© 2004 International Monetary Fund May 2004

IMF Country Report No. 04/142

The Gambia: Selected Issues and Statistical Appendix

This Selected Issues paper and Statistical Appendix for The Gambia was prepared by a staff team of
the International Monetary Fund as background documentation for the periodic consultation with the
member country. It is based on the information available at the time it was completed on March 2,
2004. The views expressed in this document are those of the staff team and do not necessarily reflect
the views of the government of The Gambia or the Executive Board of the IMF.

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 INTERNATIONAL MONETARY FUND

THE GAMBIA

Selected Issues and Statistical Appendix

Prepared by a staff team consisting of Jon Shields (head), Ulrich Jacoby,

Thomas Harjes (all AFR), and Katerina Alexandraki (PDR)

Approved by the African Department

March 2, 2004

Contents Page

Basic Data ..................................................................................................................................4

I. Recent Economic Developments............................................................................................6

A. Background ...............................................................................................................6
B. Output and Inflation ..................................................................................................7
C. Fiscal Developments ...............................................................................................10
D. Monetary Sector......................................................................................................18
E. External Sector ........................................................................................................20

II. On the Conduct of Monetary Policy in The Gambia ..........................................................24

A. Introduction.............................................................................................................24
B. Institutional Framework ..........................................................................................24
C. Recent Developments in Monetary Aggregates and Prices, 1998-2003.................25
The sources of reserve money growth .............................................................26
Foreign exchange losses in 2002 .....................................................................32
D. Conclusion and Policy Recommendations..............................................................34

III. The Gambia’s External Position and Vulnerabilities to Shocks........................................38

A. Background .............................................................................................................38
B. Principal Sources of Vulnerability in the Gambian Balance of Payments..............39
C. Mitigating Balance of Payments Vulnerabilities Through Growth in Exports of
Goods and Services: Structural Impediments and Ongoing Measures ........................41
Reexport and transit trade ................................................................................41
Agriculture .......................................................................................................43
Services ............................................................................................................47
Exploitation of natural resources .....................................................................49
D. Conclusion ..............................................................................................................50
 -2-

IV. Data Deficiencies in The Gambia’s Balance of Payments ................................................51

A. Current Account......................................................................................................51
Exports of Goods .............................................................................................51
Imports of Goods .............................................................................................52
Nonfactor services ...........................................................................................53
Income and transfers ........................................................................................53
B. Capital and Financial Account ................................................................................54
C. Institutional Weaknesses and Steps Forward ..........................................................55

Tables
II.1. Inflation, Depreciation, and Money Growth, 1998-2003...............................................26
II.2. Sources of Reserve Money Growth, 1998-2003 .............................................................29
II.3. The Major Sources of Reserve Money Growth, 2000-03 ...............................................30
II.4. Estimated Foreign Exchange Losses, 2000-03 ...............................................................31
III.1. The Gambia's Foreign Exchange Earnings, 1997-2003..................................................38
III.2. Composition of External Financing, 1998-2003.............................................................39
III.3. Average Tariff Protection (Import Duties) in West African Region, 1996 and 2002 ....42

Figures
I.1. Annual Contribution to GDP Growth by Sector, 1998-2003 ............................................8
II.1. Broad Money, Depreciation and Inflation, 1998-2003 ...................................................36
II.2. Broad Money and Reserve Money Growth, 1998-2003 .................................................37

Boxes
I.1. Public Expenditure Management.....................................................................................12
I.2. Petroleum Pricing Mechanism.........................................................................................14
I.3. PRSP Implementation......................................................................................................15
I.4. Enhancing the Revenue Base ..........................................................................................17
II.1. Revaluation Adjustments of the CBG's Balance Sheet...................................................28

Statistical Appendix Tables

1. GDP by Sector at Constant Prices, 1998-2003 ........................................................................57
2. GDP by Sector at Current Market Prices, 1998-2003..............................................................58
3. GDP Growth by Sector at Constant Prices, 1998-2003...........................................................59
4. Implicit GDP Deflators, 1998-2003........................................................................................60
5. Supply and Use of Resources, 1998-2003 ...............................................................................61
6. The Savings-Investment Balance, 1998-2003 .........................................................................62
7. Agricultural Production, 1998-2003 ........................................................................................63
8. Minimum Producer Prices for Agricultural Commodities, 1998-2003 ...................................64
9. Purchases and Disposition of Groundnuts, 1998-2003............................................................65
10. Indicators of Tourism Activity, 1998-2003 ............................................................................66
 -3-

11. Energy Statistics, 1998-2003 ..................................................................................................67

