416.717.2
Domestic revenue18.515.116.315.315.415.415.716.116.8
Tax revenue16.213.014.113.312.912.913.113.413.9
Direct tax4.23.84.34.03.63.63.84.04.2
Of which: personal1.71.61.71.51.31.31.41.41.5
corporate2.12.02.42.42.12.12.32.42.5
Indirect tax12.09.29.89.39.39.39.39.49.6
Domestic tax on goods and services1.41.11.72.32.12.12.22.32.5
Tax on international trade10.78.18.17.07.27.27.17.17.1
Nontax revenue2.32.12.21.92.52.52.62.72.9
Grants2.32.14.42.02.20.90.70.50.4
Program1.10.01.30.00.00.00.00.00.0
Projects1.11.01.50.90.90.90.70.50.4
HIPC0.01.01.71.11.30.00.00.00.0
Expenditure and net lending 1/22.1531.125.422.725.025.123.122.220.4
Current expenditure18.318.917.916.620.421.320.419.718.2
Wages and salaries6.35.25.44.43.93.93.93.93.9
Other charges7.48.17.05.54.94.94.94.94.9
Interest4.64.55.06.011.212.611.610.99.4
External1.11.01.11.82.01.71.71.61.5
Domestic3.53.43.94.29.210.910.09.37.9
HIPC expenditure0.01.00.50.70.50.00.00.00.0
Capital expenditure and net lending 1/3.812.27.56.14.53.72.82.52.3
Capital expenditure4.611.27.96.44.83.92.92.62.4
External3.73.46.75.03.63.42.52.32.0
GLF (Gambia Local Fund)0.90.90.80.80.50.50.40.30.3
HIPC funded0.00.00.40.70.80.00.00.00.0
PRSP-related expenditure0.00.00.00.00.00.00.00.00.0
Extrabudgetary expenditure 1/0.06.80.00.00.00.00.00.00.0
Net lending-0.71.0-0.4-0.3-0.2-0.2-0.1-0.1-0.1
Overall balance (commitment basis), without new measures-1.4-13.9-4.6-5.4-7.4-8.8-6.7-5.6-3.2
Excluding grants-3.7-16.0-9.1-7.4-9.6-9.7-7.4-6.1-3.7
Excluding grants, HIPC and PRSP expenditure-3.7-14.9-8.1-6.0-8.3-9.7-7.4-6.1-3.7
Overall balance (cash basis), without new measures
Including grants-1.8-14.4-4.4-5.8-7.4-8.8-6.7-5.6-3.2
Unspecified measures0.02.23.23.32.3
Overall balance (after measures)-7.4-6.6-3.5-2.2-1.0
Financing1.814.44.45.87.46.63.52.21.0
External (net)-0.8-0.41.90.6-2.2-1.9-2.4-2.5-2.8
Borrowing2.53.69.94.02.72.51.91.81.6
Project2.52.45.04.02.72.51.91.81.6
Program0.00.00.00.00.00.00.00.00.0
Other loans 2/0.01.24.90.00.00.00.00.00.0
Amortization-3.4-3.9-8.1-3.6-4.9-4.4-4.3-4.3-4.5
HIPC debt relief0.00.00.20.10.00.00.00.00.0
Domestic2.714.82.55.29.68.56.04.73.8
Bank 1/0.814.50.33.98.07.14.53.22.3
Nonbank2.61.02.70.91.61.61.61.61.6
Accumulation / repayment (minus) of arrears-0.7-0.8-0.5-0.10.00.00.00.00.0
Privatization proceeds0.00.00.00.00.20.00.00.00.0
Repayment of domestic debt0.00.00.00.0-0.2-0.2-0.1-0.1-0.1
CBG (unrealized profits)0.00.00.00.40.00.00.00.00.0
Basic primary balance, excl. measures 3/4.6-8.12.73.65.16.36.77.27.8
Memorandum items:
Overall balance, incl. measures-7.4-6.6-3.5-2.2-1.0
Excluding grants, HIPC and PRSP expenditure-8.3-7.5-4.2-2.7-1.4
Stock of domestic debt31.538.136.624.627.929.429.027.325.6
Sources: The Gambian authorities; and staff estimates and projections.

Data for 2001 include US$ 28.5 million capital expenditure financed by a retroactive loan by the Central Bank of The Gambia (CBG) which the authorities indicated in October 2003 had not been recorded in official accounts.

Includes loan disbursements (D 287.8 million in January and D 94.7 million in April) from Taiwan Province of China for electricity generators and improvement of distribution network. The generators were delivered to the National Water and Electricity Corporation in October 2001. The inflows were used to pay the suppliers.

Domestic revenue minus total expenditure and net lending, excluding interest payments and externally financed capital expenditure.

Table 4 B.The Gambia: Central Government Operations (Scenario B), 2000-2008(In percent of GDP, unless otherwise indicated)
200020012002200320042005200620072008
Prel.Proj.Proj.Proj.Proj.Proj.Proj.
Revenue and grants20.817.220.817.321.021.320.921.020.9
Domestic revenue18.515.116.315.316.816.816.716.917.2
Tax revenue16.213.014.113.314.114.114.014.114.3
Direct tax4.23.84.34.04.04.04.04.14.3
Of which: personal1.71.61.71.51.41.41.41.51.5
corporate2.12.02.42.42.32.32.42.52.6
Indirect tax12.09.29.89.310.210.110.010.010.0
Domestic tax on goods and services1.41.11.72.32.32.32.32.42.5
Tax on international trade10.78.18.17.07.97.97.67.67.5
Nontax revenue2.32.12.21.92.72.72.72.82.9
Grants2.32.14.42.04.24.54.24.03.7
Program1.10.01.30.02.01.91.81.71.6
Projects1.11.01.50.91.01.00.80.80.7
HIPC0.01.01.71.11.21.71.61.61.4
Expenditure and net lending 1/22.1531.125.422.724.823.021.320.219.4
Current expenditure18.318.917.916.618.215.214.313.813.3
Wages and salaries6.35.25.44.44.24.14.14.14.1
Other charges7.48.17.05.55.35.35.35.35.3
Interest4.64.55.06.08.25.14.33.73.4
External1.11.01.11.81.81.51.41.31.2
Domestic3.53.43.94.26.43.62.92.52.2
HIPC expenditure0.01.00.50.70.50.70.60.60.6
Capital expenditure and net lending 1/3.812.27.56.16.57.87.06.46.1
Capital expenditure4.611.27.96.46.88.17.26.66.3
External3.73.46.75.03.73.52.82.22.0
GLF (Gambia Local Fund)0.90.90.80.80.50.50.40.30.3
HIPC funded0.00.00.40.70.71.01.01.00.9
PRSP-related expenditure0.00.00.00.01.83.03.13.13.1
Extrabudgetary expenditure 1/0.06.80.00.00.00.00.00.00.0
Net lending-0.71.0-0.4-0.3-0.3-0.2-0.2-0.2-0.2
Overall balance (commitment basis), without new measures-1.4-13.9-4.6-5.4-3.8-1.7-0.40.81.5
Excluding grants-3.7-16.0-9.1-7.4-8.0-6.2-4.6-3.2-2.2
Excluding grants, HIPC and PRSP expenditure-3.7-14.9-8.1-6.0-4.9-1.50.11.52.3
Overall balance (cash basis), without new measures
Including grants-1.8-14.4-4.4-5.8-3.8-1.7-0.40.81.5
Unspecified measures2.10.00.00.00.0
Overall balance (after measures)-1.7-1.7-0.40.81.5
Financing1.814.44.45.81.71.70.4-0.8-1.5
External (net)-0.8-0.41.90.6-0.40.60.0-0.4-0.7
Borrowing2.53.69.94.03.63.42.72.12.0
Project2.52.45.04.02.82.61.91.41.3
Program0.00.00.00.00.80.80.80.70.7
Other loans 2/0.01.24.90.00.00.00.00.00.0
Amortization-3.4-3.9-8.0-3.6-4.3-3.7-3.4-3.2-3.2
HIPC debt relief0.00.00.10.10.31.00.70.60.6
Domestic2.714.82.55.22.11.00.4-0.4-0.8
Bank 1/0.814.50.33.90.50.50.50.50.5
Nonbank2.61.02.70.91.61.61.61.61.6
Accumulation / repayment (minus) of arrears-0.7-0.8-0.5-0.10.00.00.00.00.0
Privatization proceeds0.00.00.00.00.20.00.00.00.0
Repayment of domestic debt0.00.00.00.0-0.3-1.0-1.7-2.4-2.9
CBG (unrealized profits)0.00.00.00.40.00.00.00.00.0
Basic primary balance, excl. measures 3/4.6-8.12.73.64.02.42.52.73.1
Memorandum items:
Overall balance, incl. measures-1.7-1.7-0.40.81.5
Excluding grants, HIPC and PRSP expenditure-2.8-1.50.11.52.3
Stock of domestic debt31.538.136.624.622.021.019.617.715.4
Sources: The Gambian authorities; and staff estimates and projections.

Data for 2001 include US$ 28.5 million capital expenditure financed by a retroactive loan by the Central Bank of The Gambia (CBG) which the authorities indicated in October 2003 had not been recorded in official accounts.

Includes loan disbursements (D 287.8 million in January and D 94.7 million in April) from Taiwan Province of China for electricity generators and improvement of distribution network. The generators were delivered to the National Water and Electricity Corporation in October 2001. The inflows were used to pay the suppliers.

Domestic revenue minus total expenditure and net lending, excluding interest payments and externally financed capital expenditure.

Table 5A.The Gambia: Monetary Survey, Scenario A, December 2000-December 2008
200020012002200320042005200620072008
Dec.Dec.Dec.Dec.Dec.Dec.Dec.Dec.Dec.
Proj.Proj.Proj.Proj.Proj.
Monetary survey(In millions of dalasis, unless otherwise indicated; end of period)
Net foreign assets 1/1,3206509581,8942,5612,7623,1393,4064,202
Net domestic assets6631,7172,2442,6993,4775,1326,6008,3119,781
Domestic credit7702,0202,6993,7095,2187,0748,89710,85212,832
Claims on government (net) 2/835896121,0122,1053,4044,4565,4216,265
Advances to the gov. in foreign currencies 3/0483483
Claims on the private sector and public enterprises 4/6877751,3351,9772,3942,9503,7214,7125,847
Claims on foreign exchange bureaus 5/0174269
Other items (net)-107-303-454-1,010-1,741-1,942-2,297-2,541-3,051
Broad money1,9822,3673,2034,5936,0387,8949,73911,71713,982
Currency outside banks5406017971,1831,5552,0332,5083,0183,601
Deposits1,4421,7672,4053,4104,4835,8617,2318,70010,381
Memorandum items:
Nominal GDP (calendar year)5,3826,5567,36410,27513,64718,31423,37329,87937,333
(percentage change)9.421.812.339.532.834.227.627.824.9
Velocity (calendar-year GDP/avg. broad money)3.03.22.72.72.62.62.72.82.9
Reserve money multiplier (broad/reserve money)2.82.82.82.52.52.52.52.52.5
(Annual percentage change)
Broad money34.819.435.343.431.530.723.420.319.3
Reserve money16.821.034.162.728.530.723.420.319.3
Total deposits32.222.536.241.831.530.723.420.319.3
Contribution to growth of broad money(In percent of beginning-of-period broad money, unless otherwise indicated)
Net foreign assets22.5-33.813.029.214.53.34.82.76.8
Net domestic assets12.353.222.314.217.027.418.617.612.5
Domestic credit7.463.128.731.532.930.723.120.116.9
Claims on government (net) 2/3.125.51.012.523.821.513.39.97.2
Advances to the gov. in foreign currencies 3/0.024.30.00.00.00.00.00.00.0
Claims on the private sector and public enterprises 4/4.44.423.720.09.19.29.810.29.7
Claims on foreign exchange bureaus 5/0.08.84.0-1.00.00.00.00.00.0
Other items (net)4.9-9.9-6.4-17.4-15.9-3.3-4.5-2.5-4.4
Credit to the private sector and public enterprises (excl. foreign exchange bureaus)
Rate of growth in percent10.312.872.348.021.123.326.126.624.1
In percent of GDP12.811.818.119.214.713.613.613.613.6
Percent ratios
Currency/broad money27.325.424.925.825.825.825.825.825.8
Currency/deposits37.534.033.234.734.734.734.734.734.7
Deposits/broad money72.774.675.174.274.274.274.274.274.2
Sources: The Gambian authorities; and staff estimates and projections.

Valued at current exchange rates.

Excluding advances to the government in foreign currencies.

These advances reflect previously unrecorded public spending and borrowing in 2001, financed by the Central Bank of The Gambia (CBG), and previously unrecorded depletion of foreign exchange reserves in 2001–03 as reported by the authorities on October 28, 2003.

In March 2003, the government instructed the CBG to lend the equivalent of D 137 million in U.S. dollar to a newly created public enterprise for a seismic survey of offshore oil deposits.

Claims on foreign exchange bureaus reflect the delayed delivery of foreign currency purchased on a spot basis.

