Central Bank of The Gambia Quarter 1 January March Table of Contents OVERVIEW PART I

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1 Table of Contents OVERVIEW ii PART I DEVELOPMENT IN THE DOMESTIC ECONOMY 1 1. Monetary Developments Monetary Policy Stance Broad Money Growth Factors Affecting Money Supply Net Foreign Assets (NFA) Net Domestic Assets (NDA) Base Money Growth Distribution of commercial bank credit Interest Rates INFLATION FOREIGN EXCHANGE DEVELOPMENTS Volume of Transactions Exchange rate movements GOVERNMENT FISCAL OPERATIONS Public Debt Developments in the Tourism Industry EXTERNAL TRADE Volume of Trade Direction of Trade PART II DEVELOPMENTS IN THE INTERNATIONAL ECONOMY 21 PART III STATISTICAL TABLES 24 i

2 OVERVIEW Monetary policy stance of the Central Bank of The Gambia was largely restrictive in the first quarter of 2016 to rein in price pressures. The monetary policy rate was left elevated at 23 percent to anchor inflationary expectations. Similarly, other key interest rates remained somewhat elevated, including yields on government securities and commercial banks lending rates. Growth in monetary aggregates continued to moderate, reflecting tight monetary policy stance and the deterioration in external sector. Annual money supply (M2) contracted by 2.9 percent in March 2016 after increasing by 1.2 percent a year earlier. The contraction was due in the main to the contraction in the net foreign assets of the banking system, especially that of the Central Bank. On the other hand, net domestic assets of the banking system continued to be the major source of liquidity, thanks to increased government borrowing from the banking system. This has resulted to growing public domestic debt and rising interest cost on the budget. Further, continued monetization of fiscal deficit was a major source of price pressures in the first quarter of The crowding out effect of increased government borrowing and the resultant high interest rates have contributed largely to the decline in commercial banks loans and advances to the private sector. Deposit money banks loans and advances to major sectors of the economy at end March 2016 amounted to D 4.7 billion compared to D5.4 billion in the same period in 2015, representing a contraction of 12.8 percent. Tourism has recovered somewhat after the Ebola outbreak in the sub-region. The Gambia did not record a single case of the disease but the news from the sub-region scared visitors leading to booking and flight cancellations. As a result, tourism and related activities plummeted. The number of air-chartered arrivals during the first quarter of 2016 increased by 16.0 percent but still below the pre-ebola crisis level. Total exports registered a declined in the first three months of 2016 compared to the preceding quarter. Although domestic exports increased, both re-exports and imports ii

3 fell during the review period. The net result was an improved trade balance relative to the preceding quarter. At the external front, developments in the global economy in the first quarter of 2016 were characterized by decline in energy and commodity prices. Economic activity in the quarter was estimated to be stronger compared to the corresponding period a year earlier. However, growth was expected to slow down somewhat in the second quarter before recovering in the third. Meanwhile, global inflation remained subdued reflecting declining energy and commodity prices as well as subdued economic activity. However, inflation rate remained high in sub-saharan Africa region as most countries currencies continued to be under pressure. iii

4 PART I DEVELOPMENT IN THE DOMESTIC ECONOMY 1. Monetary Developments 1.1. Monetary Policy Stance The thrust of monetary policy in 2016 is to maintain low and stable inflation. To achieve this, the Bank implements a monetary targeting framework with reserve money the operating target and broad money, the intermediate target. The Bank relies mainly on open market operations in the conduct of monetary policy. Additionally, the rediscount rate, the policy rate of the Bank, is set by the Monetary Policy Committee (MPC) to signal the direction of monetary policy. In its sitting in January, 2016, the Committee decided to leave the policy rate unchanged at 23 percent. Other complementary tools include foreign exchange market intervention and the required reserve ratio on commercial bank deposits Broad Money Growth From December to March 2016, broad money (M2) which comprises of narrow money (M1) and quasi money grew by 2.9 percent compared to 1.2 percent in the corresponding period a year earlier. The increase in the growth of broad money was mainly on account of the increase in the net domestic assets of the banking system. Of the components of money supply, narrow money (M1), which comprises of currency outside banks and demand deposits, rose by 7.8 percent in the first quarter of 2016 compared to 1.4 percent in the corresponding period a year earlier. On the other hand, quasi money which consists of time and savings deposits, contracted by 2.4 percent after growing by 1.0 percent in the first quarter of Chart 1 shows the quarterly growth in broad money and components from 2014 to It shows a sharp contraction in the savings deposits which led to the contraction in quasi money in the first quarter of