12. Public Sector Wage Scale, 1998-2003....................................................................................68
13. Minimum Daily Wages, 1998-2003 .......................................................................................69
14. Civil Service Structure, 1998-2003.........................................................................................70
15. Private Employment by Industry, 1998-2003.........................................................................71
16. Private Sector Employment by Size of Establishments and Industry,
1997 and 1998......................................................................................................................72
17. Overall Consumer Price Index for Low-Income Households in Banjul and
Kombo St. Mary, January 1998-December 2003 ................................................................73
18. Central Government Financial Operations, 1998-2003 ..........................................................74
19. Central Government Financial Operations (percent of GDP), 1998-2003 .............................75
20. Functional Classification of Central Government Current Expenditure,
1998-2003 .............................................................................................................................76
21. Central Government Social Expenditure and Social Indicators, 1998-2003 ..........................77
22. Public Investment Program and Its Financing, 1998-2003.....................................................78
23. List of Public Enterprises, December 2002 ...........................................................................79
24. Monetary Survey, December 1998-December 2003 ..............................................................80
25. Summary Accounts of Monetary Authorities, December 1998-December 2003...................81
26. Summary Accounts of Commercial Banks, December 1998-December 2003.......................82
27. Monthly Interest Rates on Treasury Bills, January 1998-December 2003.............................83
28. Structure of Interest Rates, 1998-June 2003 ...........................................................................84
29. Distribution of Commercial Bank Credit by Sector, 1998-2003 ............................................85
30. Liquidity Position of Commercial Banks, 1998-2003 ............................................................86
31. List of Commercial Banks, December 2002...........................................................................87
32. Distribution of Outstanding Government Securities, 1998-2003 ...........................................88
33. Balance of Payments, 1998-2003 ...........................................................................................89
34. Composition of Merchandise Exports, 1998-2003 .................................................................90
35. Composition of Merchandise Imports, 1998-2003 .................................................................91
36. Direction of Trade, 1998-2003 ...............................................................................................92
37. Foreign Trade Indicators, 1998-2003 .....................................................................................93
38. Public External Debt Outstanding and Debt Service, 1998-2003...........................................94
39. Exchange Rate Indicators, 1990-2003 ....................................................................................95
40. Interbank and Parallel Market Exchange Rates, January 1998 - December 2003..................96
41. Summary of Tax System as of December 31, 2003................................................................97
 -4-

The Gambia: Basic Data

Area, population, and GNP per capita

Area 10,700 sq. km.

Population
Total (2003) 1.4 million
Growth rate (2000-2003; average) 2.8 percent
GDP per capita (2003) (staff est.) 256 US$

1998 1999 2000 2001 2002 2003

Est. Prel. Prel.

(In millions of dalasis, unless otherwise indicated)

National accounts

GDP at constant 1976/77 prices 659.0 701.2 739.9 782.5 757.1 823.5
Of which
Agriculture 121.4 157.0 173.4 188.9 135.7 175.7
Manufacturing 34.7 35.2 35.9 36.9 38.5 39.5
Services 383.4 390.5 403.7 432.9 451.4 469.7

Nominal GDP 4,479.1 4,921.9 5,382.4 6,555.9 7,364.3 10,275.2

Gross domestic investment

(in percent of GDP) 18.3 17.8 17.3 17.4 21.2 19.6
Gross domestic savings
(in percent of GDP) 11.4 11.9 9.0 11.3 14.7 11.6
Central government finance

Total revenue and grants 919.9 944.5 1,117.2 1,125.7 1,528.7 1,776.4
Domestic revenue 831.5 878.7 995.4 989.9 1,201.8 1,569.1
Foreign grants 88.5 65.8 121.8 135.9 326.9 207.2

Total expenditure and net lending 1,028.2 1,118.2 1,192.1 2,037.4 1,870.7 2,327.9
Recurrent 799.8 887.0 985.2 1,237.1 1,318.2 1,703.3
Development and net lending 1/ 228.7 231.2 206.3 800.3 552.5 624.6

Overall deficit (commitment basis) 1/

Excluding grants -197.0 -239.5 -196.8 -1,047.5 -668.9 -758.7
Including grants -108.5 -173.7 -75.0 -911.6 -342.0 -551.5

Adjustment to cash basis (float) -24.5 -34.5 -23.7 -34.7 17.8 -39.4
Overall deficit (cash basis) 1/ -133.0 -208.2 -98.7 -946.3 -324.2 -590.9

Financing 133.0 208.2 98.7 946.3 324.2 590.9

Foreign 54.5 30.0 -45.6 -23.6 140.9 57.9
Domestic 78.5 178.2 144.3 969.9 183.3 533.0

Money and credit 2/

Net domestic assets -1.7 11.2 12.3 53.2 22.3 14.2
Credit to the government 3/ 0.5 3.4 3.1 49.8 1.0 12.5
Credit to the private sector 4/ 5.4 7.8 4.4 13.2 27.7 19.0
Broad money 10.2 12.1 34.8 19.4 35.3 43.4
 -5-

The Gambia: Basic Data (continued)

1998 1999 2000 2001 2002 2003

Est. Prel. Prel.

(In millions of U.S dollars, unless otherwise indicated)

Balance of payments

Trade balance -78.9 -68.7 -63.3 -43.1 -49.1 -51.8

Exports, f.o.b. 130.4 120.2 126.6 101.6 111.0 102.0
Imports, c.i.f. -209.3 -188.9 -189.9 -144.7 -160.1 -153.8
Services (net) 29.7 22.7 8.2 -5.4 -1.5 -2.4
Transfers 39.1 33.8 41.8 34.0 42.6 35.4
Private 3.5 3.8 10.6 3.5 3.6 3.7
Official 35.6 30.0 31.3 30.5 39.0 31.6
Current account balance
Excluding official transfers -45.7 -42.2 -44.5 -45.0 -47.0 -50.5
Including official transfers -10.1 -12.2 -13.2 -14.5 -8.0 -18.9
Capital account 17.3 7.5 5.7 -5.8 21.4 4.3
Official 5.4 2.7 6.3 8.4 34.0 8.6
Private 12.0 4.8 -0.6 14.3 -13.1 -4.4
Unaccounted-for loss in reserves 0.0 0.0 0.0 -28.5 0.5 0.0
Errors and omissions -0.8 -0.6 17.6 -31.4 -18.3 3.2
Overall balance 6.5 -5.3 10.1 -51.7 -4.9 -11.4

Current account balance (in percent of GDP)

Excluding official transfers -10.9 -9.8 -10.6 -10.8 -12.7 -13.8
Including official transfers -2.4 -2.8 -3.1 -3.5 -2.2 -5.1

Gross official reserves

In millions of SDRs 75.2 71.7 84.5 50.1 49.5 42.0
In months of imports, c.I.f. 5.8 6.2 7.0 5.3 4.8 4.6