Table 5B.The Gambia: Monetary Survey, Scenario B, December 2000-December 2008
200020012002200320042005200620072008
Dec.Dec.Dec.Dec.Dec.Dec.Dec.Dec.Dec.
Proj.Proj.Proj.Proj.Proj.
Monetary survey(In millions of dalasis, unless otherwise indicated; end of period)
Net foreign assets 1/1,3206509581,8942,7953,4443,9974,5865,213
Net domestic assets6631,7172,2442,6992,7542,7332,7422,6162,474
Domestic credit7702,0202,6993,7094,0724,3114,5284,7374,947
Claims on government (net) 2/835896121,0121,0721,1391,2121,2911,375
Advances to the gov. in foreign currencies 3/0483483483450418386354322
Claims on the private sector and public enterprises 4/6877751,3351,9772,3592,6112,8353,0453,250
Claims on foreign exchange bureaus 5/017426923819014395480
Other items (net)-107-303-454-1,010-1,317-1,578-1,786-2,121-2,473
Broad money1,9822,3673,2034,5935,5506,1776,7397,2017,686
Currency outside banks5406017971,1831,4291,5911,7361,8551,979
Deposits1,4421,7672,4053,4104,1204,5865,0035,3475,707
Memorandum items:
Nominal GDP (calendar year)5,3826,5567,36410,27512,48713,89915,23016,38317,601
(percentage change)9.421.812.339.521.511.39.67.67.4
Velocity (calendar-year GDP/avg. broad money)3.03.22.72.82.52.42.42.42.4
Reserve money multiplier (broad/reserve money)2.82.82.82.52.52.62.72.72.7
(Annual percentage change)
Broad money34.819.435.343.420.811.39.16.96.7
Reserve money 6/16.821.034.162.719.27.24.96.96.7
Total deposits32.222.536.241.820.811.39.16.96.7
Contribution to growth of broad money(In percent of beginning-of-period broad money, unless otherwise indicated)
Net foreign assets22.5-33.813.029.219.611.79.08.78.7
Net domestic assets12.353.222.314.21.2-0.40.1-1.9-2.0
Domestic credit7.463.128.631.57.94.33.53.12.9
Claims on government (net) 2/3.125.51.012.51.31.21.21.21.2
Advances to the gov. in foreign currencies 3/0.024.30.00.0-0.7-0.6-0.5-0.5-0.4
Claims on the private sector and public enterprises 4/4.44.423.720.08.34.53.63.12.8
Claims on foreign exchange bureaus 5/0.08.84.0-1.0-1.0-0.9-0.8-0.7-0.7
Other items (net)4.9-9.9-6.4-17.4-6.7-4.7-3.4-5.0-4.9
Credit to the private sector and public enterprises (excl. foreign exchange bureaus)
Rate of growth in percent10.312.872.348.019.410.78.67.46.7
In percent of GDP12.811.818.119.218.918.818.618.618.5
Percent ratios
Currency/broad money27.325.424.925.825.825.825.825.825.8
Currency/deposits37.534.033.234.734.734.734.734.734.7
Deposits/broad money72.774.675.174.274.274.274.274.274.2
Sources: The Gambian authorities; and staff estimates and projections.

Valued at current exchange rates.

Excluding advances to the government in foreign currencies.

These advances reflect previously unrecorded public spending and borrowing in 2001, financed by the Central Bank of The Gambia (CBG), and previously unrecorded depletion of foreign exchange reserves in 2001–03 as reported by the authorities on October 28, 2003.

In March 2003, the government instructed the CBG to lend the equivalent of D 137 million in U.S. dollar to a newly created public enterprise for a seismic survey of offshore oil deposits.

Claims on foreign exchange bureaus reflect the delayed delivery of foreign currency purchased on a spot basis.

Reserve requirements are assumed to be lowered to 16 percent in 2005, and to 14 percent in 2006.

Table 6A.The Gambia: Summary Accounts of the Central Bank and Commercial Banks, Scenario A, December 2000 - December 2008(In millions of dalasis, unless otherwise indicated; end of period)
200020012002200320042005200620072008
Dec.Dec.Dec.Dec.Dec.Dec.Dec.Dec.Dec.
Proj.Proj.Proj.Proj.Proj.
Central Bank of The Gambia
Net foreign assets 1/1,314698816881948570131-753-1,427
Foreign assets1,5941,1371,5641,9622,5282,5512,3261,452476
Foreign liabilities-280-439-747-1,081-1,580-1,981-2,195-2,205-1,903
Net domestic assets-6121523249751,4372,5473,7155,3806,949
Domestic credit-7781393811,2291,6812,4363,2004,0655,014
Claims on government (net) 2/-732-486-2983587781,5332,2973,1624,111
Advances to the gov. in foreign currencies 3/0483483483483483483483483
Claims on private sector232424252525252525
Claims on banks (net)-68-56-96-102121212121
Claims on public enterprises 4/000137137137137137137
Claims on foreign exchange bureaus 5/0174269238238238238238238
Other items (net)16614-57-254-2441125151,3141,935
Reserve money7038511,1411,8562,3853,1173,8464,6275,522
Currency outside banks5406017971,1831,5552,0332,5083,0183,601
Bank reserves1622503436738291,0841,3381,6091,921
Cash3555526890117145174208
Deposits at the central bank1271952916057409671,1931,4351,713
Required reserves2022473376148071,0551,3021,5661,869
Excess reserves-3926592229364352
Commercial banks
Net foreign assets 1/5-481421,0141,6142,1923,0084,1595,629
Foreign assets1371285681,056
Foreign liabilities-132-176-426-42
Net domestic assets1,4371,8142,2632,3962,8703,6704,2234,5414,753
Domestic credit1,4801,8262,2212,4693,5594,6605,7186,8087,840
Claims on government (net)8161,0759106541,3271,8712,1592,2582,155
Claims on private sector and public enterprises6647511,3121,8152,2322,7893,5594,5505,685
Of which: in foreign currency09595
Reserves1622503436738291,0841,3381,6091,921
Cash3555526890117145174208
Deposits at the central bank1271952916057409671,1931,4351,713
Net claims on central bank68569610-21-21-21-21-21
Other items (net)-274-317-398-756-1,497-2,053-2,812-3,856-4,986
Total deposit liabilities1,4421,7672,4053,4104,4835,8617,2318,70010,381
of which: foreign currency deposits00273
Demand deposits4435259591,6902,2222,9053,5844,3125,145
Savings deposits7058321,0841,3751,8072,3632,9153,5074,185
Time deposits2934103623454545947328811,051
Memorandum items: 6/
TMU exchange rate (dalasis per SDR)16.521.322.222.222.222.222.222.222.2
Central Bank of The Gambia
Net foreign assets1,17161956439731315028-127-200
Net foreign assets (in millions of SDRs)71.029.025.417.914.16.81.2-5.7-9.0
Foreign assets1,4091,0581,08692083567249024467
(in millions of SDRs)85.449.748.941.437.630.322.011.03.0
Foreign liabilities-238-439-522-522-522-522-462-371-267
(in millions of SDRs)-14.4-20.6-23.5-23.5-23.5-23.5-20.8-16.7-12.0
Net domestic assets-4682325771,4592,0712,9673,8184,7545,722
Domestic credit-7781393811,2291,6812,4363,2004,0655,014
Other items (net)31093196229391531618689708
Sources: The Gambian authorities; and staff estimates and projections.

Valued at current exchange rates.

Excluding advances to the government in foreign currencies.

These advances reflect previously unrecorded public spending and borrowing in 2001, financed by the Central Bank of The Gambia (CBG), and previously unrecorded depletion of foreign exchange reserves in 2001–03 as reported by the authorities on October 28, 2003.

In March 2003, the government instructed the CBG to lend the equivalent of D 137 million in U.S. dollars to a newly created public enterprise for a seismic survey of offshore oil deposits.

Claims on foreign exchange bureaus reflect the delayed delivery of foreign currency purchased on a spot basis.

Using exchange rates as specified in 2002 technical memorandum of understanding (TMU).

Table 6B.The Gambia: Summary Accounts of the Central Bank and Commercial Banks, Scenario B, December 2000 - December 2008(In millions of dalasis, unless otherwise indicated; end of period)
200020012002200320042005200620072008
DecDec.DecDec.Dec.Dec.Dec.DecDec
Proj.Proj.Proj.Proj.Proj.
Central Bank of The Gambia
Net foreign assets 1/1,3146988168811,3071,8152,1972,5812,883
Foreign assets1,5941,1371,5641,9622,8053,5934,1874,3854,458
Foreign liabilities-280-439-747-1,081-1,498-1,778-1,990-1,804-1,575
Net domestic assets-61215232497590555628976-48
Domestic credit-7781393811,2301,2741,1471,0501,1301,310
Claims on government (net) 2/-732-486-298358496462459632906
Advances to the gov. in foreign currencies 3/0483483483450418386354322
Claims on private sector232424252525252525
Claims on banks (net)-68-56-96-10-10-10-10-10-10
Claims on public enterprises 4/000137123110968268
Claims on foreign exchange bureaus 5/017426923819014395480
Other items (net)16613-57-255-369-592-761-1,055-1,358
Reserve money7038511,1411,8562,2122,3712,4862,6572,835
Currency outside banks5406017971,1831,4291,5911,7361,8551,979
Bank reserves162250343673783780751802856
Cash355552688292100107114
Deposits at the central bank127195291605700688650695742
Required reserves202247337614742734700749799
Excess reserves-3926594146505357
Commercial banks
Net foreign assets 1/5-481421,0141,4881,6291,8002,0042,329
Foreign assets1371285681,056
Foreign liabilities-132-176-426-42
Net domestic assets1,4371,8142,2632,3962,6322,9573,2033,3423,377
Domestic credit1,4801,8262,2212,4692,7873,1533,4673,5973,626
Claims on government (net)8161,075910654576676753659469
Claims on private sector and public enterprises6647511,3121,8152,2112,4772,7142,9383,157
Of which: in foreign currency09595
Reserves162250343673783780751802856
Cash355552688292100107114
Deposits at the central bank127195291605700688650695742
Net claims on central bank685696101010101010
Other items (net)-274-317-398-756-948-986-1,025-1,067-1,115
Total deposit liabilities1,4421,7672,4053,4104,1204,5865,0035,3475,707
of which: foreign currency deposits00273
Demand deposits4435259591,6902,0622,2952,5042,6762,856
Savings deposits7058321,0841,3751,5401,7141,8701,9982,133
Time deposits293410362345518577629673718
Memorandum items: 6/
TMU exchange rate (dalasis per SDR)16.521.322.222.222.222.222.222.222.2
Central Bank of The Gambia
Net foreign assets1,1716195643975587588981,0331,131
Net foreign assets (in millions of SDRs)71.029.025.417.925.134.140.446.550.9
Foreign assets1,4091,0581,0869201,1981,5001,7111,7551,748
(in millions of SDRs)85.449.748.941.453.967.577.079.078.7
Foreign liabilities-238-439-522-522-640-742-813-722-618
(in millions of SDRs)-14.4-20.6-23.5-23.5-28.8-33.4-36.6-32.5-27.8
Net domestic assets-4682325771,4591,6541,6131,5881,6231,705
Domestic credit-7781393811,2301,2741,1471,0501,1301,310
Other items (net)31093196229380465538493394
Sources: The Gambian authorities; and staff estimates and projections.

Valued at current exchange rates.

Excluding advances to the government in foreign currencies.

These advances reflect previously unrecorded public spending and borrowing in 2001, financed by the Central Bank of The Gambia (CBG), and previously unrecorded depletion of foreign exchange reserves in 2001–03 as reported by the authorities on October 28, 2003.

In March 2003, the government instructed the CBG to lend the equivalent of D 137 million in U.S. dollars to a newly created public enterprise for a seismic survey of offshore oil deposits.

Claims on foreign exchange bureaus reflect the delayed delivery of foreign currency purchased on a spot basis.

Using exchange rates as specified in 2002 technical memorandum of understanding (TMU).

