Gambia cuts rate 50 bps, inflation seen trending lower

    Gambia's central bank lowered its policy rate by 50 basis points to 12.0 percent, its fifth rate cut since May 2017, saying it expects inflation to trend lower despite the risks from "the domestic food supply situation in light of the poor harvest, impact of the outbreak of the Coronavirus on food supply chains and the uncertainty surrounding global food prices."
    The Central Bank of The Gambia, which has been in a monetary easing cycle in the last three years, added high public debt also poses a significant risk to the country's economy.
     Gambia's central bank has cut its rate by a total of 1,100 basis points since May 2017, most recently exactly 12 months ago on Feb. 28, 2019, as inflation has decelerated sharply since hitting almost 9 percent in January 2017, pushed up by a fall in the delasi's exchange rate.
     A more stable exchange rate since October 2018 has helped curb inflation though the delasi took a hit last year after travel company Thomas Cook, which accounted for about 40 percent of tourists to the country, collapsed in September 2019.
     Gambia's headline inflation rate eased slightly to 7.4 percent in January from 7.7 percent in November and December but was still higher than 6.08 percent a year ago, the central bank said.
     "The Committee is of the view that headline inflation will continue to trend downwards in the near-term, premised on the continued stability of the exchange rate and the well-anchored inflation expectations," the central bank said.
    While the policy rate was cut 50 basis points, the central bank raised the interest rate on its standing deposit facility by 50 points to 3.0 percent and cut the rate on its standing lending facility to 13.0 percent from 13.50 percent.
    Gambia's economy grew 6.5 percent in 2018, and growth in 2019 and 2020 is projected at 6.0 percent and 6.2 percent, respectively, mainly due to strong growth in the services sector, in particular tourism, trade, financial services and insurance, and telecommunication.
     Earlier this month staff from the International Monetary Fund (IMF) sealed an agreement with Gambia that underpins the country's request for a 3-year, US$48 million extended credit facility that will support a restructuring of its external debt.
     IMF estimated Gambia's economy grew 6 percent in 2019, despite the temporary drop in tourist arrivals in November following the bankruptcy of Thomas Cook and much lower agricultural output due to erratic rainfall.
    "The strong performance reflected The Gambia's gaining competitiveness as a tourist destination, strong private sector consumption and investment supported by foreign exchange inflows, greater availability of credit and much-improved reliability of electricity and water supply," IMF said.
    It added sound macroeconomic policies will underpin the prospects for sustained economic growth, a strengthening of foreign exchange buffers and inflation moderating from an average of 7.1 percent in 20-19 to the central bank's target of 5 percent.
     IMF also said Gambia's fiscal deficit had declined to around 81 percent of gross domestic product in 2019 from nearly 87 percent in 2018.
    Gambia's dalasi has firmed this year, although it has eased in the last week as most other currencies, and was trading at 51.0 to the U.S. dollar today, up 0.6 percent this year.

Gambia holds rate, Thomas Cook collapse presents risk

     Gambia's central bank left its policy rate steady at 12.50 percent as inflation is has started to decelerate and is expected to continue to trend downwards as long as the exchange rate of the delasi remains stable.
     The Central Bank of The Gambia (CBG) added an improving current account along with a comfortable level of international reserves continues to support a stable delasi while the fundamentals of the banking sector remain strong, underpinned by adequate capital, high liquidity, a low level of non-performing loans, robust credit expansion and profitability.
      But among the major risks to the economy are shocks to agriculture and food supply from weather-related factors, the impact on tourism from the collapse of Thomas Cook, and high public debt, CBG said.
      Gambia's inflation rate decelerated to 7.5 percent in October from 7.6 percent in September but is still able 6.6 percent in October 2018.
      Gambia's economy grew 6.5 percent in 2018 from 4.8 percent in 2017, supported by tourism, trade, financial services, insurance, transport and telecommunications, and has been forecast to growth 5.4 percent this year.
     "Growth is projected to remain robust in 2019," CBG said, cautioning the collapse of Thomas Cook in September may affect tourism along with the impact of delayed rains on agricultural output.
     Tourism accounts for some 30 percent of economic output in the former British colony of Gambia, with the Thomas Cook Group accounting for about 40 percent of annual visitors.
     Some 57,000 British customers had already book hotels or seats on charter flights for Gambia for the season that typically starts in October, around one-quarter of all tourists to Gambia in 2018.
     The delasi has depreciated since July, with the fall accelerating in October although it has bounced back in recent days and the CBG said the exchange rate "remains broadly stable."
     The delasi was trading at 51.13 to the U.S. dollar today, down 3.5 percent this year.