External public debt 5/

In millions of U.S. dollars 460.5 451.5 455.1 475.5 560.4 562.0
In percent of GDP 109.4 104.5 108.1 113.8 151.6 153.2

(In percent of exports and travel income)

Debt-service ratio 6/
Including the Fund 11.1 11.8 15.4 18.5 7.8 9.8
Excluding the Fund 8.4 9.6 14.3 18.1 7.6 9.7

1/ Data for 2001 include US$28.5 million capital expenditure financed by a retroactive loan by the Central Bank of
The Gambia (CBG) which the authorities indicated in October 2003 had not been recorded in official accounts.
2/ In percent of broad money at the beginning of the period.
3/ Includes the central bank's foreign currency advance to the government in 2001.
4/ Includes public enterprises and central bank credit to foreign exchange bureaus.
5/ 2003 figure is preliminary and does not fully incorporate all disbursements by the African Development Bank.
It therefore underestimates total debt.
6/ As a percentage of exports and travel income. After interim debt relief and HIPC grants. Excludes any
accumulation of esternal arrears.
 -6-

I. RECENT ECONOMIC DEVELOPMENTS

A. Background

1. The Gambia is a small, open economy on the west coast of Africa. It extends
inland for 180 miles along both banks of the Gambia River, at widths varying from 15 to
30 miles. The only land borders of the country are with Senegal. The population was
provisionally recorded by the 2003 census at 1.4 million, with a recent average growth rate
of 2.8 percent. Three-fourths of the population is rural, and the remainder is largely located
in the urban areas around the capital, Banjul. The 1998 household poverty survey indicated
an overall poverty rate of 67 percent. 1

2. Following independence in 1965, The Gambia maintained broadly stable

macroeconomic conditions and achieved modest rates of economic growth. However,
economic performance deteriorated significantly after 1983 because of adverse terms of
trade shocks and large budget deficits financed by domestic borrowing. Increased reliance
on government intervention in allocating credit and promoting economic development–
primarily in the agricultural sector—and the lack of competition in the economy further
destabilized the economic environment. To address the situation, the authorities embarked
in 1985 on an ambitious Economic Reform Program (ERP), succeeded in 1990 by the
Program for Sustained Development (PSD). However, the ongoing economic reforms were
disrupted by the military coup in July 1994. In the aftermath of the coup, donors cut
assistance to The Gambia, and tourism receipts dropped markedly. In addition, the reexport
trade was adversely affected by controls imposed by the neighboring countries before and
after the devaluation of the CFA franc in 1994 and by the impact of the devaluation on The
Gambia’s external competitiveness. Economic performance deteriorated substantially.

3. Presidential and parliamentary elections, in 1996 and 1997, respectively, marked

the end of the transition from military to civilian government and helped to establish
conditions for a resumption of donor support and economic reforms. In June 1998, the
government entered into a three-year arrangement under the IMF Enhanced Structural
Adjustment Facility (ESAF)—subsequently the Poverty Reduction and Growth Facility
(PRGF). Economic performance improved substantially during 1998-2001. Although
student disturbances and election-related incidents during 2000, accompanied by the
withdrawal of a major tourist operator, adversely affected the tourism sector for a period,
arrivals picked up strongly in subsequent years. Meanwhile, in January 1999, the
government seized the groundnut processing plant belonging to the Gambia Groundnut
Corporation (GGC), a private groundnut marketing monopoly. Compensation was
subsequently paid, with financial support from the European Union (EU), and the company

1
The Gambia: Millennium Development Goals Report 2003.
 -7-

is being prepared for resale. The establishment of a second company producing other
groundnut derivatives expanded processing capacity.

4. Parliamentary, presidential, and local elections were held in 2001–02, and were
assessed to be generally fair by international observers. President Jammeh was reelected by
a large majority, and his party won all but three seats in the elections to the National
Assembly.

B. Output and Inflation

5. During 1998-2001, real output growth averaged 6 percent in The Gambia. This
mainly reflected a strong performance in the agricultural sector (roughly one-fourth of the
GDP), which grew on average by about 9 percent as a result of successive good harvests.
Services, representing over half of total output, grew on average by 6 percent, mainly
driven by trade, transport and communications; however tourism services experienced
some difficulties in the 2000-01 season. The industrial sector grew on average by just
under 5 percent and accounted for about 10 percent of real output; most of the growth
reflected activity in construction, while manufacturing output stayed fairly flat (Figure I.1).

6. Economic performance deteriorated sharply in 2002, as sparse rainfall led to a

decline of one-third in agricultural output. Real GDP shrank by 3 percent. However,
sectors other than agriculture fared reasonably well: the tourism sector benefited from
greater political stability and improved competitiveness; industrial production growth
accelerated (largely reflecting the processing of a record 2001 groundnuts crop); and the
construction sector boomed as a result of some donor-financed infrastructure projects,
prospects of a resurgence in tourism, and low real interest rates.

7. In 2003, favorable weather conditions led to a strong rebound in the

agricultural sector. Provisional crop reports from the United Nations Food and
Agricultural Organization (FAO) imply a growth in agricultural output of 30 percent,
resulting in GDP growth estimated at just under 9 percent. However, in level terms, the
GDP would still be significantly below the trend established in previous years.