Table 7A.The Gambia: Balance of Payments Scenario A 1997 - 2008In millions of U.S. dollars, unless otherwise indicated
199719981999200020012002200320042005200620072008
Rev.est.Rev.est.Rev.est.Rev.est.Rev.est.Rev.est.Prel.Proj.Proj.Proj.Proj.Proj.
Trade balance-65.2-79.0-68.7-63.3-43.0-49.1-51.8-51.5-46.6-42.8-39.8-39.3
Exports, f.o.b.108.7130.3120.2126.6101.6111.0102.0136.7144.8152.3158.6165.3
Groundnuts/groundnut products4.912.59.913.717.623.910.630.226.726.827.327.8
Other domestic exports9.18.55.97.48.28.911.112.513.414.115.015.9
Reexports94.7109.3104.4105.475.878.280.394.0104.7111.3116.3121.5
Imports, c.i.f.-173.9-209.3-188.9-189.9-144.7-160.1-153.8-188.3-191.4-195.1-198.4-204.6
For domestic use-105.4-124.0-111.4-113.6-88.7-102.4-94.6-118.9-114.2-113.0-112.6-114.9
Of which: oil products-12.2-13.7-10.5-22.6-9.2-17.0-17.7-19.5-18.6-18.9-19.5-20.1
For reexport-68.5-85.3-77.5-76.3-55.9-57.7-59.2-69.3-77.2-82.1-85.8-89.6
Factor services (net)-18.8-20.0-21.1-20.5-23.2-26.4-24.7-30.5-35.7-36.9-36.9-39.1
Net interest income-24.3-26.0-29.4-30.7-31.9-33.6-31.5-37.2-44.9-45.9-48.2-50.4
Remittances5.56.08.310.28.77.26.86.79.29.011.311.3
Nonfactor services:47.749.743.828.717.824.922.339.441.141.742.644.2
of which: travel income63.369.263.847.738.241.148.059.861.162.163.465.3
Private unrequited transfers (net)3.43.53.810.63.53.63.73.93.93.83.83.8
Official unrequited transfers (net)28.135.630.031.330.539.031.632.925.825.124.524.1
Current account balance
Excluding official transfers-32.9-45.8-42.2-44.5-45.0-47.0-50.5-38.8-37.2-34.3-30.3-30.4
Including official transfers-4.9-10.1-12.2-13.2-14.5-8.0-18.8-5.9-11.4-9.2-5.8-6.3
Capital account17.317.37.55.722.620.94.30.42.51.0-4.9-3.3
Official loans (net)11.65.42.76.38.334.08.64.65.21.7-2.0-3.6
Project related20.914.213.720.524.747.421.820.919.816.012.311.6
Program loans0.00.00.00.00.01.30.00.00.00.00.00.0
Amortization-9.4-8.8-11.0-14.1-16.4-14.6-13.2-16.3-14.6-14.3-14.3-15.2
Private capital inflow5.712.04.8-0.614.3-13.1-4.4-4.3-2.7-0.7-2.80.3
Foreign direct investment (net)12.015.60.415.810.29.112.713.89.810.010.310.5
Other Investment (net)-6.3-3.64.4-16.44.1-22.2-17.0-18.1-12.5-10.7-13.1-10.3
of which: suppliers’ credits3.03.63.33.316.7-12.53.13.83.83.94.04.1
Unaccounted-for loss in Official Reserves0.00.00.00.0-28.50.50.00.00.00.00.00.0
Errors & Omissions-6.1-0.7-0.617.6-31.3-18.33.20.00.00.00.00.0
Overall balance (excl. PRSP)6.36.5-5.310.1-51.7-4.9-11.4-5.5-8.9-8.2-10.6-9.6
Financing, of which:-6.3-6.55.3-10.151.74.911.45.58.98.210.69.6
Change in gross official reserves (increase = -)0.0-5.54.8-16.943.80.810.56.511.012.416.612.0
of which:
repurchases/repayments (IMF)-6.4-4.9-3.5-1.6-0.20.00.0-1.0-2.1-4.1-6.2-7.1
purchases/loans (IMF)0.04.74.79.18.73.70.00.00.00.00.00.0
Exceptional financing 1/0.70.00.00.00.00.40.90.00.00.00.24.6
Memorandum items:
Current account balance (in percent of GDP)
Excluding official transfers-8.0-10.9-9.8-10.6-10.8-12.8-13.8-10.6-10.2-9.2-8.0-7.9
Including official transfers-1.2-2.4-2.8-3.1-3.5-2.2-5.1-1.6-3.1-2.5-1.5-1.6
Gross official reserves (end of period)
In millions of U.S. dollars97.8102.098.0111.463.864.158.756.145.433.116.54.5
In months of imports, c.i.f.6.85.86.27.05.34.84.63.62.82.01.00.3
In months of imports, c.i.f.
Over the next 12 months5.56.56.08.94.95.44.03.52.82.01.00.3
Plus all other services payments4.34.94.46.33.53.42.92.52.01.40.70.2
External debt-service ratio 2/
Including the Fund13.111.111.815.418.57.89.810.311.411.812.212.4
Excluding the Fund9.28.49.614.318.17.69.79.610.39.79.39.2
Sources: The Gambian authorities; and staff estimates and projections.

Includes debt relief by Paris Club; interim assistance by multilaterals is treated as grants. For 2007 and 2008, an accumulation of external arrears is assumed.

As a percentage of exports and travel income. Debt service calculated after HIPC grants and debt relief granted up to 2004 but before any accumulation of arrears.

Table 7B.The Gambia: Balance of Payments Scenario B 1997 - 2008In millions of U.S. dollars unless otherwise indicated
199719981999200020012002200320042005200620072008
Rev.est.Rev.est.Rev.est.Rev.est.Rev.est.Rev.est.Prel.Proj.Proj.Proj.Proj.Proj.
Trade balance-65.2-78.9-68.7-63.3-43.1-49.1-51.8-56.4-57.6-60.0-62.2-66.6
Exports, f.o.b.108.7130.4120.2126.6101.6111.0102.0137.0145.2152.8159.1165.8
Groundnuts/groundnut products4.812.59.913.717.623.910.630.226.726.927.327.8
Other domestic exports9.28.65.97.48.28.911.112.813.814.615.516.4
Reexports94.7109.3104.4105.475.878.280.394.0104.7111.3116.3121.5
Imports, c.i.f.-173.9-209.3-188.9-189.9-144.7-160.1-153.8-193.5-202.7-212.7-221.3-232.4
For domestic use-105.4-124.0-111.4-113.6-88.7-102.4-94.6-124.1-125.5-130.6-135.5-142.8
of which: oil products-12.2-13.7-10.5-22.6-9.2-17.0-17.7-19.7-18.9-19.3-20.1-20.8
For reexport-68.5-85.3-77.5-76.3-55.9-57.7-59.2-69.3-77.2-82.1-85.8-89.6
Factor services (net)-18.8-20.0-21.1-20.5-23.2-26.4-24.7-30.6-35.3-35.7-35.2-36.7
Net interest income-24.3-26.0-29.4-30.7-31.9-33.6-31.5-37.2-44.6-44.7-46.5-48.0
Remittances5.56.08.310.28.77.26.86.79.29.011.311.3
Nonfactor services47.749.743.828.717.824.922.341.546.749.853.758.0
of which:travel income63.369.263.847.738.241.148.062.568.573.679.184.8
Private unrequited transfers (net)3.43.53.810.63.53.63.73.93.93.93.93.9
Official unrequited transfers (net)28.135.630.031.330.539.031.640.840.540.440.740.2
Current account balance
Excluding official transfers-32.9-45.7-42.2-44.5-45.0-47.0-50.5-41.7-42.3-42.0-39.8-41.3
Including official transfers-4.8-10.1-12.2-13.2-14.5-8.0-18.9-0.9-1.8-1.70.9-1.1
Capital account17.317.37.55.722.720.94.39.711.58.05.55.0
Official loans (net)11.65.42.76.38.434.08.67.98.95.31.60.0
Project related20.914.213.720.524.847.421.821.120.316.412.712.0
Program loans0.00.00.00.00.01.30.03.23.23.23.23.2
Amortization-9.4-8.8-11.0-14.1-16.4-14.6-13.2-16.3-14.6-14.3-14.3-15.2
Private capital inflows5.712.04.8-0.614.3-13.1-4.41.82.62.74.05.0
Foreign direct investment (net)12.015.60.415.810.29.112.713.811.311.611.912.2
Other investment (net)-6.3-3.64.4-16.44.1-22.2-17.0-12.0-8.7-8.8-7.9-7.2
of which: suppliers’ credits3.03.63.33.316.7-12.53.13.94.14.34.44.6
Unaccounted-for loss in official reserves0.00.00.00.0-28.50.50.00.00.00.00.00.0
Errors and omissions-6.1-0.8-0.617.6-31.4-18.33.20.00.00.00.00.0
Overall balance (excl. PRSP)6.36.5-5.310.1-51.7-4.9-11.48.99.66.46.43.8
Financing, of which:-6.3-6.55.3-10.151.74.911.4-8.9-9.6-6.4-6.4-3.8
Change in gross official reserves (increase = -)0.0-5.54.8-16.943.80.810.5-17.9-20.4-14.3-3.00.5
of which:
repurchases/repayments (IMF)-6.4-4.9-3.5-1.6-0.20.00.0-1.0-2.1-4.1-6.2-7.1
purchases/loans (IMF)0.04.74.79.18.73.70.09.09.09.00.00.0
Exceptional financing 1/0.00.00.00.00.00.40.91.03.83.02.82.8
Memorandum items:
Current account balance (in percent of GDP)
Excluding official transfers-8.0-10.9-9.8-10.6-10.8-12.7-13.8-11.0-10.7-9.9-8.9-8.8
Including official transfers-1.2-2.4-2.8-3.1-3.5-2.2-5.1-0.2-0.5-0.40.2-0.2
Gross official reserves (end of period)
In millions of U.S. dollars97.8102.098.0111.463.864.158.780.5101.2115.6118.8118.3
In months of imports, c.i.f.6.85.86.27.05.34.84.65.06.06.56.46.1
In months of imports, c.i.f.
Over the next 12 months5.56.56.08.94.95.43.94.85.76.36.15.8
Plus all other services payments4.24.84.46.13.53.72.83.44.04.44.34.2
External debt-service ratio 2/
Including the Fund13.111.111.815.418.57.89.89.66.16.97.27.6
Excluding the Fund9.28.49.614.318.17.69.79.05.04.94.54.7
Sources: The Gambian authorities; and staff estimates and projections.

Includes debt relief by Paris Club; interim assistance by multilaterals is treated as grants.

As a percentage of exports and travel income. Debt service calculated after HIPC grants and debt relief.

Table 8A.The Gambia: External Financing Requirements and Sources - Scenario A(In millions of U.S. dollars)
ActualIMF Staff Projections
1998199920002001200220032004
Gross financing requirements68.153.783.926.361.253.850.3
Current account deficit (excluding official transfers)45.842.244.545.047.050.538.8
Debt amortization11.912.820.824.915.013.817.1
Medium and long-term debt11.912.820.824.915.013.817.1
Public sector9.511.719.423.914.613.216.3
Amortization9.511.714.817.014.613.216.3
Other0.00.04.76.90.00.00.0
Commercial banks0.00.00.00.00.00.00.0
Corporate private sector2.41.11.41.00.40.60.7
Short-term debt 1/0.00.00.00.00.00.00.0
Repayment of arrears0.00.00.00.00.00.00.0
Change in gross official reserves (increase = -)5.5-4.816.9-43.8-0.8-10.5-6.5
Repurchases/repayments (IMF)4.93.51.60.20.00.01.0
Available financing68.153.783.926.361.253.850.3
Foreign direct investment (net)15.60.415.810.29.112.713.8
Debt financing from private creditors-1.25.5-10.412.0-21.7-16.5-17.4
Medium- and long-term financing-4.82.3-13.7-4.8-9.2-19.5-21.1
To public sector0.012.20.00.00.00.00.0
To commercial banks2.7-0.6-6.32.9-8.7-26.7-4.5
To corporate private sector-7.5-9.3-7.4-7.6-0.57.2-16.6
Suppliers’ credits3.63.33.316.7-12.53.13.8
Official creditors 2/49.843.651.755.287.653.553.9
Official unrequited transfers (net)35.630.031.330.539.031.632.9
Loans 3/14.213.720.524.748.621.820.9
To public sector14.213.720.524.748.621.820.9
To private sector0.00.00.00.00.00.00.0
Purchases/loans (IMF)4.74.79.18.73.70.00.0
Exceptional Financing 4/0.00.00.00.00.40.90.0
Financing gap0.00.00.00.00.00.00.0
Other flows 5/-0.7-0.617.6-59.8-17.93.20.0
Errors and omissions-0.7-0.617.6-31.3-18.33.20.0
Unaccounted-for loss in official reserves0.00.00.0-28.50.50.00.0

Original maturity of less than 1 year. Stock at the end of the previous period.

Includes both loans and grants.

Excluding the IMF.

Includes accumulation of arrears and debt relief by bilateral creditors

Includes all other net financial flows, and errors and omissions. In 2001, it includes an unaccounted-for loss in reserves.