Gambia maintains key rate but raises deposit rate 50 bps

    Gambia's central bank kept its monetary policy rate (MPR) at 12.50 percent and the rate on its standing lending facility at 13.50 percent but raised the interest rate on the standing deposit facility by 50 basis points to 2.50 percent, pointing to "increased optimism on the economic growth prospects" and a continued decline in inflation.
     The Central Bank of The Gambia (CBG), which cut its policy rate by 100 basis points in February on declining inflation, also said the current account deficit had narrowed in the first half of the year, supporting stability of the dalasi's exchange rate, while the fiscal deficit had also narrowed.
    Gambia's headline inflation rate has begun to decelerate and stabilize after a jump in May following a sharp increase in postal charges in April, the effect of high demand during Ramadan in May and a recent rise in fuel prices, CBG said.
     The headline inflation rate declined to 7.32 percent in July from 7.38 percent in June and 7.49 percent in May, CBG said, adding food inflation, which is the main driver of headline inflation, was unchanged in July and July around 6.7 percent while non-food inflation had decelerated.
     CBG's monetary policy committee said price pressures had started to ease and underlying inflation remained broadly subdued and this was expected to continue in the medium term, premised on a continued stable exchange rate, well-anchored inflation expectations and moderate global food prices.
    "Major risks to the inflation outlook, however continue to be the domestic food supply situation in the light of delayed rainfall experienced this year," CBG said in a statement from Aug. 29.
     Gambia's economy rebounded strongly in 2018, with gross domestic product growing 6.5 percent after 4.8 percent in 2017 according to the country's statistics bureau, and the central bank said its composite index of economic activity suggests economic activity remained robust in the first half of this year and "points to stronger growth in the second half of the year."
     An increased inflow of private remittances, higher tourism, official inflows from development partners has kept the foreign exchange market operating smoothly and kept the exchange rate of the dalasi stable, with the volume of transactions in the first seven months of the year up 14 percent.
     The dalasi was trading at 50.50 to the U.S. dollar today, down 0.8 percent since last Monday, and down 2.3 percent since the start of this year.

Gambia maintains rate as inflation risks subside

     Gambia's central bank left its monetary policy rate steady at 12.50 percent, saying risks to domestic inflation had subsided since February while inflation expectations are well anchored, and the exchange rate of the dalasi is projected to remain broadly stable, supported by market confidence and improved supply.
     The Central Bank of The Gambia (CBG) cut its rate by 100 basis points in February due to declining inflation and to continue its support of private sector growth. It also increased the reserve maintenance period to 2 weeks to give commercial banks more flexibility in liquidity management.
     Since May 2017 the central bank has lowered its key rate by 750 basis points as inflation has steadily decelerated since almost 9 percent in January that year.
     In April Gambia's headline inflation rate rose to 6.9 percent from 6.1 percent in March due to a one-off increase in postal charges as food inflation decelerated to 6.3 percent, reflecting a stable exchange rate and moderate global food prices.
     The central bank's core measure of inflation, which strips out utility, energy and volatile food, eased to 6.0 percent in April from 6.6 percent in April 2018.
     CBG targets inflation of 5.0 percent.
      Gambia's economy rebounded strongly last year, with growth estimated of 6.5 percent compared with 4.8 percent in 2017, driven by the services sector, including tourism and trade, financial services and insurance, transport and telecommunications. Agriculture also recovered to slow 0.9 percent after shrinking 4.4 percent in 2017.
      Although delayed rain fall, flooding and long dry spells continue to affect crop yields, CBG said early data show that growth will remain robust in 2019, helped by support from its development partners, higher remittances, tourism and foreign direct investment.
      Gambia's foreign exchange market is functioning smoothly, the bank said, saying the volume of transactions had risen to US$638.5 million in the first quarter, up 25.7 percent from fourth quarter 2018.
      The dalasi's exchange rate is also broadly stable, rising against pound sterling, euro and the CFA from April 2018 to April 2019, but against the U.S. dollar is was down by 4.8 percent.

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Gambia maintains rate on steady inflation, robust growth

     Gambia's central bank left its monetary policy rate steady at 13.50 percent, saying inflation is expected to decelerate further toward the target of 5.0 percent while economic growth is expected to remain robust in 2018 with the outlook positive on the back of continued implementation of sound macroeconomic policies and structural reforms.
     The Central Bank of The Gambia (CBG), which has kept its rate steady since cutting it by 150 basis points in May, added the overnight deposit rate was maintained at 2.0 percent.
     In September the CBG introduced an interest rate corridor, setting the deposit rate at 2.0 percent and the lending rate 1 percentage point above the monetary policy rate.
     "Economic recovery in the Gambia continues to gather strength evidence by the rebound in tourism, construction activities, finance and insurance, trade, and telecommunications," the central bank said, adding the economy was estimated to have grown 4.6 percent in 2017, up from 0.4 percent in 2016.
     Gambia's inflation rate eased to 6.5 percent in October from 7.4 percent a year ago and CBG said its outlook for declining inflation was based on the premises that the exchange rate of the dalasi remains broadly stable, pressures from global food prices remain mild, inflation expectations remain well anchored and monetary and fiscal policies remain prudent and well coordinated.
     Risks to the outlook stem from rising global inflation, which may put upward pressure on imports prices, higher interest rates in advanced economies and a stronger U.S. dollar, and higher domestic energy prices that may push up inflation expectations.
      The exchange rate of the dalasi has remained stable, CBG said, noting it had depreciated against the U.S. dollar by 3.7 percent from December 2017 to October. Today it was trading at 49.7 to the dollar.
     But in real effective terms, the dalasi has appreciated, the central bank said, adding activity in the foreign exchange market had picked up rapidly with transactions in the domestic foreign exchange market up by US$1.9 billion in the year to end-October from $1.2 billion in the year-ago period.