8. Groundnuts, the predominant cash crop in The Gambia, have continued to form
the mainstay of the agricultural sector (about one-third of value added). In 2000 and 2001,
above-average rainfall led to a very strong performance in the groundnut sector: total
production rose to 138,000 and 151,000 tons, respectively, compared with an average of
121,000 tons during 1998-2001. In 2002, however, production plummeted to about 72,000
tons due to a shortened rainy season. In 2003, according to first estimates from the FAO,
groundnut production recovered to about 127,000 tons. Although there were above-average
rains in the year, this represents a surprisingly strong outcome, given the difficulties
experienced by farmers, particularly in the North Bank Division of the country, in
obtaining seeds, fertilizers, and other inputs following the poor 2002 season. Quality may
however, have been poor, implying a much lower value added than assumed in the
 -8-

provisional GDP estimates, even if the provisional estimates of quantity turn out to be well
founded.

Figure I.1. The Gambia: Annual Contribution to GDP Growth by Sector, 1998-2003
(In percent)

10

-2 Total
Agriculture
-4 Industry
Services
-6

-8
1998 1999 2000 2001 2002 2003

Sources: The Gambian authorities; and IMF staff estimates.

9. Agricultural production in The Gambia is shifting slowly away from groundnuts

to other crops, which currently represent over 40 percent of total agricultural output
(including livestock). These other products include millet, maize, rice, and sorghum, and
newer growth areas such as sesame and exotic vegetables. While the output of most of
these crops was hit hard by inadequate rains in 2002, the impact on rice and horticultural
production was mitigated by irrigation facilities, which covered about 8 percent of the total
crop area in 2002. In 2003, the output of millet, maize, and rice grew strongly, according to
the provisional FAO report. Horticultural activities gained importance with improved
export conditions, following an increase in air traffic between Europe and The Gambia, and
improved competitiveness following the depreciation of the dalasi, but they still
represented only a small proportion of commercial farming activity. Production in the
fisheries sector improved further, supported by additional, donor-financed facilities for the
production of ice, a previous bottleneck for export-oriented industrial fish production.

10. Industrial production grew by about 10 percent in 2002, boosted by the entry of a
large manufacturing company into the groundnut processing sector. By providing facilities
to produce groundnut cake and oil, the company has raised significantly the value added of
groundnut-related exports. Following the purchase of several electricity generators,
electricity production also increased by 10 percent in 2002. However, the supply of
 -9-

electricity is still subject to large fluctuations. In 2003, growth in industrial production is

estimated to have decreased slightly to about 7 percent from 10 percent in 2002 as the poor
2002 groundnuts crop left the processing plants largely idle despite the prospect of much
higher unit profits as a result of increased world prices and the depreciation of the dalasi.

11. Services contributed positively to GDP growth in 2002, although by less than in the
two previous years. The tourism sector and reexport trade performed well, benefiting from
a more competitive situation as a result of the depreciation of the dalasi exchange rate, but
growth in transport and communications slowed due to lower incomes and an increase in
prices toward the end of the year. These trends continued into 2003, and services are
estimated to have grown by only about 4 percent.

12. Data on investment and savings in The Gambia are extremely rudimentary
because of limited information on the allocation of expenditure. National saving is
estimated to have increased by 5 percentage points of GDP to 19 percent of GDP in 2002,
on the basis of a decline in the current account deficit to 2.2 percent in 2002, from 3.5
percent in 2001 and total investment is estimated at about 21 percent of GDP in 2002, up
from 17.4 percent in 2001. Public investment, which included several donor-financed
projects, grew strongly, while private investment in the tourism sector was boosted by
improved prospects for tourist arrivals and the lengthening of the season; meanwhile,
domestic interest rates were low in real terms. In 2003, an estimated current account deficit
of about 5 percent and domestic investment estimated at about 20 percent of GDP imply
that national saving returned to former levels of about 15 percent. Private investment
slowed due to higher real interest rates, and fewer public investment projects were
undertaken.

13. During 1998-2001, prices, as measured by the consumer price index (CPI) for
low-income households in the greater Banjul area, increased by about 2.6 percent on
average. However, toward the end of this period, inflation started to accelerate, with
consumer prices rising by 8 percent in the 12 months to December 2001. By the end of
2002, the 12-month consumer price inflation rate had risen to 13 percent. The 12-month
inflation rate peaked at 21 percent in August 2003, before declining to 18 percent by
December 2003.

14. Imported goods represented the strongest rising prices during this period, reflecting
a depreciation of the dalasi in domestic currency terms of 108 percent against the U.S.
dollar and 182 percent against the euro between December 2000 and December 2003. In
2002, food and drink prices (which account for about 60 percent of the index) increased by
about 18 percent, while the other components, including housing, firewood, electricity, and
clothing increased only by 2–5 percent. However, the CPI is based on weights established
in 1976/77 and probably substantially understates the current importance of imported goods
and of domestic goods and services, such as transport, which are heavily dependent on fuel
and other imports. In addition, the published index is based on a basket applying to low-
income households only. As a consequence, the index would appear to have been
substantially understating average consumer price inflation throughout 2001-03.
 - 10 -

15. No recent data are available on an economy-wide basis for employment or earnings.

16. The relatively subdued increase recorded in the consumer price index (CPI),
compared with the rapid depreciation of the dalasi exchange rate, resulted in a decline in
the index of the real effective exchange of 46 percent between December 2001 and October
2003 (Table 39). Although the probable bias in the CPI discussed above would imply that
this figure exaggerates the improvement in external competitiveness during the period, The
Gambia’s relative cost structure would appear now to strongly favor export activities.

17. Following the launch of “Operation No Compromise” by President Jammeh in

September 2003 to address unfair and corrupt business practices and foreign exchange
dealings, many retailers of essential commodities, such as beef and rice, were pressured to
reduce their selling prices. Some supermarkets were also accused of overcharging and
misleading labeling. As a result, prices may have been temporarily held below trend levels.