5 Chart 1: Growth Rates of Broad Money and Components (Quarterly Percent Change) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1-5.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Broad Money Narrow Money Quasi Money Time Savings Source: CBG 1.3. Factors Affecting Money Supply Net Foreign Assets (NFA) The net foreign assets of the banking system contracted to D0.6 million or by 72.5 percent in the first quarter of 2016 compared to a positive growth of 0.6 percent in the corresponding period a year earlier (see Table 1). Table 1: Monetary Survey in D' million Key Variables Yly % Chg Qtly % Chg Q Q Q Net Foreign Assets Central Bank Foreign Assets 4, , , Foreign Liabilities -3, , , Deposit Money Banks Net Domestic Assets Domestic Credit Net Claims of Gov t Public Sector Private Sector Other Financial Institutions Other Items, Net o/w Revaluation Acc Money Supply Narrow Money Quasi Money Source: CBG 2

6 The contraction of the NFA was mainly on account of a significant decline in the NFA of both the Central Bank and commercial banks. NFA of the Central Bank contracted by percent to stand at negative D0.7 billion, a higher contraction than 30.9 percent in the first quarter of Similarly, NFA of deposit money banks decreased by 44.9 percent to D1.3 billion reflecting the contraction in their foreign assets by 23.0 percent Net Domestic Assets (NDA) From December to March 2016, the net domestic assets (NDA) of the banking system rose to D20.2 billion or 12.1 percent relative to 1.4 percent in the corresponding quarter in Domestic credit rose to D22.6 billion or by 2.9 percent in the first quarter of 2016, higher than 1.4 percent a year earlier. Claims on government net which constitutes 75.1 percent of domestic credit, rose to D17.0 billion or 1.8 percent, lower than 3.9 percent in the first quarter of The banking system s claims on private sector recovered from a contraction of 5.6 percent in the first quarter of 2015 to increase by 7.7 percent to D17.0 billion during the quarter under review. Other items net for the review quarter contracted by 38.8 percent. Chart 2: Broad Money, NFA & NDA in (D' million) Source: CBG Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q NFA NDA BM 1.4. Base Money Growth Base money exhibits seasonal pattern growing at robust pace in the first and fourth quarters where economic activities are vibrant whilst growing at moderate pace during the lean periods of second and third quarters (see Chart 3). In the first quarter of 2016, reserve money grew by 7.2 percent, higher than 5.5 percent in the same period in Growth in reserve money during the review period was due solely to the 15.2 percent increase in the NDA of the Central Bank to D7.8 billion. Central Bank s claims on 3

7 government stood at D7.7 billion in March 2016 from D6.7 billion in December 2015, representing a quarterly growth of 14.0 percent. NFA of the Bank, on the other hand, contracted by percent to negative D0.7 billion during the review period, reflecting deterioration in the external sector. Of the components of reserve money, currency in circulation grew by 15.4 percent whilst reserves of commercial banks contracted by 5.4 percent during the review period. Chart 3: Quarterly Reserve Money Growth (percent) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Source: CBG Table 2: Central Bank Survey in D' millions Key Variables Yly % Chg Qtly % Chg Q Q Q Net Foreign Assets Foreign Assets 4, , , Foreign Liabilities -3, , , Net Domestic Assets Domestic Credit Net Claims of Gov t Gross Claims Gov t Deposits Private Sector Other Financial Institutions Other Items, Net o/w Revaluation Acc Base Money Currency in Circulation Reserves of DMBs Source: CBG 4