Gambia maintains rate as inflation seen heading to target

      Gambia's central bank left its policy rate steady at 13.50 percent, saying it expects inflation to decelerate further towards its target of 5.0 percent as inflation expectations are well anchored and the exchange rate of the dalasi is expected to remain stable, supported by prudent fiscal and monetary policies.
      The Central Bank of The Gambia (CBG), which cut its rate by 150 basis points in May, added economic growth had gained momentum on the back of sound macroeconomic policies, structural reform, strong external support and improved business confidence.
     The central bank's rate cut in May was its first rate cut since June 2017. Since May 2017, when the CBG began an easing cycle, the rate has been cut by a total of 950 basis points.
      The CBG also said its monetary policy committee had decided to introduce an interest rate corridor as of Sept.3, with the rate on overnight deposits set at 2 percent and the lending rate set 1 percent above the monetary policy rate.
     Gambia's inflation rate declined to 6.46 percent in June from 6.53 percent in May and the CBG said it expects the continued decline in global food prices to dampen the effects of higher oil prices on domestic inflation.
      Gambia's statistics office rebased the Gross Domestic Product to 2013 from 2004, estimating growth of 4.6 percent in 2017 compared with 0.4 percent in 2016.
      Higher growth was largely due to a rebound in tourism and trade, financial services along with growth in construction, transport and communications while agricultural production shrank by 8.1 percent due to erratic rainfall, CBG said.
      Economic growth this year is expected to strengthen further with GDP growth projected at 5.4 percent on the back of continued sound macroeconomic policies, structural reforms, and strong performance of the services sector and construction.
      CBG also said the stock of domestic debt remained stable at 29.0 billion dalasi from the same period last year.
      Supported by the International Monetary Fund (IMF), Gambia embarked on economic reforms in 2017, with the IMF in June this year saying implementation of the reform program was largely satisfactory, but public debt of nearly 130 percent of GDP was unsustainable.
      After falling in 2017, the exchange rate of the dalasi has been stable this year, depreciating by 1.1 percent against the U.S. dollar from December 2017 to August and 0.1 percent against the euro, the central bank said.
      Transactions in the domestic foreign exchange market totaled US$19 billion in the year to end-July, up from $1.2 billion in the same period last year, "reflecting improved market conditions and confidence," CBG said.

Gambia cuts rate 150 bps to boost credit growth

      Gambia's central. bank lowered its policy rate by 150 basis points to 13.50 percent to "reinforce private sector credit growth particularly to small and medium size enterprises."
       It is the first rate cut by the Central Bank of The Gambia (CBG) since June 2017 and the policy rate has now been cut by a total of 950 basis points since it began an easing cycle in May 2017/
       The CBG also said it was introducing an overnight interest corridor as of Aug. 30 to help limit the volatility of short-term interest rates around its policy rate.
       "Lower volatility increases the effectiveness of the monetary policy rate and strengthens the interest channel of the monetary transmission mechanism," the central bank said, adding it would introduce standing lending and deposit facilities as part of it corridor framework.
       Gambia's inflation rate eased to 6.6 percent in April from 8.7 percent in April 2017 but was up from 6.7 percent in March 2018 due to a slight rise in non-food inflation, the central bank said.
       But the CBG expects this increase in inflation to be temporary and the outlook is for inflation to decelerate further toward its 5 percent target based on continued stability of the exchange rate and prudent monetary and fiscal policies.
       Risks to this outlook include higher global commodity prices, particularly energy and food, while  Gambia's debt to Gross Domestic Product ratio of 130 percent "poses a major risk to the economy."
       Gambia's economic recovery is gathering strength, the central bank said, adding real GDP is projected to grow by 5.4 percent this year, up from 3.5 percent in 2017, predicated on a rebound in agriculture and continued improvement in trade, tourism and construction.
       The exchange rate of Gambia's dalasi has remained stable and rose by 1.2 percent against the U.S. dollar from December last year to May 2018, the CBG said.