C. Fiscal Developments

18. The conduct and impact of fiscal policy have deteriorated substantially during
the last three years. The fiscal deficit (excluding grants) rose from 3.7 percent of GDP in
2000 to 15 percent in 2001 and fell back only to 6 percent by 2003. Unbudgeted spending
contributed substantially to the overshooting of the fiscal deficit, particularly in 2001. The
extended election cycle, covering presidential elections in October 2001, parliamentary
elections in January 2002, and local elections in April 2002, may also have contributed to
the expenditure overruns. Although some progress has been made on budget execution and
monitoring (Box I.1), unbudgeted spending has continued, parliamentary scrutiny and
control have been limited, and provision of information to the public has been rudimentary.
A substantial backlog in the documentation, closure, and auditing of the fiscal
accounts has undermined the principles of accountability, transparency, and
coherence in fiscal management.

2000

19. The fiscal deficit (excluding grants) narrowed from 4.9 percent of GDP in 1999
to 3.7 percent in 2000. This was the result of improved revenue collection (0.6 percent of
GDP), mainly due to higher customs revenue resulting from the termination of the contract
for the flawed preshipment inspection scheme that had been introduced in 1999; an
additional factor was a drop in expenditures of 0.6 percent of GDP, due to lower externally
financed capital expenditure.2 This relatively good performance was accompanied by a
substantial increase in program financing (from the EU) to 1.2 percent of GDP, compared
2
The introduction of the preshipment inspection scheme led to a substantial drop in imports
as administrative delays as well as the associated cost (1.4 percent of the c.i.f. value of
imports, payable in U.S. dollars) reduced the attractiveness of importing through Gambian
ports.
 - 11 -

with 0.2 percent of GDP in 1999. The authorities also reached agreement with Alimenta, a
Swiss company, whose groundnut processing plant the authorities had seized in 1999.
Under the settlement, Alimenta was to receive US$11.4 million, of which US$3.5 million
was payable in 2000, and the remaining amount in 2001. The EU eventually contributed €7
million in grants for the financing of this settlement.

20. With the enhancement of the Heavily Indebted Poor Countries (HIPC) Initiative in
September 2000, implying a substantial lowering of the threshold values, The Gambia
became eligible for debt relief under the initiative. It reached its decision point in
December 2000. At this point, the international community committed itself to providing
overall debt relief of US$66.6 million in net present value (NPV) terms during the interim
period and at the completion point.

2001

21. On the basis of revised data provided by the authorities in October 2003, it
would appear that the fiscal deficit deteriorated extraordinarily sharply in 2001,
reflecting huge unbudgeted payments, together with election-related spending. The
overall deficit (excluding grants) surged to 15 percent of GDP, and the basic primary
balance reverted from a surplus of nearly 5 percent of GDP in 2000 to a deficit of more
than 8 percent of GDP in 2001.3 Of this deterioration of 13 percent of GDP, 7 percentage
points were due to unbudgeted expenditures;4 an additional 2 percentage points reflected
unprogrammed on-lending to the National Water and Electricity Company (NAWEC) for
the purchase of three generators; and domestic revenue dropped by 3.5 percentage points,
almost entirely due to weak performance in customs administration. Owing to the
deterioration of macroeconomic policies and unresolved governance concerns, the EU
withheld payments of budgetary assistance in 2001. However, interim assistance under the
enhanced HIPC Initiative provided about 1 percent of GDP in debt-service grants from
multilateral creditors.

3
The basic primary balance is defined as domestic revenue minus total expenditure and net
lending, excluding interest payments and externally financed capital expenditure.
4
The authorities indicated in October 2003 that expenditures of US$ 28.5 million—financed
directly from the foreign currency reserves—had been made in 2001, but had not previously
been reported in public accounts. The authorities indicated that the money had been spent on
development projects, agriculture, social programs and national security. No evidence was
provided of the precise nature of this unrecorded activity. The spending has been
provisionally classified as capital expenditure and retrospectively added to the fiscal accounts
in 2001, with a counterpart entry in domestic central bank financing (although lending of this
magnitude would appear to contravene the Central Bank of the Gambia Act). In 2003, the
financing was retroactively converted into a loan from the CGB to the central government
with a maturity of 15 years, including 2 years grace, and an interest rate of 4 percent.
 - 12 -

Box I.1. Public Expenditure Management

Assisted by the United Kingdom Department for International Development (DfID) and the
World Bank, public expenditure reviews (PERs) were conducted in 2001 in key sectors
(agriculture, education, and health) in order to improve sectoral linkages to the priorities set
in the interim poverty reduction strategy paper (I-PRSP) and to the budget. The Fund and
the World Bank also assisted the authorities in developing an Assessment and Action Plan
(AAP) to strengthen the capacity for tracking overall poverty reducing expenditure,
including debt relief under the enhanced HIPC Initiative.

The Fund resident budget advisor assisted the authorities in closing the government
accounts for the years 1992–99, and in setting up a “flash” reporting system to provide
some regular monthly data on budget execution. Also with the assistance of the Fund
resident budget advisor, a review was undertaken of the below-the-line (BTL) accounts,
which for years had been a source of expenditure that was neither budgeted nor scrutinized.
The review resulted in the closure of about 80 percent of the roughly 500 BTL accounts by
end-2002, and incorporation of most of the substantial remaining accounts into the budget;
however, some potential remains for unbudgeted expenditure. In September 2002, the
National Emergency Financial Committee (NEFCOM) was established to oversee execution
of the budget and to control cash expenditure through monthly allocations to departments.