8 1.5. Distribution of commercial bank credit Deposit money banks loans and advances to major sectors of the economy at end March 2016 amounted to D 4.7 billion compared to D5.4 billion in the same period in 2015, representing a contraction of 12.8 percent. However, compared to end December 2015, total outstanding loans and advances rose by 4.9 percent. Credit to private sector has been hampered by the high borrowing cost, tightening credit standards by commercial banks and the crowding out effect of government borrowing. Table 3: Commercial banks' credit to major sectors of the economy Sectors Mar. Jun. Sept. Dec. Mar. Jun. Sept. Dec. Mar. Quarterly percent change Agriculture Fishing Construction Transportat Distributive 2, , , , , , , , , Tourism Personal Lo Other 2, , , , , , , , , Total 6, , , , , , , , , Source: CBG Chart 4: Composition of loans and Advances Personal Loan 10% Fishing 0% Q Others 21% Agricultur e 2% Manufact uring 3% Constructi on 9% Transport ation 13% Financial Institutio Personal ns Loan 3% 8% Q Agricultu re Fishing 2% 0% Others 22% Manufac turing 4% Construc tion 8% Transpor tation 7% Financial Institutio ns 3% Tourism 2% Distributi ve Trade 37% Tourism 2% Distributi ve Trade 44% Source: CBG 5

9 Chart4 shows that distributive trade has been the main recipient of commercial banks loans and advances. Loans to the sector, which accounted for 36.8 percent of the total industry loans and advances, declined by 2.2 percent in the first quarter of 2016 compared to 44.0 percent in the corresponding quarter a year earlier. Despite being the second largest contributor to GDP growth, agriculture sector has been among the least recipients of commercial bank loans and advances (see Chart 4). This is as a result of mainly high cost of finance and the seasonal nature of activity in the sector. Loans and advances to the agriculture sector constituted only 1.8 percent of total loans and advances. Quarter-on-quarter, credit extended to the sector contracted by 49.1 percent in the first quarter of 2016 compared to 98.6 percent in the first quarter of Similarly, tourism sector attracted only 2.0 percent of total credit despite being an important contributor to GDP, a major foreign exchange earner and employs significant number of Gambia s labour force. Loans to the sector contracted by 0.2 percent compared to 17.9 percent in the first quarter of Credit to construction and transportation sectors rose by 11.4 percent and 29.3 percent compared to negative 49.2 percent and 10.8 percent respectively Interest Rates The Central Bank of The Gambia uses the rediscount rate as the key policy rate to signal the direction of monetary policy. The rate is decided at the quarterly meetings of the Monetary Policy Committee (MPC). As at end-march 2016, the policy rate stood at 23 percent, which reflects the tight monetary policy stance of the Bank. Similarly, other key interest rates including yields on government treasury securities, lending rates and inter-bank lending rates remained elevated. Average yield on 91-day, 182-day and 364-day treasury bills increased from percent, percent and percent at end-december, 2015 to percent, percent and percent at end-march,

10 Chart 5: Average lending and deposit rates Q Q Q Q Q Lending Rates Deposit Rates Savings rates Source: CBG Deposit money banks minimum lending rates stood at 15 percent whilst the maximum rate reached 30 percent per annum. Meanwhile, interest rates on short-term savings and deposits remained unchanged from December 2015, ranging from percent and percent respectively. In contrast interest rates on time deposits edged up slightly with the exception of the three months time deposits which decreased by 0.3 percentage points. The six, nine and twelve months time deposits rose to percent, percent and percent in March 2016 from percent, percent and percent respectively from December Chart 6: Term Deposits Q1 Q2 Q3 Q4 Q months 6 months 12 months Source: CBG 7

11 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar INFLATION Inflationary pressures persisted in the first quarter of 2016 at the back of expansionary fiscal policy. According to the Gambia Bureau of Statistics (GBoS) headline inflation stood at 7.01 percent in March 2016, compared to 6.5 percent a year earlier. Average inflation rate (12-month moving average) was 6.81 percent compared to 6.3 percent a year earlier. Chart 7: Headline Inflation Source: GBoS and CBG Staff Estimates However, food inflation, which is the main driver of headline inflation, declined to 8.2 percent from 8.4 percent in the corresponding period of last year, attributed largely to the significant decline in consumer price inflation of meat to 13.5 percent from 22.3 percent in March In contrast Consumer price inflation of bread cereals and fish increased to 9.1 percent and 10.4 percent from 4.3 percent and 7.3 percent respectively a year ago. Chart 8 shows a declining trend in consumer meat inflation while bread cereals, fish and vegetables are trending upwards. 8

