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, African Markets online newspaper reports.
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.
Courtesy of African Markets