Through end-2003, the PERs in agriculture, health, and education from 2001 had not been
updated as initially planned and thus could not feed into the preparation of the budget. This
was a major failure, since these PERs provide the main link between the PRSP and the
budget formulation. Progress has also been minimal in updating, closing and auditing of the
government accounts: they have not been audited since 1991, or closed since 1999, and data
entry into the general ledger has stalled at November 2001. Capacity problems have been
cited, including an outdated computer system, but there has been little evidence of any
serious commitment by the authorities to overcome these difficulties despite available donor
assistance. Lack of a sufficiently clear delineation of competences between the Department
of State for Finance and Economic Affairs and the Accountant General’s Office may also
have been a factor. The lack of progress in these areas continues to severely hamper
financial reporting and control, as well as parliamentary oversight and control of budget
execution.
 - 13 -

2002

22. On the assumption that the amount of unbudgeted expenditure was trivial in
2002, the overall fiscal deficit (excluding grants) in that year dropped to about 8
percent of GDP, thus retracting toward pre-2001 levels.5 However, this was well above
the program projection of 5 percent of GDP, despite the adoption of several measures in the
second half of the year. Domestic revenue rebounded strongly, by about 3.5 percent of
GDP, with gains in all taxation categories except customs duties, which stagnated at about
8 percent of GDP. Expenditure and net lending returned to more normal levels, to about
25.5 percent of GDP, with capital expenditure of 7.5 percent of GDP and current
expenditure of 18 percent of GDP. The basic primary balance was almost 3 percent of
GDP. Starting in September 2002, the execution of the budget was shifted to a cash basis,
with a newly created National Emergency Financial Committee (NEFCOM) to oversee
execution and control of noninterest, nonwage domestic expenditure. An announcement
was made of increases in excise duties on alcohol, soft drinks, and cigarettes, and domestic
petroleum prices were raised substantially in an effort to recover part of the losses incurred
through the strong increase in international fuel prices and the previous subsidization for
political considerations (Box I.2). While NEFCOM proved to be very successful in limiting
discretionary spending, control of the overall fiscal position was increasingly hampered by
the rising burden of debt service due to high domestic financing and rising interest rates, as
well as the depreciation of the dalasi.

5
In December 2003, the authorities indicated that further unbudgeted expenditures had
occurred in 2002; however, no details were provided.
 - 14 -

Box I.2. Petroleum Pricing Mechanism

The supply and pricing of petroleum products in The Gambia are determined by the
authorities. Importation of petroleum supplies is confined to a single contractor, chosen by
competitive government tender and based on the narrowest margin over the Platts reference
price. The role of the four oil companies operating in The Gambia is limited to organizing
the distribution chain, for which they receive fixed margins. The appropriateness of
domestic pump prices is reviewed periodically (about quarterly), based on the landed cost
of petroleum, converted into dalasi at current market rates, with allowances added for
financing cost, duties, excises, and trading and transportation margins. The authorities can
change pump prices at any time. The financial consequences of sustained misalignments
are buffered by combining or offsetting any windfall loss or profit (FLUMARA) with oil
import duties due.

In the past, there have been prolonged periods of continued losses, such as during the 2001-
02 election cycle. Quasi-fiscal costs were also incurred due to the provision of foreign
exchange at favorable rates for oil importation by the central bank. Since October 2002,
however, the authorities have sought to correct previous misalignments, ensure that dealers’
margins fully reflect costs, and adjust pump prices more systematically. Pump prices were
doubled between October 2002 and February 2003. The provision of foreign exchange at
favorable rates was discontinued as of end-2002. The authorities have committed
themselves to undertaking regular quarterly reviews of petroleum prices.

23. On the positive side, external grants surged by 2.3 percent of GDP to 4.4 percent in
2002, program grants (by the EU) resumed after the Fund’s Executive Board approved a
new three-year PRGF arrangement, and both project grants and debt-service grants
(provided as interim assistance under the enhanced HIPC Initiative) rose strongly. External
project loans also doubled to about 5 percent of GDP, mainly reflecting increased
disbursements from the World Bank, as implementation of some of their projects started to
accelerate. Lastly, Paris Club creditors agreed in January 2002 to provide interim assistance
under the enhanced HIPC Initiative through a flow rescheduling on Cologne terms.

24. Progress on structural reforms was slow. Privatization came practically to a halt
as the authorities decided that the sale of major public enterprises should not precede the
establishment of a multisector regulatory agency. However, even though the latter event
was a trigger for reaching the HIPC Initiative completion point and initially envisaged to be
in place by end-2002, no progress was made in this direction. The authorities submitted
their first full PRSP in May 2002 (Box I.3.), and the Executive Boards of the Fund and the
Bank found this to be a sound basis for Fund and IDA concessional assistance and debt
relief.
 - 15 -

Box I.3. PRSP Implementation

The Gambia presented its I-PRSP in December 2000 and its first full PRSP in June 2002,
coinciding, respectively, with the decision point under the enhanced HIPC Initiative and the
approval of a new PRGF arrangement. Early formulation of a poverty program in the mid-
1990s known as the Strategy for Poverty Alleviation (SPA), had given The Gambia a head
start in producing a PRSP, which was formulated in an exemplary participatory process.
However, implementation of the PRSP was hampered by a number of factors:
• Economic growth severely undershot the projections underlying the PRSP, with GDP
declining in 2002 due to a crop failure.
• There is a distinct lack of output data on social and health indicators.
• There are no reliable input data from budget execution, and the budget classification
system makes it very difficult, if not impossible, to retrieve data in the relevant
aggregation or disaggregation. This, in turn, makes it very difficult to link and monitor
input and output, and to make adjustments in budget execution during the year.
• The linkages from the PRSP to budget formulation are weak. The latter relies mainly on
the submissions of line ministries, whereas the PRSP coordinating unit (SPACO) has
had only very limited input.
• The PERs conducted in 2001 fed into budget formulation, mitigating somewhat the
deficiencies in linkages between the PRSP and the budget; however, they have not been
updated since.
• Donor assistance fell considerably short of the substantial pledges in support of the
PRSP made at the roundtable conference in Geneva in September 2002.
The first PRSP progress report is expected in early 2004.