12 Chart 8: Components of Food Consumer Price Inflation Source: GBoS and CBG Staff Estimates Non-food inflation increased to 5.3 percent from 4.2 percent in March 2015, mainly as a result of the increase in consumer price inflation of Clothing, garments and tailoring services and Hotels, cafes and restaurants to 7.2 percent and 7.0 percent from 4.7 percent and 6.7 percent respectively the same period last year. However, Non-food products and services such as Transport declined to 0.1 percent compared to 7.5 percent a year ago while housing, water, electricity, gas and other fuels remained unchanged at 4.5 percent. 9

13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Chart 9: Components of Non-Food Consumer Price Inflation Source: GBoS and CBG Staff Estimates The Central Bank s core measure of inflation which excludes price effects of energy, utility and volatile food items, increased to 7.06 percent in March 2016 compared 6.77 percent in March The increase in underlying inflation reaffirms the persistence of price pressures. Chart 10: Core-2 Measure of Inflation Source: GBoS and CBG Staff Estimates 10

14 3. FOREIGN EXCHANGE DEVELOPMENTS 3.1. Volume of Transactions Volume of transactions in the interbank market measured by aggregate sales and purchases of foreign currencies increased markedly to D15.6 billion (USD372.2 million) or by percent in the first quarter of 2016 relative to the fourth quarter of Compared to the corresponding quarter a year ago, trading volumes in the foreign exchange market declined by 7.0 percent. During the review period, purchases of foreign currency (reflecting supply) in the interbank market for foreign exchange increased to D7.83 billion (USD million), or 63.0 percent relative to the previous quarter. Compared to the corresponding quarter a year ago purchases of foreign currency declined by 7.0 percent. Sales, reflecting demand of foreign currency increased by 64.0 percent to D7.81 billion (USD million). Sales however, decreased by 9.0 percent when compared to the same period a year ago. Table 4: Volumes of Transaction (billions GMD) Q1 Q2 Q3 Q4 Q1 Purchases Sales Total Quarterly Growth Rates 8% -41% -46% 6% 174% Source: CBG 11

15 Chart 11: Quarterly Volumes of Transactions (billions GMD) Source: CBG Q1 Q2 Q3 Q4 Q Sales Purchases Chart 12: Quarterly Percentage Growth Rates of Transaction Volumes 200% 150% 100% 50% 0% -50% Q1 Q2 Q3 Q4 Q % Source: CBG 12

16 Chart 13: Market share of key currencies Q1, 2016 (percent) 0% Euro 26% GBP 16% SEK 1% CFA 1% USD 56% Source: CBG 3.2. Exchange rate movements As at end March, 2016 the dalasi depreciated against the US dollar, Pound sterling, CFA franc and Euro by 6.0 percent, 2.0 percent, 4.0 percent and 7 percent respectively, compared to the preceding quarter. Relative to the same period last year, the dalasi appreciated against Great Britain Pound, US dollar, Euro and CFA franc by 23.0 percent, 18.0 percent, 20.0 percent and 17.0 percent respectively. Table 5: End of Period Mid-Market Rates for Major Traded currencies Currency/Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 GBP USD CHF SEK(100) CFA(5,000) Euro Source: CBG 13

17 4. GOVERNMENT FISCAL OPERATIONS Fiscal policy continued to be expansionary characterized by larger budget deficits which are financed largely by domestic borrowing. Although revenue collection has been improving, curtailing expenditure remains a challenge. However, the fiscal deficit improved somewhat in the first quarter of 2016 relative to the same period last year. In the first quarter of 2016, government fiscal operations resulted to an overall deficit including grants of D million (0.7 percent of GDP) as against the deficit of D (1.0 percent of GDP) recorded the same period in Fiscal deficit (excluding grants) was D million (1.0 percent of GDP) compared to D million (1.5 percent of GDP) the same period last year. Chart 14: Government s Fiscal Performance Source: MoFEA Total revenue and grants amounted to D2.2 billion (5.2 percent of GDP), slightly higher than the D2.1 billion (5.0 percent of GDP) reported a year ago. Tax revenue grew by 9.0 percent to stand at D1.9 billion in quarter one, 2016 from D1.8 billion reported in the same period of Non-tax revenue and grants fell by 24.0 percent and 43.0 percent to stand at D million and D106.6 million in March 2016 respectively. 14