Table 8B.The Gambia: External Financing Requirements and Sources - Scenario B(In millions of U.S. dollars)
ActualIMF Staff Projections
1998199920002001200220032004
Gross financing requirements68.153.783.926.361.253.877.6
Current account deficit (excluding official transfers)45.742.244.545.047.050.541.7
Debt amortization11.912.820.824.915.013.817.1
Medium and long-term debt11.912.820.824.915.013.817.1
Public sector9.511.719.423.914.613.216.3
Amortization9.511.714.817.014.613.216.3
Other0.00.04.76.90.00.00.0
Commercial Banks0.00.00.00.00.00.00.0
Corporate private sector2.41.11.41.00.40.60.7
Short-term debt 1/0.00.00.00.00.00.00.0
Repayment of arrears0.00.00.00.00.00.00.0
Change in gross official reserves5.5-4.816.9-43.8-0.8-10.517.9
Repurchases/repayments (IMF)4.93.51.60.20.00.01.0
Available financing68.153.783.926.361.253.877.6
Foreign direct investment (net)15.60.415.810.29.112.713.8
Debt financing from private creditors-1.25.5-10.412.0-21.7-16.5-11.3
Medium- and long-term financing-4.82.3-13.7-4.8-9.2-19.5-15.2
To public sector0.012.20.00.00.00.00.0
To commercial banks2.7-0.6-6.32.9-8.7-26.7-3.0
To corporate private sector-7.5-9.3-7.4-7.6-0.57.2-12.2
Suppliers’ credits3.63.33.316.7-12.53.13.9
Official creditors 2/49.843.651.755.387.653.565.1
Official unrequited transfers (net)35.630.031.330.539.031.640.8
Loans 3/14.213.720.524.848.621.824.2
To public sector14.213.720.524.848.621.824.2
To private sector0.00.00.00.00.00.00.0
Purchases/loans (IMF)4.74.79.18.73.70.09.0
Exceptional Financing 1/0.00.00.00.00.40.91.0
Financing gap0.00.00.00.00.00.00.0
Other flows 5/-0.8-0.617.6-59.9-17.83.20.0
Errors & Omissions-0.8-0.617.6-31.4-18.33.20.0
Unaccounted-for loss in Official Reserves0.00.00.0-28.50.50.00.0

Original maturity of less than 1 year. Stock at the end of the previous period.

Includes both loans and grants.

Excluding the IMF.

4/

Includes accumulation of arrears and debt relief by bilateral creditors

Includes all other net financial flows, and errors and omissions. In 2001 it includes an unaccounted-for loss in reserves.

Table 9.The Gambia: Financial Sector Indicators, 2001-03 1/(In million of dalasi, unless otherwise indicated)
200120022003
Dec.Dec.March
Total assets2,903.04,338.55,012.2
Total loans 2/743.51,317.21,586.8
Holdings of government and CBG bills1,129.31,004.51,014.6
Total capital and reserves315.1460.6480.9
Nonperforming loans (NPLs) 3/84.688.987.5
Provisions against NPLs67.668.562.1
NPLs/total loans (in percent)11.46.75.5
NPLs/total assets (in percent)2.92.01.7
Total capital / total assets (in percent)
(simple capital adequacy ratio)10.910.69.6
Source: Central Bank of The Gambia.

Currently, the banking sector in The Gambia consists of six banks: the Standard Chartered Bank, Trust Bank, International Bank for Commerce, Arab Gambia Islamic Bank, Guaranty Trust Bank and First International Bank. In 2001, the data include the Continent Bank, a small bank that catered mainly to lower-income customers, which was put into liquidation by the CBG in January 2002.

The large increase in loans outstanding since December 2001 reflects both several major investment projects (new ferries and a new ferry terminal, a large loan to Gamtel, oil sector loans) and a sizable increase in household overdrafts.

Overdrafts in default are not included in NPLs.

Table 10.The Gambia: Performance Criteria and Indicative Targets Under the First Annual Program Under the Three-Year PRGF, June - December 2002
End-Jun.End-Sep.End-Dec.
Quantitative BenchmarksQuantitative Benchmarks (adj.) 1/Prel.Performance CriteriaPerformance Criteria (adj.) 1/Prel.Quantitative BenchmarksQuantitative Benchmarks (adj.) 1/Prel.
(In millions of dalasis; change from beginning of the calendar year)
Net bank credit to the central government (ceiling) 1/2/-50.1-0.145.4-95.8-13.144.7-75.519.922.7
Net domestic assets of the central bank (ceiling) 1/3/14.164.1116.5-33.3-31.3158.2-17.5-17.5345.1
Basic primary balance of the central government (floor) 4/5/67.417.4-141.5141.8139.881.8225.7225.7169.8
External payments arrears of the central government (ceiling) 6/0.00.00.00.00.00.00.00.00.0
(In millions of SDRs; change from beginning of the calendar year)
Net official international reserves (floor) 7/0.8-1.8-3.94.04.0-4.48.38.3-3.7
New nonconcessional debt contracted or guaranteed by the government (ceiling), 1–12 year maturity 8/0.00.00.00.00.00.00.00.00.0
Outstanding stock of external public debt with a maturityof less than 1 year (ceiling) 9/0.00.00.00.00.00.00.00.00.0
(In millions of dalasis; change from beginning of the calendar year)
Financial indicators
Total domestic government revenue (floor)604.9604.9582.8892.8892.8878.61,211.51,211.51,201.8
Government wage bill (ceiling)192.2192.2194.8277.4277.4282.0371.6371.6395.2
Memorandum item:
External budgetary assistance 5/50.00.00.070.068.068.090.090.094.9

Adjustments reflect differences in the amount of external budgetary assistance from that programmed. The adjustments also reflect technical revisions.

Defined as claims on government (net) in the monetary survey.

Defined as the difference between the net official international reserves and reserve money.

The basic primary balance is defined as domestic revenue minus total expenditure and net lending, excluding interest payments and externally financed capital expenditure.

Including grants and loans, but excluding project aid.

Applied on a continuous basis.

The floor is adjusted by the difference between the amount of external budgetary assistance from that programmed.

External debt contracted or guaranteed other than that with a grant element equivalent to 35 percent or more, calculated using a discount rate based on OECD commercial interest reference rates.

Excluding normal import-related credits.

9. The vulnerability of the economy to external shocks remained largely unaddressed. Tourism, the reexport trade, and groundnuts continued to provide the main domestically generated sources of foreign exchange, and only in the hotels and restaurants sector were there indications of a positive response to the improvement in external competitiveness (Figure 4). Most of the population remained dependent on groundnut farming and, hence, highly susceptible to weather variations.

Figure 3.The Gambia: Trade and Current Account, 1998-2003

(In percent of GDP)

Sources: The Gambian authorities; and IMF staff estimates.

Figure 4.The Gambia: Foreign Exchange Earnings and External Financing, 1998-2003

Sources: The Gambian authorities; and IMF staff estimates.

1/ Includes short- and medium-term capital flows, suppliers’ credits, and errors and omissions.

10. In October 2003, President Jammeh launched Operation No Compromise to address concerns that unfair business practices and corruption were disrupting the economy and leading to an unwarranted depreciation of the exchange rate. The informal foreign exchange market was restricted; businesses and individuals were pressured to deposit or surrender all foreign currency holdings; and some retailers were forced to reduce their selling prices for essential goods. Subsequently, charges of tax evasion and fraud were reportedly laid against several prominent businessmen and alleged collaborators in the public sector, and five officials and former officials of the central bank were indicted on offenses related to Swiss franc transactions by the CBG.

A. Macroeconomic Performance in 2002

11. Real GDP shrank by about 3 percent in 2002. An unusually short rainy season led to a halving of the groundnut harvest and a drop of nearly one-third in the output of other crops. Strong growth was confined to the construction, utilities, and the hotel and restaurants sectors (Table 2A). Within the small manufacturing sector, groundnut processing benefited from additional capacity and the availability of a good crop in 2001.

12. Reflecting the continuing high rates of monetary growth, the nominal effective exchange rate index declined by 34 percent during the year, and consumer price inflation rose to 13 percent on a 12-month basis. 4 Although exports of processed groundnuts were at near record levels, project-related imports rose and the balance on factor services deteriorated as official interest receipts and private remittances declined; the current account deficit (excluding grants) is estimated to have been equivalent to about 13 percent of GDP in 2002 (Table 7A and Figure 3).

13. The overall fiscal deficit (excluding grants) reached 8.1 percent of GDP in 2002, compared with a target of 5.0 percent. 5 (Figures 5 and 6). Most of the overshooting reflected stronger-than-expected foreign-financed capital spending and higher debt interest payments resulting from the exchange rate depreciation and the rise in treasury bill yields (Figure 7); the basic primary fiscal surplus for 2002 fell only slightly short of its target level, at 2.7 percent of GDP (Tables 3A and 4A).

Figure 5.The Gambia: Revenue and Expenditure, 1998-2003

(In percent of GDP)

Sources: The Gambian authorities; and IMF staff estimates. Data series have been revised to reflect previously unreported transactions from 2001 onwards.

Figure 6.The Gambia: Fiscal Balances, 1998-2003

(In percent of GDP)

Sources: The Gambian authorities; and IMF staff estimates. Data series have been revised to reflect previously unreported transactions from 2001 onwards.

Figure 7.The Gambia: Share of Scheduled Interest Payments in Current Government Expenditure, 1998-2003

(In percent of GDP)

Sources: The Gambian authorities; and IMF staff estimates.

14. Reserve money grew by 34 percent during 2002, a substantial proportion of which appears to have resulted from liquidity injections by the CBG associated with losses on foreign exchange transactions. (Table 5A). These losses arose in part from currency transactions with local foreign exchange bureaus involving exceptionally wide spreads (at times well in excess of 10 percent). The rapid depreciation in the dalasi exchange rate also led to losses from seasonal smoothing operations and the provision of foreign currency to oil importers at a rate based on lagged-average dealing rates. 6

15. The lax monetary conditions gave rise to a 72 percent increase in credit to the private sector during 2002, fuelling an increase in broad money of 35 percent and providing an opportunity for speculation in real estate and foreign assets. In response, the yield on treasury bills was raised in steps from 15 percent in July to 20 percent in December (Figure 1). The government also instituted corrective fiscal measures in October 2002. Budget execution was shifted to a cash basis, and a new National Emergency Fiscal Committee (NEFCOM) was created to monitor and approve expenditure allocations. Fuel prices were doubled to eliminate government subsidies (see Box 2), increases were announced in selected excise taxes, and administrative fees were raised.

Box 2.Petroleum-Pricing Mechanism

The supply and pricing of petroleum products in The Gambia is determined by the authorities. Importation is confined to a single contractor, chosen by a competitive government tender based on the narrowest margin over the Platts reference price. Domestic pump prices are fixed intermittently taking account of the landed cost of petroleum in dalasi, with allowances added for financing costs, duties, excises, and trading and transportation margins. The financial consequences of sustained misalignments, such as during the 2001–02 election cycle, are borne by the government. Since October 2002, the authorities have sought to prevent costs falling on government by ensuring that dealers’ margins fully reflect costs and adjusting pump prices quarterly.

B. Macroeconomic Performance in 2003

16. Real GDP is estimated to have grown by 8.8 percent in 2003, on the basis of a provisional report by the Food and Agriculture Organization (FAO) of a full recovery in agricultural output following abnormally heavy and sustained rains.7 Production and exports of groundnut products nevertheless dropped precipitously as a result of the failed crop in 2002, and the external current account deficit is estimated to have widened slightly despite higher tourism earnings and reduced imports for domestic use as a result of the real depreciation of the exchange rate. The dalasi declined by a further 34 percent in nominal effective terms in the 12 months to October 2003, and the official CPI rose by 18 percent during 2003.

17. The fiscal deficit (excluding grants) declined to 6.0 percent of GDP in 2003, compared with a budget target of 4.5 percent. Domestic revenue is estimated to have undershot the budget by 2.7 percent of GDP, almost entirely due to weak customs performance, but this was offset in part by the impact on noninterest current expenditure of the tight cash ceilings imposed by NEFCOM.

18. Monetary growth escalated further in 2003. With questionable central bank foreign exchange transactions continuing in the first quarter, and the entire financing of the fiscal deficit (including grants) being provided by the central bank (Figure 8 and Table 6A), reserve money grew by 63 percent during the year. Holdings of treasury and central bank bills by the private sector declined. Broad money grew by 43 percent, reflecting credit expansion of 48 percent to the private sector (which included finance for several major investment projects, as well as rising household overdrafts).

Figure 8.The Gambia: Budgetary Financing, 1998-2003 1/

(In percent of GDP)

Sources: The Gambian authorities; and IMF staff estimates.

1/ Data series have been revised to reflect previously unreported transactions from 2001 onwards.

19. The authorities progressively increased interest rates, and treasury bill yields reached 31 percent by September 2003. As part of the monetary tightening, starting in April 2003, minimum reserve requirements were extended to include foreign currency deposits and were increased in two steps from 14 percent to 18 percent. However, the effectiveness of these measures was diluted because penalty mechanisms for shortfalls in required reserves were not properly implemented until July 2003.

C. Structural Issues

20. Weaknesses persisted in all areas of fiscal management. Although the Central Revenue Department successfully took over the administration of the sales tax from the Customs and Excise Department, collections performance in respect of customs duties deteriorated further as a result of ineffective management and excessive use of discretionary exemptions. The planning, execution and monitoring of public expenditure continued to be impeded by the failure to close the fiscal accounts beyond 1999 and the lack of progress in finalizing the general ledger, for which entries were not made beyond November 2001. However, the elimination of the majority of below-the-line accounts and imposition of cash budgeting under NEFCOM helped to restrain unbudgeted spending. Despite considerable technical assistance, public expenditure management systems remain well below the standard required for reliable reporting on HIPC and other poverty and program monitoring. The finances of public enterprises are also not subject to effective monitoring or control. A draft organic budget law, which should help to clarify procedures and responsibilities for public sector fiscal management, was presented to cabinet but has not yet been approved for submission to the National Assembly.