2003

25. Projections for 2003, based on preliminary actual data through September
2003, indicate some fiscal consolidation stemming from tight expenditure control. The
basic primary balance is projected at 3½ percent of GDP and the overall deficit (excluding
grants) at 6 percent of GDP, 2 percentage points lower than in 2002. Total expenditure and
net lending is expected to have dropped by more than 2 percent of GDP, mostly on account
of lower foreign-financed capital expenditures. Current expenditures declined by 0.8
percent of GDP despite rising cost pressures, including from a 6.5 percent average increase
in public sector wages and an increase in interest payments by 1 full percentage point to 6
percent of GDP.6 This is a clear indication of the tight expenditure control exercised by
NEFCOM, whose mandate was extended through end-2003. Against this, domestic revenue

6
Public sector wages had last been raised in 2000.
 - 16 -

further declined by more than 1 percent of GDP, owing to the continued weakening of
customs administration.

26. Following the failure to complete the first review under The Gambia’s PRGF
arrangement, the Paris Club informed the authorities that the second annual tranche of the
debt rescheduling, covering the period July 2003 to July 2004, would not be implemented.
There were also no disbursements of program grants or loans by the EU or by other donors.
Faced with the prospect of rising debt-service obligations and a continued loss in
external financing, the authorities embarked on a number of remedial measures
beginning in the fourth quarter of 2003. These included management changes in the
Customs and Excise Department, reinvigorated efforts to collect tax and duty arrears and to
limit the granting of exemptions, increases in fuel prices and in processing and license fees,
and acceleration of the establishment of a central revenue authority (Box I.4). With external
financial support declining due to the weak policy performance, financing of the deficit
relied totally on domestic borrowing, which almost doubled to about 6 percent of GDP.
The privatization of the assets of the GGC was further delayed, along with the
establishment of a multisector regulatory agency and the revitalization of the rest of the
privatization program. On the positive side, the preparation of the 2004 budget marked the
beginning of the transition to an improved budget classification scheme as part of the
ongoing efforts to implement a medium-term expenditure framework.

27. Little information is available about the performance of public enterprises.7

Over the past few years, only the Gambia Ports Authority (GPA) and the Gambia
Telecommunications Company (GAMTEL) have been paying dividends to the central
government. NAWEC is in a particularly poor state, as the tariffs, which are set by the
government, do not cover production costs.8 In aggregate, public enterprises are in a net
arrears position toward the central government, mainly due to debt-service arrears and
some tax and duty arrears owed by NAWEC, in total amounting to 0.7 percent of GDP at
end-September 2003.

28. The central government’s domestic debt had nearly doubled in absolute terms
from D 1.3 billion in 1999 to D 2.5 billion by end-2003, with most of the debt buildup
occurring before end-2001. As a percent of GDP, it rose from 27 percent in 1999 to 38
percent in 2001, but, with nominal debt stagnating and inflation picking up strongly from
late 2002 onward, the ratio subsequently declined to about 25 percent in 2003.

7
There is a regular section on the major public enterprises in the budget speech by the
Secretary of State for Finance and Economic Affairs to the National Assembly.
8
In February 2003, tariffs were raised for the first time since 1992. However, the electricity
tariff covers only 60 percent of NAWEC’s production costs, and the water and sewer
services are also lossmakers.
 - 17 -

Box I.4. Enhancing the Revenue Base

Customs duty collection has steadily fallen behind in recent years—in spite of rising
imports and the dalasi’s depreciation—on account of poor management, apparent corrupt
practices, and the undisciplined provision of duty waivers. Procedures have remained
outdated, data provision has been incomplete and unreliable, and implementation of
recommendations from donors’ technical assistance has been marginal. However, the
authorities have recently taken action by changing the senior management of customs,
tightening internal controls, limiting the extension of duty waivers and other exemptions,
and taking a tough stance on arrears collection.

In contrast to customs, the collection of inland revenue by the Central Revenue

Department (CRD) has improved considerably, following tight management procedures
and implementation of technical assistance recommendations. This has also been
noticeable in the transfer of the collection of domestic sales tax from the Customs
Department to CRD, effective January 1, 2003, which has boosted revenue strongly. In
part this is also because the income tax information available in CRD facilitates the
assessment of domestic sales taxes.

Other revenue-enhancing measures that are being prepared are the creation of a large
taxpayers unit, and the establishment of a National Revenue Authority; the latter would
unify customs and inland revenue in a modern administrative setting that would, inter alia,
allow the introduction of targeted performance incentives for staff. The reform of the
Income and Sales Tax Act is well advanced and expected to be implemented in 2004, with
a view to broadening the tax base. Large sales of land, mainly to the tourism sector,
commenced late in 2003. The authorities are determined to keep domestic fuel prices at
levels that will generate a moderate surplus for the budget.
 - 18 -

D. Monetary Sector

29. During the late 1990s, The Gambia experienced relative price stability.
Consumer price inflation was contained below 5 percent9and there was only a limited
depreciation in the nominal effective exchange rate. Monetary conditions remained stable,
with growth in broad money and reserve money averaging about 15 percent during 1997-
99, little net bank credit to the government, and a modest improvement in net foreign assets
of the monetary sector. Interest rates on treasury bills with three months’ maturity, which
stood at 16 percent during 1996-97, were lowered to 14 percent in the fourth quarter of
1998 and to 12.5 percent at the end of 1999.