18 Total expenditure on the other hand stood at D2.5 billion (6.0 percent of GDP), representing a decline of 3.0 percent when compared to the same period in Recurrent expenditure which accounted for 84.0 percent of total government expenditure grew by 12.0 percent to D2.1 billion in the three months to end-march Other charges comprising of spending on goods & services and transfers accounted for 47.0 percent of total recurrent expenditure and grew to D993.7 million or by 36.0 percent from a year ago. Capital expenditure on the other hand significantly declined to D million in March 2016 compared to the outturn of D million recorded in March, Public Debt The Gambia s public debt has grown to unsustainable level, reflecting the expansionary fiscal stance. Total domestic debt stock went up by 20.0 percent in the first quarter of 2016 to D23.2 billion (55.0 percent of GDP) from D19.3 billion in the corresponding period in The stock of external debt, on the other hand, increased by 6.98 percent to US$ million (46.0 percent of GDP) at the end of the first quarter of 2016 from US$ million (50 percent of GDP) in the same period a year ago. This resulted in a total public debt stock of D42.5 billion (100 percent of GDP) at the end of the first quarter of 2016 from D39.4 billion (99 percent of GDP) in the corresponding period in

19 Chart 15: Public debt and its components (D millions) Source: MoFEA and CBG Domestic interest payments, accounting for 28.0 percent of total tax revenue increased by 12.0 percent during the review period. External interest payments on the other hand declined from D162.2 million in 2015 to D45.2 million in Table 6: Revenue and Grants Receipts RECEIPTS 2015 Q Q Q1 Y-o-Y % (In Millions of Dalasis) Total Revenue & Grants 2, , , Percent of GDP Domestic Revenue 2, , , Percent of GDP Tax Revenue 1, , , Percent of GDP Taxes on Income & wealth Personal Corporate Indirect Tax 1, , , Percent of GDP Domestic Tax on gds. & serv Value Added Tax (VAT) Tax on Int'l. Trade Non-tax Revenue Percent of GDP Grants Percent of GDP Nominal GDP 39, , , Source: MoFEA and CBG Staff Estimates 16

20 Table 7: Expenditure and Net Lending PAYMENTS in D'millions 2015 Q Q Q1 Y-o-Y% Expenditure & NL 2, , , Percent of GDP Current Expenditure 1, , , Percent of GDP wages & salaries Other Charges Interest Payments External Domestic Capital Expenditure Percent of GDP Externally Financed Loans Grants GLF Capital Net Lending Nominal GDP 39, , , Source: MoFEA and CBG Staff Estimates 5. Developments in the Tourism Industry Tourism industry continues to be a major source of foreign exchange and key sector for employment in The Gambia. In 2014 and 2015, tourism in The Gambia was significantly affected by the Ebola outbreak in the West African sub-region, though no single case was report in the country. In the first quarter of 2016, the number of air-chartered tourist arrivals stood at 59,501 representing 16.0 percent increase over the previous quarter. In comparison to the corresponding quarter a year ago, total arrivals increased markedly by 49.3 percent. However, the number of air-chartered arrivals during the first quarter of 2016 was below the pre-ebola crisis level. Although Gambia did not register a single case of Ebola, news from the sub-region scared visitors leading to booking and flight cancellations. Chart 16 shows that arrival numbers has since been recovering but at a slower pace than expected. 17

21 Chart 16: Air- Chartered Tourist Arrivals 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Overall Total 58,2 30,7 15,1 53, , 22, , Growth rate 68%-47%-51%252%15%-54%-19%158%20%-58%-33%85% 10%-45% -3%140%16% 300% 250% 200% 150% 100% 50% 0% -50% -100% Source: GT Board and CBG Staff Estimates In terms of nationality of visitors, Great Britain remained the main source market for Gambia, accounting for 30.9 percent of total air chartered tourist in the first quarter of 2016, followed by the Dutch (15.5 percent). This is illustrated in Chart 17. Chart 17: Air- Chartered Tourist Arrivals 30,000 25,000 20,000 15,000 10,000 5,000 British Swedish Finnish Dutch - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Source: GT Board and CBG Staff Estimates

