This 2017 Article IV Consultation highlights that The Gambian economy has started to recover, following the sharp growth slowdown in 2016. For 2017, economic growth is estimated at 3.5 percent with a better agricultural season and a strong rebound of tourism and trade. With much-improved fiscal discipline and external financial support, the Dalasi has remained stable since April and gross international reserves increased from 1.6 months of import cover at end-2016 to 2.9 months at end-2017. Over the medium term, The Gambia can achieve a more robust growth path. This will require continued strong policy implementation and effective fiscal reforms, including ensuring debt sustainability.
This Selected Issues paper assesses the macrofinancial linkages in The Gambia. Significant macrofinancial linkages persist in The Gambia, first and foremost between the public sector and the banks. Banks are highly exposed to the government through large holdings of short-term government debt, which is a legacy of the large financing needs of the previous administration. In addition, large claims have built up between government and state-owned enterprises (SOEs) on the one hand, and banks and the corporate sector including SOEs on the other. There has been persistent financial distress within the SOE cluster. Weak SOE performance has also led to arrears both to central government and within the SOE cluster.
This study empirically analyzes the determinants of bond market development in a cross section of 23 sub-Saharan African (SSA) countries between 1990 and 2008. It considers the stage of development and the size of the bond market, as well as the historical, structural, institutional and macroeconomic factors driving bond market development in SSA. The study finds that the savings constraint is a key impediment to domestic bond markets development as well as financial market deepening, as it results in a low level of financial intermediation by the banks. Overall, the results show that a confluence of factors matters for the development of domestic bond markets in SSA; these include structure of the economy, investment profile, law and order, size of the banking sector, the level of economic development, and various macroeconomic factors. Policy implications include increased efforts to strengthen the investment environment and the need for a regional approach to bond market development.
This paper evaluates the demand for broad money (M2) in The Gambia for January 1988-June 2007. There appears to be a long-run relationship for demand for real M2, but the relationship is not stable. Exogenous output shocks, financial innovation, changes in income velocity, and inadequate data quality contribute to the instability. The authorities may need to apply the monetary targeting regime flexibly in the overall objective of preserving price stability. A possible option for The Gambia is to become an inflation targeter lite.
This paper discusses key findings of the Fifth Review under the Poverty Reduction and Growth Facility (PRGF) for The Gambia. The Gambia’s external debt position has worsened recently. The global economic crisis is undermining growth and the external balance. Performance on the PRGF-supported program has been generally satisfactory. All quantitative performance criteria for end-March 2009 were met, and the structural measures scheduled through March were implemented. IMF staff supports the authorities’ request for a waiver for the nonobservance of the performance criterion for making the credit reference bureau operational.
The authorities’ response to policy recommendations in the 2005 Article IV Consultation has been generally positive, and authorities successfully completed an SMP. The appreciation reflects the tightening of monetary policy and increased inflows of remittances, transfers, and FDI. The Gambian economy has stayed relatively competitive. The principal purpose of the SMP was to help the authorities reestablish a policy track record. In particular, over commitments, expenditure overruns, and extrabudgetary expenditures risk further accumulation of domestic arrears and/or increased domestic borrowing.
This paper highlights Ex-Post Assessment of the Longer-Term Program Engagement for The Gambia. Under the Enhanced Structural Adjustment Facility (ESAF)/Poverty Reduction and Growth Facility (PRGF) arrangement of 1998–2001, The Gambia made initial progress toward improved economic growth and stabilization. Real economic growth averaged 6 percent during the four years, and annual inflation averaged 2.6 percent per year. The favorable outturn reflected the performance of the agricultural sector, which grew at an annual average of about 10 percent, attributable to favorable weather and improved services to the groundnuts sector.
The most salient trend in monetary policy over the past two decades has been increasing reliance on money market operations, which reflects the belief that allowing market forces to allocate financial resources brings about increased economic efficiency and growth. However, small economies and countries with undeveloped financial markets have found that a lack of competition in their financial markets complicates their efforts to rely on money market operations, at times forcing them to rely instead on direct instruments or moral suasion. In some larger countries, the shift toward a reliance on money market operations has been gradual and, at times, fraught with difficulty. This report draws on a variety of country experiences to analyze the reasons for such difficulties and proposes a stylized sequencing of reforms that enables countries to tailor the introduction of money market operations to their particular circumstances.
This Report on the Observance of Standards and Codes (ROSC)—Data Module provides an assessment of The Gambia’s macroeconomic statistics against the recommendations of the General Data Dissemination System, complemented by an assessment of data quality based on the IMF’s Data Quality Assessment Framework, July 2003. The assessment reveals that the legal framework for statistical activity in The Gambia is broadly adequate. Further legislative effort is under way to promote greater autonomy or authority of some statistical agencies.