21. Implementation of other structural reforms has been slower than planned, although three out of five structural benchmarks under the first annual program under the PRGF arrangement were completed before time, and a new household survey was launched (Tables 11 and 12). To facilitate export growth, the Trade Gateway Project was launched with World Bank support and The Gambia Investment and Free Zones Authority was established. However, poor progress was made under the Technical Cooperation Action Plan, particularly on central bank governance and statistics (Table 13), and little was achieved on privatization.

Table 11.The Gambia: Structural Benchmarks Under the First Annual Program Under the Three-Year Poverty Reduction and Growth Facility, April 1, 2002 - March 31, 2003
MeasuresExpected Date of CompletionStatus
Quarterly schedule towards eliminating cross arrears between government and public enterprises based on a review of public enterprise study and cabinet paper.End-July 2002Completed in May 2002.
Completion of the enterprise survey in order to compile data on the international investment position.End-July 2002Completed end-July 2002.
Completion of stage I of the household survey (dry season) as basis for constructing an updated and comprehensive consumer price index.End-September 2002Delays due to technical problems and changes in conduct of survey.
Completion of ASYCUDA IIEnd-October 2002Delays due to technical problems.
Public reports on poverty-reducing expenditure.End-November 2002Completed end-November 2002.
Table 12.The Gambia: Additional Structural Benchmarks Under the Three-Year Poverty Reduction and Growth Facility, 2003 1/
MeasuresExpected Date of CompletionStatus
Cabinet approval and submission to the National Assembly of the Anti-Money-Laundering BillEnd-April 2003Submitted to National Assembly in June 2003 and approved in July 2003.
Public reports on poverty-reducing expenditure.End-May 2003Not submitted.
Cabinet approval and submission of the new Organic Budget Law, containing the key elements recommended by FAD, to the National Assembly.End-June 2003Considered by cabinet in November 2003. Targeted for submission to National Assembly early in 2004.
Agreement on a schedule for the reconciliation of the Accountant General’s cash books and the general ledger with the accounts of the central bank, and the regular updating of the general ledger to a more recent date—with a lag of two months.End-July 2003A schedule for 2003 was agreed in early August but has not been achieved.
Changing of the petroleum product pricing mechanism to ensure permanent full cost recovery on a consignment basis.End-December 2003Full cost recovery has been established, and there will be quarterly reviews of price adjustments.
Closing of public accounts for 2000–02.End-December 2003Little progress.
Completion of the household survey. 2/End-December 2003Data collection largely completed.
Implementation of interim measures as specified by the Fund expert to stabilize and fully utilize ASYCUDA version 2.7. 3/End-December 2003Delay due to technical problems.

Agreed subsequent to July 2002

For technical reasons, the authorities decided to conduct the survey continuously rather than breaking it up in two stages (dry and wet season).

The targets were revised after the review by the Fund expert.

Table 13.The Gambia: Structural Reforms Under the Technical Cooperation Plan (TCAP)
AreaStatus
Macroeconomic policy formulation and managementResident macroeconomic advisor in place. Macroeconomic and monetary policy committees have been established. Little progress has been made in improving analytical or debt-management capacity.
Revenue administration
Overall revenue administration reformAdministration of the domestic sales tax has been transferred from the Customs Department to the revenue department. The Income and Sales Tax Bill and the Revenue Authority Bill are scheduled to be sent to the National Assembly by early 2004.
Tax and customs administrationA tax systems headquarters and a large taxpayer unit are being established. Self-assessment is commencing. Little progress has been made on customs operations, ASYCUDA, or a review of tariffs.
Public Expenditure Management (PEM)
Budget preparationA new revenue and expenditure classification system was introduced for the 2004 budget. Finalization of the organic budget law is now expected in early 2004. A resident MTEF consultant is in place.
Budget execution and treasury functionsA national expenditure commitment control regime (NEFCOM) was established to control monthly cash releases. Most of the below-the-line accounts of the central goverment have been closed. A flash reporting system has been introduced. Little progress has been made in closing and auditing the fiscal accounts.
Central Bank and the Financial SystemActs have been passed on financial institutions, insurance and money laundering. A revised Central Bank Act is still under consideration. Implementation has been negligible in respect of other parts of the comprehensive set of financial sector reform measures recommended by MFD missions.
Macroeconomic statisticsThe household survey is nearing completion. There has been little progress on institutional reform or in improving data quality or coverage.
Note: Implementation of the government’s medium-term economic and financial reform program, as supported by the PRGF arrangement, is underpinned by a Technical Cooperation Action Plan (TCAP) for 2002–05. Financial support for some of the technical assistance envisaged under the TCAP was pledged at the Round Table Conference in September 2002. Responsibility for coordinating technical assistance from various donors and the Fund and for reviewing the TCAP annually rests with the Department of State for Finance and Economic Affairs. An in-depth external evaluation is scheduled after its completion in 2005.

D. Other Sectoral Issues

22. The banking system in aggregate appears to be reasonably healthy, with the overall capital adequacy ratio declining only marginally from 10.9 percent a year earlier to 10.6 percent at end-2002, well above the regulatory requirement for individual banks of 8 percent. Other indicators of financial sector stability, such as nonperforming loans and provisioning, also remained stable. However, there was a sizable increase in household overdrafts, which are not classified as non-performing if in default (Table 9). The regulatory environment of the financial sector has been strengthened through passage of the Financial Institutions, Insurance, and Money Laundering Acts.

23. The Gambia has retained its generally open external environment. Imports are subject to a maximum tariff of 18 percent. Export taxes are restricted to fish and fishing products (10 percent), and gold and diamonds (3 percent). 8 Although The Gambia has been part of the exchange rate mechanism of the West African Monetary Zone (WAMZ) since April 2002, the exchange rate regime has been flexible in practice, with intervention generally limited to seasonal smoothing operations. 9

24. The real effective exchange rate declined by 46 percent between December 2001 and October 2003 (Figure 2). The improvement in underlying external competitiveness may be considerably less than implied by this figure (because of measurement problems relating to the CPI and delayed pass-through of price increases), but The Gambia’s relative cost structure would now appear to provide considerable incentives for expansion of exports of goods and services. However, apart from tourism-related activities, there are few signs yet of an increase in export-related activity.

E. Poverty Reduction Strategy and HIPC Initiative

25. In 2001, The Gambia ranked 149th on the human development index. Although few quantitative indicators are available to assess progress toward the Millennium Development Goals, it is likely that poverty has increased markedly since 2001, owing to the crop failures of 2002, rising inflation, and limited provision of income support and social services. Some of the priority social policy areas addressed in the PRSP have, however, shown improvement in recent years, including gross school enrollment rates at lower basic and secondary levels, particularly for girls, and immunization rates and the coverage of basic health facilities (Table 14). The substantial donor support which was offered at the Geneva roundtable in September 2002 has not as yet resulted in additional financing for the PRSP, partly because of unresolved issues over macroeconomic performance and governance. The first progress report on the PRSP is scheduled for completion in early 2004.

Table 14.The Gambia: Income and Social Indicators, 1970 - 2002
Unit of

Measurement
Latest Single Year
1970-751980-851992-9719981999200020012002
Population
Total populationMillions0.50.71.21.21.31.31.41.4
Population growth ratePercent3.33.02.83.04.23.02.82.6
Total fertility rateBirths per woman6.56.55.75.5
Poverty
TotalPercent of population40.0
Urban povertyPercent of population37.0
Rural povertyPercent of population41.0
National head count indexPercent of population64.0
Income
GNI per capita (Atlas method)U.S. dollars348340340340320280
GDP per capita (staff est.)U.S. dollars342341336318307265
Social indicators
Primary school enrollment
TotalPercent of age group21.062.065.069.875.091.0
MalePercent of age group77.072.0
FemalePercent of age group48.057.0
Literacy
TotalPercent of age group34.337.838.9
FemalePercent of age group27.630.931.9
Access to safe water
TotalPercent of population12.045.050.062.0
UrbanPercent of population
RuralPercent of population3.033.039.053.0
Immunization rate
MeaslesPercent under 12 months75.091.087.090.0
DPTPercent under 12 months77.096.074.4
Children’s (under age of 5)
malnutrition ratePercent20.026.017.0
Life expectancy at birth
TotalYears37.041.053.053.253.253.7
MaleYears36.039.051.051.451.6
FemaleYears39.043.055.055.055.0
Mortality
Infant mortality ratePer thousand live births179.0154.078.076.474.891.0
Under-age-of-5 mortality ratePer thousand live births319.0216.0110.0110.0126.0
MalePer thousand live births138.0
FemalePer thousand live births120.0
Adult (ages 15–59) mortality ratePer thousand population
MalePer thousand population655.0584.0404.0408.0411.0
FemalePer thousand population519.0466.0339.0344.0349.0
Maternal mortality ratioPer thousand live births15.011.010.5
Sources: World Bank; United Nations; the Gambian authorities; and staff estimates.

26. The Gambia reached the decision point under the enhanced Initiative for Heavily Indebted Poor Countries (HIPC) in December 2000 (www.imf.org), at which time creditors committed themselves, in aggregate, to debt relief of US$66.6 million in net present value (NPV) terms at the completion point. Interim assistance has been provided by the IMF, World Bank, African Development Bank, European Investment Bank, and the OPEC Fund, and, as of January 9 2003, by the Paris Club in the form of a flow rescheduling on Cologne terms. 10 However, since the PRGF-supported program went off track, the Paris Club has informed the authorities that the second tranche of the rescheduling, covering the period July 2003-July 2004, will not be enacted. Interim assistance by the Fund ceased on January 1, 2004. The HIPC Initiative completion point cannot now be reached until 2005, at the earliest (Table 15).

Table 15.The Gambia: Status of HIPC Initiative Completion Point Triggers
AreaStatus
Poverty reduction
Preparation of a full PRSP through a participatory process and satisfactory implementation for one year.PRSP launched mid-2002. First full-year progress report due in early 2004.
Improvement of the poverty database and monitoring capacity, as evidenced by progress in restructuring the Central Statistics Department (CSD) or developing its capacity.Making progress. CSD has developed a restructuring strategy and is receiving technical assistance from the World Bank and IMF. The household survey and census are being conducted; the economic census will be launched in 2004.
Macroeconomic stability
Continued maintenance of macroeconomic stability, as evidenced by satisfactory implementation of the PRGF-supported program.PRGF-supported program off track.
Governance
Progress in strengthening public expenditure management, as evidenced by the issuance of annual public reports on the overall budget execution and semiannual reports on the use of interim HIPC Initiative debt relief.First two semiannual reports submitted in May and November 2002; no subsequent updates. National budget reports annual budget execution with a two-year lag.
Social sector reforms
Budgetary savings from interim HIPC debt relief to be used in accordance with the annual budgets approved by the Task Force and the HILEC.Good progress.
Measures and targets regarding progress in implementing education and health reform programs, including the following:
increase by at least 45 percent (from 192 graduates in the base academic year 2000/01) the number of teachers for lower basic education graduating from The Gambia College;Attained.
ensure appropriate funding of a trust fund for girls’ scholarships in the poorest regions and make progress in raising such rates by expanding this scholarship scheme to no less than 2,000 girls annually in at least three regions;Attained.
increase by at least 5 percent each year (from 44 percent in the base year of 1998) the number of births attended by a person trained in antenatal care; and.PHPNP indicates 53 percent in 2001 (maternal mortality rate survey)
increase the share of primary and secondary health care within the overall recurrent budget for health.On course.
Structural reforms
Measures to promote private sector development, including the following:
establish a functional multisector regulatory agency; andIn progress; should become operational in early 2004.
bring to the point of sale the two major public groundnut-processing plants in the country.Ongoing; should be achievable early in 2004.

IV. Economic Outlook and Poverty Reduction

27. The immediate economic outlook is poor. Despite a stabilization of the exchange rate in the last quarter of 2003, inflationary pressures remain very strong in the wake of persistently high rates of monetary growth. The fiscal deficit is projected to increase in 2004 and its financing—which relied entirely on the central bank in 2003—will be made more difficult by the current withholding of donor support because of concerns about policy implementation and governance. The debt outlook will worsen significantly and essential improvements in infrastructure and other structural measures will be further delayed.

28. Decisive action to correct the growing macroeconomic imbalances and governance concerns could, however, mitigate some of the longer-term effects of the poor performance. With The Gambia’s generally liberal economic environment, the recent substantial improvement in external competitiveness, and the possible exploitation of offshore hydrocarbon deposits, offer considerable potential for achieving the overdue diversification of the economy beyond its four basic industries (production and processing of groundnuts, reexport trade, and low-value-added tourism).

29. The economy is therefore at a critical juncture. Accordingly, two contrasting outlooks are explored below:

  • Scenario A (Tables 1A to 8A) is based on a continuation of the current policy stance. No additional fiscal measures are assumed in 2004 beyond the budget proposals, but monetary policy is tightened further to limit the extent of accumulation of inflationary pressures. Some additional fiscal action is assumed in later years.