22 Table 8: Total Tourist Arrivals QUARTERLY TOURIST ARRIVALS FROM TRADITIONAL MARKETS Nationality Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 British 28,094 11,852 1,765 16,318 21,656 5,386 2,622 16,202 24,538 6,658 2,822 12,781 13,953 3,440 2,392 13,487 18,406 Swedish 3, ,661 3, ,380 4, ,021 1, ,783 3,422 Danish , Finnish 1, , ,029 2, ,224 2,545 Norwegian , German 2, ,951 2, ,798 2, ,044 1, ,377 1,611 Belgian ,375 1,504 1, ,985 1,520 1, , ,452 1,751 Dutch 6,353 2,490 1,318 8,538 10,867 2,328 1,685 10,637 10,756 2,458 1,110 5,172 4,609 1,350 1,218 7,314 9,223 Spanish ,034 1, ,040 1,369 1,457 1,339 1,535 1,230 1,704 1,062 1,565 1,478 1,563 TOTAL 44,673 17,521 5,102 36,827 44,467 11,869 8,025 37,923 50,081 13,627 7,361 23,228 24,547 8,241 7,151 31,216 39,705 QUARTERLY ARRIVALS FROM NON-TRADITIONAL MARKETS French American , , , Italian Austrian Czechs , , ,493 3,271 Polish ,740 2, ,500 1,559 Irish 1, , (114) Nigerian 1,407 1,841 1,208 1,395 1,526 2,046 1,802 1,751 1,411 1, ,107 1,267 1, ,049 Gambians 5,629 5,247 4,511 7,865 6,818 6,692 6,545 9,119 8,178 7,301 6,883 7,842 7,205 6,389 7,232 8,450 7,458 Africans 2,422 2,956 2,366 2,596 3,287 4,454 3,664 4,278 3,028 3,240 2,140 1,880 2,226 2,723 2,539 2,657 2,260 Others 1,216 1,533 1,154 2,195 1,833 1,581 1,553 2,189 1,619 1,339 1,010 1,232 1,078 1,086 1,276 2,257 2,039 TOTAL 13,615 13,204 10,008 16,373 16,772 16,396 14,799 20,949 20,290 15,678 12,311 13,145 15,297 13,778 14,233 20,097 19,796 Overall Total 58,288 30,725 15,110 53, ,844 22, ,501 Growth rate Source: GT Board and CBG Staff Estimates 6. EXTERNAL TRADE Data from the Gambia Bureau of Statistics (GBOS) revealed that total exports registered a decline compared to the preceding quarter. Although domestic exports increased, both re-exports and imports fell during the review period. The net result was an improved trade balance relative to the preceding quarter Volume of Trade Although domestic exports rose by D million or percent, re-exports declined by 39.9 percent in the first quarter, 2016 relative to the previous quarter. During the period under review, the trade balance improved to a deficit of D million (US$61.2 million) compared to a deficit of D2,882.4 million (US$73.0 million) in the previous quarter. This was largely attributed to the fall in imports of D million or by 11.4 percent. 19

23 6.2. Direction of Trade The Gambia s direction of trade during the quarter shows that the bulk of imports originated from Ivory Coast accounting for 18.8 percent or D million of imports, followed by Malaysia (D million or 9.4 percent) and Brazil (D million or 8.7 percent). Major import items of the Gambia include food stuff (mainly rice, sugar and vegetable oil) and refined petroleum. Chart 18: Direction of imports and exports (D millions) 700,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000,000 50,000,000 0 Direction of Exports Source: GBoS During the quarter under review Vietnam was the main destination for Gambian exports recording 82 percent of exports, followed by China and Denmark accounting for 9.8 percent and 2.1 percent respectively. The Gambia has a small export base and the main exported products include groundnut, cotton, cashew nuts and scrap iron. 20

24 PART II DEVELOPMENTS IN THE INTERNATIONAL ECONOMY Developments in the global economy were marked by excess oil supply from oil producing countries and falling inflation, especially in advance economies. Growth was expected to slow down slightly in the second half of 2016, before recovering gradually in According to the International Monetary Fund (IMF) World Economic Outlook, global growth rose to 3.2 percent in the first quarter of 2016 from 2.9 percent in the fourth quarter of Growth in the quarter was supported largely by lower energy and commodity prices, and accommodating monetary policies especially in developed economies. Growth in advanced economies was projected to increase to 2 percent, as the projected decline in growth in Japan due to the planned consumption tax increase was more than offset by slightly stronger performance in most other advanced economies. Economic activity in emerging market and developing economies was projected to increase only modestly relative to 2015, remaining 2 percentage points below the average of the past decade. Growth in sub-saharan Africa was forecast to remain weak in 2016 at 3.0 percent, about 0.5 percentage point lower than in The oil-exporting countries were projected to grow at 2.0 percent in 2016 and 3.4 percent in Inflation is expected to remain elevated as most currencies in the region continued to be under pressure coupled with supply side constraints emanating from drought which affected food production. 21

