The Governor, Central Bank of The Gambia (CBG), Mr. Buah Saidy on Thursday, 27th May 2021 briefed the press on the appropriate monetary policy decisions of the members of the Monetary Policy Committee (MPC), deemed to be suitable under the current microeconomic environment. This was following the MPC’s meetings to review economic and financial developments in the first quarter (Q1) of 2021.
Addressing the gathering, which included banking officials, the CBG boss inter alia said, the Government expenditure and net lending in the first quarter of 2021, decreased by 4.6 to 5.6 billion (5.7 percent of GDP) from D5.9 billion (6.0 percent GDP) in the first quarter of 2020. The contraction in expenditure and net lending was solely driven by recurrent expenditure, which declined by 14.9 percent during the review period.
Saidy also told journalists that the stock of domestic debt rose by D35.84 billion in April 2021, from D33.67 million in the comparative period in 2020. He explained that the increase in domestic debt stock reflects mainly higher fiscal expenditure, resulting partly from Treasury Bills rollover cost, which accounts for 57.5 percent of the domestic debt. He pointed out that revenue and grants totaled D3.6 billion, (representing 3.6 percent of the GDP), in the first quarter of 2021, by 21.8 percent from D4.6 billion (4.7 percent of GDP) in the same period a year earlier.
The Governor of the apex bank disclosed to the press that both revenue and grants accounted for the decline in total revenue and grants during the year under the review. He also explicated that government’s fiscal operations for the first three months of 2021, points to a worsened position, as the overall budget deficit (including grants) in the first quarter of 2021, increased to D2.1 billion (1.4 percent of GDP) in the corresponding period a year ago.
“The expansion in the budget deficit (including grants), was attributed to a D21.8 percent contraction in revenue and grants”, said Saidy. He assured that the “banking sector remains well capitalized, highly profitable and liquid” and that on a yearly basis, total assets of the industry increased by 20.4 percent to D61.23 billion at end March 2021, from D50.85 billion in the same period a year ago, and by D2.4 billion at end December 2020.
“In the twelve months to end April 2021, volume of transactions in the foreign exchange market increased to US$2.29 billion, from US$2.08 billion in the corresponding period in 2020. Both purchases and sales, indicating supply and demand of foreign currency, respectively increased to US$1.16 Billion and US$1.03 billion in April 2021,” the gathering heard.
The CBG top official went on to indicate, the increment in the volume of transactions stood at US$1.04 billion and US$1.03 billion in April 2020, representing an excess demand of US$0.02 billion in the review period, compared to an excess demand of US$0.01 billion comparative period in 2020.
Saidy further stressed that the current account balance narrowed significantly to a deficit of US$8.76 million (0.48 percent of GDP) in the first quarter 2021 from a deficit of US$38.55 million (2.18 percent of GDP) in the same period in 2020.
“The goods account deficit is estimated to narrow to US$126.24 million (6.89 percent GDP) in the first three months of 2021, compared to a deficit of US$155.13 (8.79 percent GDP) in the first three months of 2020,” disclosed Governor Saidy.
The reduction, he reasoned, was due largely to decline in imports, by US$69.58 million to US$139.80 million or by 33.2 percent in first quarter of 2021, from US$209.38 million in the first quarter in 2020, reflecting a decline in COVID-19 related imports, as the country continues to report low cases of infection.