  • Scenario B (Tables 1B to 8b) assumes a more comprehensive policy response. Additional fiscal measures are incorporated in 2004 (2.1 percent of GDP), monetary policy is tightened substantially early in the year, and improvements are effected in governance and data provision. These actions are assumed to lead to a resumption of donor budgetary support and the HIPC Initiative completion point is reached during 2005.

30. Under scenario A, with no resumption of disbursements under the July 2002 PRGF arrangement or of external budgetary support, domestic financing is projected to surge to 9.6 percent of GDP in 2004 and remain high in later years. (Tables 3A and 4A). As a result, high inflation and the depreciation of the dalasi would persist. Foreign exchange reserves would gradually be depleted by capital outflows and high external debt service associated with not reaching the HIPC Initiative completion point. Debt sustainability would be threatened, and external arrears might start to accumulate in later years. This adverse macroeconomic scenario would further delay realization of delayed structural reforms, inhibit financial sector innovation, and discourage domestic savings. Although GDP growth rates might succeed in reaching to about 4 percent, the persisting uncertainty vis-à-vis the macroeconomic environment would exact a long-lasting toll on productive capacity.

Selected Economic Indicators, 2004-2006(Average percentage change, unless otherwise specified)
2004-06

Scenario A

Proj.
2004-06

Scenario B

Proj.
Real GDP4.45.0
Groundnut production (metric tons, thousands)123.6123.6
Consumer price index21.28.2
Exports, f.o.b. (in U.S. dollars)14.314.4
Imports, c.i.f. (in U.S. dollars)8.311.4
Current account, incl. official transfers(in percent of GDP)-2.4-0.3
Broad money (end of period)28.513.6
Private sector credit (end of period)23.512.8
Fiscal balance, excluding grants (in percent of GDP)-7.7-1.4
Source: Fund staff projections.

31. Under scenario B, the beneficial impact of resumed external budgetary support and fiscal measures on domestic financing, interest rates and exchange rate depreciation would lead to lower debt-servicing costs in 2004 and the fiscal deficit (excluding grants) would decline below 3 percent of GDP. Domestic financing requirements would be limited to 2 percent of GDP in 2004 (Tables 3B and 4B). Monetary growth would decelerate, which would help contain the nominal depreciation of the exchange rate. Even with no further fiscal measures, 12-month consumer price inflation could than be brought to below 5 percent by end-2005, allowing a restoration of stable macroeconomic conditions in subsequent years. However, under the enhanced HIPC Initiative, the NPV of public sector external debt would fall only to about 200 percent of exports by end-2008 from 300 percent at end-2003.

32. Even under scenario B, however, the bulk of the population would remain dependent in the medium-term on agriculture, particularly groundnuts. This dependence would limit the speed at which living standards could be expected to improve and probably imply a continuation of real GDP growth at around 4-5 percent. To achieve sustained GDP growth at rates of 6 percent, as envisaged in the PRSP for 2002-05 and, hence, to have a better prospect of progressing toward the Millennium Development Goals, would require an absence of adverse shocks, together with sharply favorable trends in donor and expatriate inflows and foreign direct investment, accompanied by an expansion in regional trade.

V. Policy Discussions

A. Governance and Data Revisions

33. Discussions on the performance of the economy and options for macroeconomic policy were severely constrained by concerns about the integrity of key macroeconomic data and a series of unresolved governance issues. Despite several requests from mid-2003 onward for information about apparent data inconsistencies, the staff and management were informed only at end-October 2003 that data on fiscal transactions and foreign exchange reserves had been substantially misstated for the period 2001–03. The audited financial statements of the central bank for 2001 and 2002 also became available only at this time, and the IMF safeguards assessment mission in November 2003 (Box 3) expressed serious concerns about their quality.

34. In response to the staff’s requests for elaboration and explanation of the data revisions and measures taken to prevent a recurrence of these problems, the authorities explained that:

  • The newly recorded government spending of US$28.5 million from the foreign exchange reserves in 2001 was related to additional spending on infrastructure, social priorities, agriculture, and national security, made in anticipation of unspecified donor support that did not subsequently materialize. The payments made in 2001 had been retrospectively classified as a foreign currency loan by the central bank to the central government, repayable in domestic currency over 15 years from June 2004 at an interest rate of 4 percent.

  • The nondelivery of foreign currency that had been purchased from foreign exchange bureaus reflected “undesirable” arrangements. The outstanding amounts, which had declined to about US$11 million by end-June 2003, had been retrospectively classified as loans to the private sector. No interest charges had been applied, but full repayment would be required by end-October 2003.

  • Spending of at least US$0.8 million had been incurred in arranging a short-term US$28 million loan from a foreign bank in February 2003. No details were provided of the classification of this payment.

  • Oversight of foreign exchange transactions at the CBG would henceforth be the responsibility of a committee chaired by the General Manager. Changes had been made in the senior management of the CBG, including the Governor and the heads of the Foreign, Financial Control and Research Departments.

35. The staff also sought more information, unsuccessfully, about foreign exchange swaps apparently executed by the CBG since June 2002 and about instructions by the government to the CBG to lend US$5 million to a newly created public enterprise in March 2003 for a three-dimensional seismic survey of offshore oil deposits, which had not been anticipated in the PRGF-supported program.

36. The staff noted that, in addition to the serious governance issues implied by the unprogrammed and unrecorded payments, and the inadequate supporting information, the loans to the central government and foreign exchange bureaus appeared to contravene aspects of the Central Bank of The Gambia Act, which places requirements on the time period, size, and interest rates charged for such loans.

37. Management and staff have advised the authorities that a special audit of foreign exchange activity at the central bank since December 2000, conducted under an agreed terms of reference, would be a critical step toward establishing comprehensive information on the unprogrammed government expenditure and necessary revisions to the fiscal accounts and foreign reserve positions. It would provide essential material on the basis of which a resumption of discussions towards a possible Fund-supported program might be initiated.

Box 3.Safeguards Assessment

The safeguards assessment concluded that there were severe vulnerabilities at the CBG in all five areas assessed (the external audit mechanism, the independence of the bank and the legal structure, the financial reporting framework, the internal audit mechanism, and the internal control system). The principal recommendations proposed by the staff included the following:

  • A new external auditor with proven experience and expertise in central banking operations should replace the current auditor.

  • A special audit should be conducted by the new audit firm to ascertain the nature and magnitude of possible misreporting to the Fund.

  • The new audit firm should reaudit the 2001 and 2002 financial statements.

  • The CBG should agree to retain future disbursements under the current or a new PRGFsupported arrangement in the SDR holdings account and to commission quarterly audits of essential quantitative performance criteria under such a program, until adequate controls are in place.

  • International accounting standards (IAS) should be adopted as the permanent accounting framework of the CBG.

  • A review of internal controls should be commissioned and an action plan developed to remedy observed weaknesses.

The authorities agreed with the findings of the report and committed to implement some of the recommendations with regard to adoption of international accounting standards and establishment of an independent audit committee to oversee audit processes and internal controls. However, they made no commitments on any of the critical recommendations, including the first three items listed above.

B. Macroeconomic Policies and Developments

38. In light of staff’s concerns about the need for urgent and resolute action to restore macroeconomic stability, discussions focused on possible fiscal policy measures, the appropriate settings for monetary instruments, and central bank governance.

Fiscal policy

39. The staff suggested urgent consideration of quick-acting revenue measures to reduce a fiscal financing gap for 2004 that was projected at about 9 percentage points of GDP in the absence of external budgetary support.11 In seeking to minimize the adverse distributional effects of any tax increases, staff suggested broadening the base of the sales tax and raising the rate applied to imported goods in line with that of domestic services. Measures might also be considered which impacted particularly on spending and profits in the tourism and reexport sectors, bearing in mind the beneficial impact on these sectors of the exchange rate depreciation. Amongst other possible measures, the staff also advocated stronger enforcement procedures to collect revenue arrears and to redress serious shortcomings in customs procedures and duty exemptions, together with accelerated privatization, and continued tight control on discretionary expenditure through NEFCOM, although the adverse consequences of cash budgeting for spending prioritization would need to be addressed.

40. The authorities expressed reservations about possible new measures aimed at the tourism sector, or measures with a direct effect on the domestic price level. They argued that exporters should retain both windfall rents and larger future margins as an incentive to expand their activities, noting concerns that prices paid in foreign currencies to hotels had been squeezed by foreign tour operators, and that measures with a direct negative impact on living standards could cause an adverse social reaction. However, the authorities confirmed that NEFCOM’s mandate would be continued through 2004 (with more flexible monthly limits) and that measures to collect tax arrears and improve customs performance would be reinforced. 12 The latter step would be facilitated by the accelerated establishment, by mid-2004, of the new Revenue Authority, which would benefit from the use of private sector expertise and well-targeted incentives, and by the creation of a large taxpayer unit, using technical assistance from the IMF and World Bank. In addition, the budget presented to the national assembly on December 19, 2003 proposed that some government charges, licensing, and other fees be increased and additional parcels of land sold (together yielding an additional 0.7 percent of GDP in 2004).

Monetary policy

41. The staff welcomed the further tightening in monetary policy since February 2003, which was viewed as overdue. However, noting the overshooting in the monetary aggregates, the prospective fiscal deficit, the reluctance of the private sector to increase holdings of government bills and the continued expansion in private credit, the current level of interest rates was unlikely to be sufficient to achieve the required restraint in monetary growth.

42. The staff expressed concern regarding the deficiencies that had been exposed in the operating procedures of the central bank, including the lack of separation of backoffice from dealing functions, the absence of clear policies guiding investment operations in foreign exchange, and the ineffectiveness of internal control procedures; these factors may have contributed to the high costs incurred in foreign exchange transactions, the resultant surge in monetary growth, and the nonrecording of payments from foreign exchange reserves on behalf of the government. Attention would need to be focused urgently on the operation of control mechanisms in the central bank, the overdue review of the Central Bank of The Gambia Act, and ways of ensuring that the central bank acts in practice with due independence from the central government, but with full accountability.

43. The staff provided calculations indicating that the high cost of foreign exchange transactions by the CBG may have been responsible for over half of the 34 percent increase in reserve money in the 12 months to December 2002.13 While accepting the thrust of the staff’s calculations, the then Governor of the CBG disputed the magnitudes involved and pointed out that the foreign exchange had been provided to oil importers on explicit government instructions.

44. The staff expressed concern about the implications for the conduct of monetary policy of the dependence of liquidity management on the primary issuance of treasury bills for monetary policy purposes. This exposes the central bank to pressure from the central government in the determination of interest rates and opens the possibility of unwarranted spending from the “sterilization account” into which proceeds from treasury bill issues are placed. The authorities indicated that current arrangements are under review.

C. Structural Reforms

45. The staff noted that The Gambia’s open trading environment and improvements in external competitiveness and preferential market access 14 offered considerable opportunities for diversification of the economy, including into horticulture, fishing, upscale tourism, and extraction of offshore oil and other mineral resources. 15 This would require that infrastructure deficiencies be addressed, particularly in the provision of electricity and water, as well as in the availability of private finance. The rejuvenation of the privatization program, encouragement of the relatively undeveloped microfinance sector, and certain aspects of land reform could play key roles. Improvements in governance and the working of the judicial system would also be crucial so that investors would have confidence that property rights could be respected and enforced and disputes resolved.

46. The staff noted the authorities’ concerns about the impact on The Gambia’s reexport and transit trades of actions by Senegal regarding border closures, restrictive transport regulations, and other apparent nontariff barriers. While the effect has in the past been relatively small because of the informal—and thus highly flexible—basis on which much of the trade has operated, recent reductions in Senegal’s external tariffs, which have brought them close to those applying in The Gambia, have reduced the relative profitability of informal imports through The Gambia. The potential development of the port of Banjul, and associated freight-related businesses, might therefore be usefully facilitated by further progress in recent bilateral discussions over customs-related and other issues. 16

47. Although the groundnut harvest seemed to have recovered well in late 2003, the staff observed that there had been substantial shortages of good-quality groundnut seeds and other inputs in the planting season. This appeared to have reflected insufficient coordination within and between government departments, compounding the impact of ineffective extension services. In the longer run, irrigation could play a vital role in mitigating the vulnerability of groundnuts to weather variations. To encourage further agricultural diversification, steps to promote the development of vegetable gardening, horticulture, and sesame are under consideration, including by strengthening marketing and transportation links with the tourism sector.

D. Data Issues

48. The staff stressed the urgency of implementing the improvements in data production and dissemination recommended by Fund technical assistance missions. Data are often late and of inadequate quality, and methodological problems or outdated weights limit the usefulness of time series on real activity and prices. Data have been perceived in the past as generally adequate for Fund surveillance, but recent substantial revisions, apparent internal inconsistencies, and delayed submissions raise serious questions about data reliability and integrity and whether the provisions of IMF Article VIII Section 5 are being satisfied. These issues will be further addressed during future staff missions. The staff is also concerned that macroeconomic data are now being published only once a year—in the budget speech—and only in partial form.