25 Commodity Prices Most commodity prices rebounded in February and March 2016 reflecting low market sentiments and weak U.S. dollar. International Monetary Fund (IMF) s All Commodity Price Index (including energy) inched up by 1.6 percent in the first quarter of 2016 from the final quarter of The lower commodity prices reflect both demand and supply factors. Weak global economic activity especially for emerging and developing economies weigh on demand whilst the resumption of exports by Iran and the greater resilience in U.S. production due to cost cutting and efficiency gains add to the global oversupply. Chart 19: Commodity Prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar All commodities and Energy Food Source: IMF Global oil price registered its first quarterly increase in the first quarter of 2016 since June 2015, averaging US$37.3 per barrel from US$36.6 per barrel at the end of the fourth quarter - an increase of 2.1 percent from December, This development partly reflected temporary supply disruptions and a decline in US oil production. Chart 20 shows that average crude oil prices inched up slightly in March 2016 after protracted decline. 22

26 Chart 20: Simple average of the spot prices of Dated Brent, WTI, and the Dubai Fateh (US$ per barrel) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Source: IMF Prices of non-energy commodities also experienced modest gain in the first three months of IMF s non-fuel Price Index (2005 = 100), which includes Food and Beverages and Industrial Inputs Price Indices, rose by 4.0 percent in March 2016 from December Similarly, IMF s food price Index ( =100) was 1.7 percent lower in March 2016 than December The decline was driven by the 2.8 percent, 1.2 percent and 2.7 percent fall in price indices of meat, dairy and cereals. Price indices of sugar and vegetable oils, on the other hand, fell by 12.9 percent and 5.4 percent respectively. The impact of the weather conditions triggered by the El Nino which disrupted production in Southeast Asia and Brazil led to the reversal in the long term declining trend in sugar prices. 23

27 PART III STATISTICAL TABLES 24

28 TABLE 1: MONETARY SURVEY (in millions of Dalasi) March June September December March June September December March NET FOREIGN ASSETS 4, , , , , , , , Monetary Authorities 2, , , , Foreign assets 6, , , , , , , , , Foreign liabilities -3, , , , , , , , , Commercial banks 1, , , , , , , , , NET DOMESTIC ASSETS 13, , , , , , , , , Domestic Credit 15, , , , , , , , , Claims on Government, net 9, , , , , , , , , Advances to Govt. in foreign currency Claims on Public Entities Claims on Private Sector 5, , , , , , , , , Claims on forex bureaux Claims on Other Financial Inst Other items, net -2, , , , , , , , , o/w: Revaluation account SDR allocation BROAD MONEY 18, , , , , , , , , Narrow Money 9, , , , , , , , , Quasi-money 8, , , , , , , , , Source: Central Bank of The Gambia 25

29 TABLE 2: THE GAMBIA : SUMMARY ACCOUNT OF THE CENTRAL BANK (in millions of Dalasi ) March June September December March June September December March NET FOREIGN ASSETS 2, , , , Net International Reserves 4, , , , , , , , Foreign assets 6, , , , , , , , , International Reserves 6, , , , , , , , , Foreign liabilities 3, , , , , , , , , Use of Fund Credit ( IMF record ) IMF Trust Fund Loans ( IMF record ) West African Clearing House a/c Holding Fund Account Other Liabilities Loans from foreign banks Other foreign loans and deposits IMF - SAF IMF - ESAF 1, , , , , , , , , IMF - ESAF ( ) SDR Allocations 1, , , , , , , , , Saudi Fund for Development NET DOMESTIC ASSETS 2, , , , , , , , , Domestic credit 2, , , , , , , , , Claims on government (net) 2, , , , , , , , , Gross claims 4, , , , , , , , , (less) Government deposits 1, , , , , , Advances to Govt. in foreign currency Claims on Public Enterprises Claims on private sector Claims on forex bureaux Claims on Deposit Money Banks (net) 1/ Claims on Other Financial Institutions Other items (net) Revaluation account Revalution of Assets Revalution of Currencies SDR allocation RESERVE MONEY 5, , , , , , , , , Currency in circulation (i.e issued) 3, , , , , , , , , Reserves of commercial banks 1, , , , , , , , , Source: Central Bank of The Gambia 26