VI. Staff Appraisal

49. Policy and governance shortcomings in the last two years have taken a heavy toll on the economy and set back the country’s medium-term development strategy. Performance has fallen well short of the targets envisaged in the PRSP’s macroeconomic framework. Poverty has probably increased, GDP growth has been erratic, inflation has risen strongly, and the exchange rate has depreciated very sharply. The completion point under the enhanced HIPC Initiative cannot now be reached until 2005, at the earliest.

50. The fiscal slippages of 2001, which undermined progress made under the 1998– 2001 PRGF arrangement, continued throughout the period, amplified by quasi-fiscal spending, including through central bank losses associated with the conduct of questionable foreign exchange transactions. Measures to restrain the resultant excessive growth in the money supply were late and inadequate.

51. A detailed assessment of economic performance and policies has, however, been hampered by the absence of a complete and verified set of data revisions following the recent acknowledgement by the authorities of serious misstatements in data previously provided for the period 2001–03. Also, the fiscal accounts have neither been closed since 1999 nor audited since 1991. Regular provision of data to the Fund, particularly by the CBG, during the period of the PRGF-supported program was deficient in coverage, quality and timeliness.

52. The resumption of discussions on a possible Fund-supported program will require that these concerns, which involve the integrity of key macroeconomic data, be addressed. A special audit of the foreign exchange transactions of the CBG and reaudits of the 2001 and 2002 financial statements would be major steps in this direction. Considerable external technical assistance is potentially available to improve the quality and production of essential statistics, including under the Technical Cooperation Action Plan, assuming the authorities demonstrate their ability to use such assistance effectively. Systematic publication of economic data should be resumed.

53. Execution of monetary policy has been unsatisfactory throughout much of the period. The conduct of certain foreign currency transactions by the CBG contributed to a sharp acceleration in the growth of reserve money. There was also an unprecedented growth in private sector credit. The delayed policy response—increasing interest rates and raising minimum reserve requirements—was not sufficient to stabilize monetary conditions. Further strong action will be required to rein back excessive monetary growth rates.

54. Improvements are required in the CBG’s internal organization, procedures, and controls to address the severe vulnerabilities identified in the Fund safeguards assessment. Monitoring of monetary data should be enhanced and arrangements for determining the issue of treasury bills should be subject to further consideration. The review of the Central Bank of The Gambia Act to conform to modern central bank law is overdue.

55. More recently, implementation of fiscal policy has improved. Control of outlays on discretionary items by NEFCOM has imposed more rigid spending discipline on departments and has successfully restrained overall noninterest expenditure despite unprogrammed wage increases. Tax revenue administration is also being tightened. Nevertheless, the prospective fiscal deficit for 2004 is too large. To provide the basis for a return to macroeconomic stability, additional fiscal measures will be required, together with actions that will allow the resumption of external budgetary support.

56. No sustained improvement in economic conditions will be possible without a fundamental enhancement in governance. Action is urgently required to prevent further unprogrammed public expenditure and unauthorized action by the CBG, tighten customs procedures and tax exemptions, and scrutinize effectively the actions of public enterprises.

57. Medium-term prospects, in particular for raising the living standards of the poor, will continue to depend largely on the performance of agriculture, including groundnuts. While weather-related shocks are inevitable, a coordinated policy approach to ensure the security of high-quality seed supply and other agricultural inputs, and improved marketing arrangements (as well as irrigation), could lessen substantially the adverse impact. It will also be important for access to finance to be improved for smallholders, as well as, more generally, for small and medium-sized enterprises. The recent sharp decline in the real exchange rate has substantially increased export incentives, improving prospects for the longoverdue diversification of the economy.

58. It is proposed that the next Article IV consultation be held in accordance with the provisions of the decision on consultation cycles approved on July 15, 2002.

APPENDIX I The Gambia: Relations with the Fund

(As of October 31, 2003)

Membership Status: Joined 09/21/1967;

Accepted Article VIII, Sections 2,3 and 4 on 01/21/1993

VII. General Resources Account

SDR Million% Quota
Quota31.10100.0
Fund holdings of currency29.6295.23
Reserve position in Fund1.484.77

VIII. SDR Department

SDR Million% Allocation
Net cumulative allocation5.12100.0
Holdings0.040.78

IX. Outstanding Purchases and Loans

SDR Million% Quota
Enhanced Structural Adjustment Facility (ESAF)/Poverty

Reduction and Growth Facility (PRGF) arrangements
23.5075.56

X. Latest Financial Arrangements

TypeApproval

Date
Expiration DateAmount

Approved

(SDR Million)
Amount

Drawn

(SDR Million)
PRGF07/18/200207/17/200520.222.89
ESAF/PRGF06/29/199812/31/200120.6120.61
ESAF11/23/198811/25/199120.5218.02

Projected Obligations to the Fund (SDR million; based on existing use of resources and present holdings of SDRs):

OverdueForthcoming
04/30/200320032004200520062007
Principal0.71.42.84.1
Charges/interest0.10.20.20.20.2
Total0.10.91.62.94.3

Implementation of HIPC Initiative

Enhanced

framework
Commitment of HIPC assistance
Decision point date1712/11/2000
Assistance committed (end-2000 NPV terms)18
Total assistance (US$ million)66.6
Of which: IMF assistance (US$ million)2.3
SDR equivalent, million1.8
Completion point dateFloating
Disbursement of IMF assistance (SDR million)
Assistance disbursed0.08
Interim assistance0.08
Completion point balance
Additional disbursement of interest income19

Safeguards Assessments

The safeguards assessment of the CBG was completed on February 3, 2004. A summary of the findings and recommendations of the safeguards assessment is outlined in Box 3 of the report.

Exchange rate arrangement

Prior to January 20, 1986, the Gambian currency, the dalasi, was pegged to the pound sterling at a rate of D 5 = £1. On January 20, 1986, an interbank market for foreign exchange was introduced, and since then the exchange rate has been determined by market forces. Effective June 30, 2002, the exchange arrangement of The Gambia was reclassified to managed float with no preannounced path for the exchange rate, from independently floating. At end-December 2003, the midpoint exchange rate in the interbank market was D 30.96 per U.S. dollar.

The Gambia has been part of the exchange rate mechanism of the West African Monetary Zone since April 2002.

Last Article IV Consultation

The 2002 Article IV consultation (www.imf.org) was concluded by the Executive Board on July 18, 2002. Since the conclusion of the first review under the PRGF arrangement was delayed, the next Article IV consultation was due by July 2003, with the usual three months’ grace.

Technical assistance

Recurrent technical assistance projects as follows:

  • The long-term Fund resident macroeconomic advisor’s assignment was extended by another year through April 2004.

  • A Statistics Department (STA) peripatetic statistical advisor assists the Central Statistics Department in updating the consumer price index (CPI) data and improving national accounts statistics.

  • A Fiscal Affairs Department (FAD) peripatetic advisor assists the Department of State for Finance and Economic Affairs with revenue administration reforms, including customs, implementation of a large taxpayer unit, and establishment of a central Revenue Authority.

  • The long-term Fund (FAD) resident budget expert’s assignment was extended until October 2003.

A Finance Department (FIN) safeguards assessment mission visited The Gambia in November and March 2003 to conduct the Stage One on-site assessment.

An STA monetary and banking statistics mission visited The Gambia in May 2003 and successfully developed an integrated database to link automatically the data sheets used for all IMF data submissions.

An FAD technical assistance advisor visited The Gambia in December 2002 to assist the authorities in drafting an organic budget law.

An FAD technical assistance advisor visited The Gambia in October 2002 and April 2003 to review the reform in public expenditure management.

A technical assistance diagnostics mission from the Monetary and Exchange Affairs Department (MAE) visited The Gambia in July 2002, with a focus on financial supervision and the insurance sector. Further assistance was provided in reviewing the Central Bank Act and in drafting the Financial Institutions and Insurance Acts.

A long-term Fund resident macroeconomic advisor arrived in Banjul in April 2002, initially for a one-year assignment.

The long-term Fund resident budget expert assisting the authorities in strengthening budgetary expenditure reporting and control returned to The Gambia in March 2002, initially for another one-year term.

A technical assistance diagnostics mission from MAE visited The Gambia in December 2001, with a focus on strengthening the central bank, including monetary policy formulation and implementation and its foreign exchange operations, as well as the financial system.

A technical assistance mission from STA on monetary and financial statistics visited Banjul in August 2001.

A technical assistance mission from FAD visited Banjul in July 2001 to assess the authorities’ capacity to track poverty-related spending.

An MAE short-term expert visited Banjul in May 2001 to assist the authorities in designing appropriate operational, prudential, and policy safeguards (including assessing the adequacy of existing legislation) for the introduction of foreign currency-denominated accounts.

An MAE short-term expert visited Banjul in April 2001 to assist the authorities in setting up a book-entry system.

A technical assistance mission from STA on balance of payments statistics visited The Gambia in September 2000.

An MAE short-term expert visited Banjul in May 2000 to assist the authorities in setting up a short-term liquidity forecasting system.

A long-term Fund resident budget expert to assist the authorities in strengthening budgetary expenditure reporting and control was in Banjul from August 2000 through August 2001.

An STA mission visited The Gambia in November 1999 to review the statistical collection in order to develop GDDS (General Data Dissemination System) metadata for The Gambia.

An FAD technical assistance mission—aimed at assisting the authorities in expenditure management, budget execution issues, cash and debt management, short-term financial planning, fiscal reporting, and information systems—visited The Gambia in early September 1999.

An MAE short-term expert visited Banjul in November 1999 to assist the authorities in designing appropriate operational, prudential, and policy safeguards (including assessing the adequacy of existing legislation) for the introduction of foreign currency-denominated accounts in the banking system.

A technical assistance mission from STA on balance of payments statistics visited The Gambia in June-July 1999.

A technical assistance mission from STA on the national accounts visited The Gambia in November-December 1998.

An MAE technical assistance mission took place in August 1998 to assist the Central Bank of The Gambia in developing market-based monetary policy instruments and to review its program for strengthening banking supervision.

An MAE technical expert provided assistance to the central bank in foreign exchange operations in December 1996.

A joint FAD/United Nations Development Program (UNDP) technical assistance mission took place in January–February 1996 to help establish a system for monitoring the financial operations of public enterprises.

An MAE technical assistance mission on monetary management and bank supervision visited The Gambia in January- February 1994.

Resident Representative

The provision of a resident representative in The Gambia is being discussed with the authorities.

APPENDIX II The Gambia: Relations with the World Bank Group

(As of November 17, 2003)

The World Bank, through IDA, has assisted the Gambian government in pursuing four main objectives: (i) establishment of a macroeconomic and sectoral environment conducive to economic growth; (ii) rehabilitation and development of infrastructure; (iii) development of human capital through the provision of more efficient social services; and (iv) capacity building in departments that have a key role for economic management. Instruments used in supporting these objectives have been sector-based investment projects. Currently, there are no adjustment credits, although there were two structural adjustment credits in the past, Structural Adjustment Loan (SAL) I and SAL II. In February 2003, the Bank’s Board approved the Country Assistance Strategy (CAS) for The Gambia for fiscal-years (FY) 2003–05, which is currently under implementation.

As of November 17, 2003, IDA had approved 30 credits worth a total amount of about US$271 million, of which about US$60 million remain undisbursed. The current portfolio consists of six projects in health, HIV/AIDS, education, poverty alleviation (infrastructure), capacity building for economic management, and private sector development (trade gateway), totaling US$99 million.

In health, the Participatory Health/Population/Nutrition operation was approved in March 1998. It aims at improving the quality of services related to reproductive health, infant and child health, and nutrition for women of reproductive age, infants, and children. It also aims at improving the quality of management and implementation of a family health program. An HIV/AIDS Rapid Response operation was approved in January 2001. The project aims at (i) containing the HIV/AIDS pandemic; (ii) reducing the spread of the pandemic and mitigating its effects; and (iii) increasing access to prevention services, as well as treatment, care, and support for those infected and affected by HIV/AIDS.

In education, the Third Education Sector Project was approved in September 1998 to support the implementation of the second half of the government’s Education Sector Policy Framework, 1988–2005, and its accompanying investment program.

A Poverty Alleviation and Municipal Development operation was approved in March 1999, with the following objectives: (i) to reduce the backlog in public infrastructure development and improve the maintenance of public assets; (ii) to alleviate poverty through the creation of temporary jobs and improvements in the selection of small and medium-sized investments, which should aim at upgrading the living environment of the poor; and (iii) to strengthen the technical and managerial capacity of local authorities (with an emphasis on their financial situation), local private firms (namely, consultants and contractors), and Gamworks (a procurement agency).

A Capacity Building for Economic Management Project was approved in July 2001 to help (i) build government capacity for economic planning, policy formulation, and execution, and (ii) build the capacity of the judicial and financial systems to facilitate private sector development.

A Trade Gateway Project was approved in February 2002 to help the country establish itself as a globally competitive export and processing center by laying the foundations for expanded private investment, export-oriented production, and employment through the establishment of a free zone and an improved institutional environment.

The next education and health projects, as well as a community-based rural development project, are being prepared, with expected Board approval in FY 2005.

As of April 30, 2002, the IFC’s portfolio had two investments with a balance of about US$0.6 million. The current portfolio includes investments for a medical clinic (Ndebaan) and commercial fishing (Lyefish).

IDA, MIGA, and the IFC will continue to coordinate their respective roles to support development activities in The Gambia. These activities are being enhanced by the IFC’s office in Dakar, which also oversees the IFC’s activities in The Gambia.

Summary of Statement of IDA Credits in The Gambia(As of November 16, 2003; in millions of U.S. dollars)
ProjectsCommitmentDisbursedUndisbursed
24 credits closed171.8172.80.0
Ongoing projects
Gateway16.02.413.6
CB for Economic Mgmt Project15.03.911.1
HIV/AIDS Rapid Response15.02.912.1
Participatory Health/Pop./Nutrition18.011.16.9
Third Education20.017.32.7
Poverty Alleviation and Municipal Dev.15.08.56.5
Subtotal99.046.152.9
Total270.8217.359.9
Source: The World Bank Integrated Controller’s System.
The Gambia—Statement of IFC’s Held and Disbursed Portfolio(As of April 30, 2002; in millions of U.S. dollars)
Committed/HeldDisbursed
------------IFC------------------------IFC------------
FY

Approval
CompanyLoanEquityQuasiParticLoanEquityQuasiPartic
1993AEF Ndebaan (Medical Clinic)0.20.00.00.00.20.00.00.0
1994AEF Lyefish (Commercial Fishing)0.40.00.00.00.40.00.00.0
Total portfolio0.60.00.00.00.60.00.00.0
Pending commitments0.00.00.00.0
APPENDIX III The Gambia: Relations with the African Development Bank

The African Development Bank (AfDB) Group began lending operations in The Gambia in 1974 and has since approved 46 projects (11 of which financed by grants) in the transport, social, public utilities, agricultural, and industrial sectors. As of September 2003, 23 projects had been completed while 18 projects were ongoing, amounting to total commitments of UA 79.7 million (US$103.6 million.) The AfDB is also a major participant in The Gambia’s enhanced Initiative for Heavily Indebted Poor Countries (HIPC Initiative) program, under which it is due to grant debt relief of US$15.7 million in net present value (NPV) terms (23.6 percent of the total debt relief under the program.)

The AfDB’s most recent strategy for The Gambia covers the period 2002–04 and aims at assisting the country in its efforts to meet the Millennium Development Goals (MDGs) by addressing specific institutional and human capacity constraints. The plan is based on The Gambia’s poverty reduction strategy (SPA-II), and the base-case scenario focuses on the following lending and nonlending (grant) interventions.

AfDB Country Strategy 2002–04 for The Gambia—Objectives
ObjectiveInstrument and AmountFocus
Meet the MDGsThird Education Project



(UA 10.0 million) 1/
Increase access to quality education and skills development, particularly for girls and pupils in the poorest areas of the country.
Improve macroeconomic environmentBudgetary support



(UA 4.38 million)
Complement efforts of other donors in consolidating the fragile macroeconomic environment and in meeting The Gambia’s exceptional financing needs during 2002–04.
Implement multisector capacity buildingCapacity-Building Project



(Grant of UA 2.0 million)
Strengthen capacity of key departments and institutions involved in the preparation and implementation of the PRSP/SPA-II. Support to be extended to institutions dealing in economic and political governance, including the Department of Justice, Auditor General’s Department, Public Divestiture Agency, parliament, and the Public Procurement Agency.

1 UA = US$1.3.

If the current policy and institutional framework for The Gambia improves—as proxied by the country’s performance in implementing the IMF’s Poverty Reduction and Growth Facility (PRGF) arrangement, the fulfillment of some required conditions for reaching the completion point of its HIPC Initiative program, and improvement in the implementation of the AfDB Group portfolio—the country will move to a higher-case scenario, and an additional UA 4.38 million will be allocated to the country for financing an agricultural-related project. Conversely, the low-case scenario will apply if there is a deterioration in the current policy and institutional framework, in which case The Gambia will qualify for only UA 1.74 million of its basic allocation. Under this scenario, the already appraised policy-based operation will not be granted. The Gambia’s AfDB strategy for 2005– 07 will be prepared in early 2005.

Implementation of the AfDB’s strategy is achieved through lending and nonlending activities. The extent of the former is dependent on a satisfactory performance under the IMF-supported PRGF, progress made toward reaching the HIPC Initiative completion point, advances in strengthening public expenditure management, and improved performance of the AfDB-sponsored projects themselves. Intervention through the nonlending program aims at strengthening policy dialogue with the government and stakeholders and focuses mainly on studies, funded through grants, to improve governance, mainstream gender, fight HIV/AIDS and communicable diseases, and improve energy supply.

APPENDIX IV The Gambia: Statistical Issues

There are substantial weaknesses in The Gambia’s economic and financial statistics, especially in the national accounts, balance of payments, and external debt statistics. The poor quality of some of the data and complete lack of others have hampered recent analysis of economic developments. Data reporting by the authorities to the Fund has become increasingly irregular over the past year. The Gambia participates in the General Data Dissemination System, and its metadata have been posted on the Fund’s Dissemination Standards Bulletin Board (DSBB) since May 2000.

Real sector

The annual national accounts are compiled using the production approach only. They rely heavily on indicators, in the absence of more comprehensive information. Accordingly, following Statistics Department (STA) assistance on national accounts since 1998, a program has been prepared by the Central Statistics Department (CSD) focusing on (i) strengthening the quality of source statistics by improving and expanding existing surveys, (ii) improving the coverage and methodology of the GDP estimates, including the implementation of the 1993 System of National Accounts (SNA), (iii) rebasing the constant price estimates—currently based on1976/77—to a more recent period, and (iv) developing independent estimates of the expenditure aggregates. STA assistance has been followed up by regular visits by a peripatetic adviser, who is also assisting with prices. Currently, the CSD produces consumer price index (CPI) data based only on the 1976/77 weights for the low-income population of the greater Banjul area. As with the national accounts, improvements in the CPI will require that the CSD—which is particularly weak—is provided with adequate resources in terms of both quantity and quality.

Government finance

The authorities provide the staff with information on central government transactions with a lag of about five-six weeks for revenue data, and with a lag of up to two months for expenditure data based on “flash” reporting. Reporting in the treasury ledger is subject to considerable delay, and central government accounts have neither been audited since 1991 nor closed since 1999. Particular weaknesses also persist in compiling data on an economic basis, and in tracking foreign-financed expenditure, in particular resources provided in the context of the enhanced Initiative for Heavily Indebted Poor Countries (HIPC Initiative) and of the poverty reduction strategy paper (PRSP) implementation. Data on domestic government financing are available on a monthly basis with a lag of three-four weeks. The three-year rolling public investment program has not been updated for some time, and the execution of public investment needs closer monitoring. The authorities have also acknowledged that substantial payments were made in 2001 and 2002 but not recorded in the government accounts.

Monetary data

Data reporting by the Central Bank of The Gambia (CBG) has become increasingly irregular over the past six months. Monthly balance sheet data of the CBG should be available within two weeks after the end of the reference month, and data for the monetary survey should be provided with a lag of about three weeks. The coverage of commercial banks in the monetary survey is comprehensive, although there has been no follow-up on the recommendations of the STA mission on monetary statistics in August 2001 regarding the inclusion of noncommercial bank depository corporations (the Postal Savings Bank and Village Savings and Credit Associations (VISACAs)) in the monetary survey. The commercial banks follow a uniform chart of accounts to report financial data to the CBG. Flash reports of key monetary data are also sent from the banks to the CBG on a weekly basis. Over the past two years, the CBG has introduced several reclassifications of the monetary accounts in an attempt to improve sectorization and coverage, as well as to harmonize the data reported to STA and AFR. Substantial revisions to data on foreign exchange transactions and lending to the central government for the period 2001–03 have recently been transmitted.

Balance of payments

A large proportion of The Gambia’s external transactions, including reexports, are in the informal sector. Inclusion of these activities in the balance of payments statistics is handled by using a crude estimation procedure, including the assumption that reexports are a fixed share of total imports and tourism revenue is a simple function of tourist arrivals. Data on trade, customs collection, and tourist arrivals are available with long lags. Data on private capital flows are poor. Official grant and loan disbursements and repayments are relatively well recorded (with some gaps in project disbursements). Data on the gross and net international reserves of the central bank are available with short lags, but have recently been substantially revised for 2001–03.

The Fund provided technical assistance (TA) on balance of payment statistics in June-July 1999 and September 2000. In reviewing progress, the 2000 mission noted that some advances had been made in the compilation of balance of payments statistics and that several of the 1999 mission’s recommendations had been implemented. Based largely on the mission’s recommendations, the CBG established a balance of payments unit, equipped with computer resources, and initiated surveys of the banking sector, insurance companies, travel and shipping agents, hotels, and foreign embassies. With assistance from the UK Department for International Development, the CBG conducted an enterprise survey to collect data for the International Investment Position. However, several recommendations from TA mission remain outstanding, and little further progress is being made. These recommendations include, among other things, obtaining better estimates of the reexport trade by undertaking a survey of the major importers/exporters, collecting data on foreign-owned construction enterprises involved in major construction activity, and conducting periodic surveys of Gambians traveling abroad.

The government has fully computerized its database on the stock of external public debt and the related debt-service obligations, using the Commonwealth Secretariat’s debt-reporting and management system with technical assistance from The World Bank. Recently, there have been some problems in operating the system due to staff changes in the debt unit of the finance ministry and the data have become unreliable.

Publication

The only regular provision of macroeconomic data to the public is through references in the annual budget speech. The central bank’s annual report and quarterly bulletins, which are intended to convey much of the nation’s macroeconomic data, have not been published since 2000 and the Central Statistics Department’s (CSD) publications have also not been appearing.

There has been no reporting of data for publication in the Government Finance Statistics Yearbook since 1993 or in Balance of Payments Statistics and International Financial Statistics (IFS), other than monetary and CPI data, since 1997.

The Gambia: Statistical Indicators(As of January 31, 2004)
Exchange RatesInternational ReservesReserve/Base MoneyCentral Bank Balance SheetBroad MoneyInterest RatesConsumer Price IndexExports/ImportsCurrent Account BalanceOverall Government BalanceGDPExternal Debt
Date of latest observation31/1/200431/1/200412/200312/200312/200331/1/200412/200312/200212/20029/2003200212/2002
Date received5/02/20045/02/20041/20041/20041/20045/02/20041/20042/20032/200310/20037/20032/2003
Frequency of data 1/WWMMMWMMAMAM
Frequency of reporting 1/WWMMMWMMAMAQ
Source of data 2/AAAAAAAAAAAA
Mode of reporting 3/C, VCCCCCCVVC, VVC, V
Confidentiality 4/CDDDDCCDDDCD
Frequency of publication 1/WAAAAWMAAAAA

A=annually; D=daily; M=monthly; Q=quarterly; and W=weekly.

A=direct reporting by Central Bank of The Gambia, Ministry of Finance, or other official agency.

C=cable or facsimile; and V=staff visits.

C=unrestricted use; and D=restricted until officially published.

The authorities have more recently indicated that unrecorded payments were made in 2002 as well as in 2001. They did not specify whether these were part of the US$28.5 million associated with 2001 or were additional to them.

In November 2002, The Gambia became the third African country to receive a sovereign credit rating (from Fitch Ltd).

Actual inflation was probably much higher than official consumer price index (CPI) figures, which are based on an outdated (1976) spending basket for the low-income urban population in the Banjul area and give a relatively small weight to exchange rate sensitive items, such as fuel.

As indicated in footnote 2, no revisions have been incorporated in fiscal data for 2002 although the authorities have indicated that some spending in that year may not have been recorded.

Details are provided in Selected Issues (forthcoming).

The recovery in agricultural production contributed 5.3 percentage points to the estimated growth in GDP.

Further details of the trade regime and the outlook for exports are in Selected Issues (forthcoming).

The exchange rate regime is formally classified as a “managed float.”

The rescheduling covers the period from July 17, 2002 through July 17, 2005.

The projections included increases in public sector wage rates of 10 percent.

A recent high-profile case, involving Youth Enterprise Development, has attracted considerable media attention.

See paragraph 14.

The Gambia is eligible for preferential access under the European Union’s Everything But Arms initiative and, since January 2003, under the U.S. African Growth and Opportunity Act.

A fuller discussion of measures to encourage diversification of the economy is in Selected Issues (forthcoming).

The recent agreement to process much of Mali’s transit trade through Banjul may increase port activity by 25 percent.

Decision was approved by the Fund on December 15, 2000 through Decision 12365-(00/126). World Bank Board decision was taken on December 14, 2000.

Assistance committed under the enhanced HIPC Initiative is expressed in net present value (NPV) terms at the decision point.

Under the enhanced HIPC Initiative, additional disbursements corresponding to interest on amounts committed but not disbursed during the interim period are made after the completion point.

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