30 TABLE 3: THE GAMBIA : SUMMARY ACCOUNT OF DEPOSIT MONEY BANK (in millions of Dalasis ) March June September December March June September December March NET FOREIGN ASSETS 1, , , , , , , , , Foreign assets 3, , , , , , , , , Foreign liabilities 1, , , , , , , NET DOMESTIC ASSETS 12, , , , , , , , , Domestic credit 13, , , , , , , , , Claims on government (net) 6, , , , , , , , , Gross claims 6, , , , , , , , , Government bonds Treasury bills 6, , , , , , , , , Government deposits Claims on public enterprises Claims on private sector 5, , , , , , , , , o/w: in Foreign Currency Reserves 2, , , , , , , , , Currency Deposits at central bank 1, , , , , , , , , Net claims on CBG CBG bills held by DMBs Credit from CBG Other items (net) -2, , , , , , , , , Net claims on other DMB , of which: Capital account -3, , , , , , , , , Total deposit liabilities 14, , , , , , , , , Demand deposits 5, , , , , , , , , Savings deposits 6, , , , , , , , , Time deposits 2, , , , , , , , , Source: Central Bank of The Gambia 27

31 TABLE 4: COMPONENTS OF MONEY SUPPLY ( in millions of Dalasis, end of period ) Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Total Money Supply 18, , , , , , , , , Money , Currency outside banks % Demand deposits Private Sector Official entities Quasi-money Savings deposits Private Sector Official entities Time deposits Private Sector Official entities Source: Central Bank of The Gambia 28

32 TABLE 5: COMMERCIAL BANKS : LOANS AND ADVANCES TO MAJOR ECONOMIC SECTORS ( in millions of Dalasi ) Sectors March June September December March June September December March Agriculture Fishing Mining and Quarrying Building & Construction Transportation Distributive Trade 2, , , , , , , , , Tourism Energy Personal Loans Other 2, , , , , , , , , Total , , , , , Source : Central Bank of The Gambia 29

33 TABLE 6: STRUCTURE OF INTEREST RATES (In percent per annum) COMMERCIAL BANKS Lending rates March June September December March June September December March Agriculture Manufacture Building Trading Tourism Other * Deposit rates Short-term deposit a/c Savings bank account * Time Deposits Three months Six months Nine months months and over Source: Central Bank of The Gambia 30

34 TABLE 7A: GOVERNMENT FISCAL OPERATIONS in D' millions Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Revenue and Grants Total Revenue Tax Revenue Direct Taxes Indirect Taxes Domestic Taxes on Goods & Services Stamp Duty Excise Duties Domestic Sales Tax Value Added Tax Other taxes on production 19.6 Airport Levy Taxes on International Trade Customs Duty Sales Tax on Imports Petroleum Taxes Duty Sales Tax Nontax Revenue Government Services & Charges Interests, Dividends and Property Contribution to Pension Fund Central Bank Profit / Loss Other Non-tax Revenues Telecommunications License Grants Program Projects HIPC Source: Ministry of Finance and Economic Affairs 31

35 TABLE 7B: GOVERNMENT FISCAL OPERATIONS in D' millions Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Total Expenditure and Net Lending 2, , , , , , , , ,503.8 Current Expenditure Expenditure on Goods & Services Salaries Other Charges Interest Payments Internal External Subsidies & Current Transfers Emergency Relief (repairs on damaged rural roads) HIPC expenditure Development Expenditure External Loans Grants Gambia Local Fund (GLF Capital) HIPC Funded GLF Extra budgetary Expenditure Net Lending Overall Balance ( Commitment Basis) Excluding Grants (with HIPC) Excluding Grants (w/o HIPC) Including Grants Adjustment to cash basis (Float) Overall Balance - Including Grants ( Cash Basis) Financing External (net) Borrowing Debt Relief (HIPC assistance) Domestic Bank Non-Bank Accumulation of arrears Privatization proceeds Repayment of domestic debt Capital Revenue Bank Capitalization Financing Gap Nominal GDP 37, , , , , , , , ,370.0 Source: Ministry of Finance and Economic Affairs 32