30. Monetary conditions deteriorated substantially in 2000-03, leading to an

acceleration of CPI inflation and very sharp declines in the nominal and real effective
exchange rates.10

31. In 2000, broad money growth rose to about 35 percent and the nominal
effective exchange rate depreciated by 12 percent during the year. However, reported
consumer prices remained broadly unchanged. A large part of the increase in broad money
reflected an increase in the net foreign assets positions of the central bank and commercial
banks, which closed their open positions in foreign currencies. Much smaller contributions
came from net bank credit to the government and private sector credit (which remained at
around 12.5 percent of GDP). Commercial bank reserves at the central bank dropped from
20 percent of total deposits at end-1999 to 11 percent at end-2000.11 The relatively slow
growth in reserve money of 17 percent reflected the effect of sterilization operations by the
CBG involving sales of treasury bills on behalf of the government, the proceeds of which
were kept in a special account at the CBG. The sterilization caused the central bank’s net
credit to the government to fall by 26.6 percent of the beginning-of-period stock of reserve
money and offset the impact on reserve money of the buildup in the foreign reserves of the
central bank and large losses of the central bank (resulting from foreign exchange
transactions).12 Treasury bill yields remained virtually unchanged at 12 percent.

9
As discussed in the previous subsection on output and inflation, the current CPI is likely to
understate inflation, against the background of a depreciating domestic currency.
10
A fuller account of the causes and effects of the deterioration in monetary policy in 2000-
03 is provided in Section II.
11
This drop in the reserves-to-deposits ratio of 9 percentage points is difficult to explain as
minimum reserve requirements remained unchanged at 14 percent. However, deficient
penalty enforcement procedures, which were not corrected until mid-2003, allowed banks
considerable discretion over their reserves in practice.
12
See Section III.
 - 19 -

32. In 2001, broad money growth was 20 percent, while the nominal effective
exchange rate depreciated by about 11 percent during the year. Annual inflation
reached 8 percent. With election pressures contributing to higher public expenditure and
constraining monetary policy responses, net bank credit to the government grew
substantially and exceeded the total increase in broad money. In addition, the government
received a foreign currency loan from the central bank for US$28 million that was paid out
of the foreign exchange reserves. Reserve money grew by 21 percent, driven by central
bank credit to the government and central bank loans to foreign exchange bureaus, which,
until recently, had been misclassified as part of the foreign exchange reserves. The foreign
exchange reserves of the central bank in U.S. dollar terms fell by about 60 percent as a
result. In the fourth quarter of 2001, treasury bill interest rates were raised to 15 percent.

33. In 2002, the impact of the lax monetary conditions became more evident. The
nominal effective exchange rate fell by 34 percent, and consumer price inflation reached 13
percent by the end of the year. Low real interest rates induced a surge in private sector
credit, which grew by more than 70 percent.13 While several major investment projects,
including the purchase of new ferries and the construction of a new ferry terminal,
accounted for a large part of the high private sector credit growth, there may also have been
some use of bank lending in support of speculation in foreign exchange and real estate.
From the beginning of the year, residents were allowed to open foreign currency deposits at
commercial banks, and these had grown to about 11 percent of total deposits by the end of
the year. Broad money growth rose to 35 percent. Reserve money grew by 34 percent,
driven by central bank credit to the government and further large losses stemming from the
foreign exchange transactions of the central bank. Treasury bill interest rates were raised in
several steps from 15 percent to 20 percent between October and December.

34. The depreciation of the dalasi and the rapid increase in consumer prices
continued in 2003, despite several moves to tighten monetary conditions. Minimum
reserve requirements, which were extended to include foreign currency deposits, were
increased from 14 percent to 16 percent at the end of March and to 18 percent at the end of
June. Yields on treasury bills were raised substantially, reaching 31 percent by September
2003. In the 12 months to December, the CPI increased by 18 percent, the nominal
effective exchange rate depreciated by more than 30 percent, and broad money grew
by 43 percent. While private sector credit growth, though still substantial at more than 40

13
As discussed in the subsection on output and inflation, the current CPI for low-income
households is likely to understate actual inflation. It is a particularly poor indicator for the
consumption basket of more affluent households with access to the banking system. While it
is therefore difficult to determine an appropriate measure for the level of real interest rates,
movements in nominal interest rates and the current CPI indicate a significant decline in real
interest rates during 2001-02. Annual inflation based on reported consumer prices rose by 13
percentage points during December 2000-December 2002, while nominal interest rates
increased only by 8 percentage points.
 - 20 -

percent, slowed, domestic bank financing of the fiscal deficit grew strongly and accounted
for more than 12 percentage points of broad money growth. Commercial banks further
reduced their treasury bill holdings by more than D 300 million, equivalent to about 3
percent of estimated 2003 GDP, in order to meet the more profitable demand for private
credit and to comply with the tightened minimum reserve requirements. With no
budgetary support from foreign donors, all the financing of the government’s fiscal
deficit was provided by the central bank. Net foreign assets of commercial banks rose in
line with foreign currency deposits at commercial banks, while foreign reserves of the
central bank fell further. Overall, net foreign assets of the consolidated banking sector,
including the central bank, increased by about 30 percent, or US$15 million, and the
accumulation of net foreign assets, adjusted for revaluation effects, accounted for about 12
percent of broad money growth.

35. In January 2002, Continent Bank, a small bank that catered mainly to low-income
customers and that had been facing difficulties for several years, was put into liquidation by
the central bank. Liquidation procedures are still ongoing. Overall, the banking sector
seemed to be healthy, with nonperforming loans in mid-2003 of less than 7 percent of
total loans and only 2 percent of total assets. However, there has also been a sizable
increase in household overdrafts, which, if in default, are not included in nonperforming
loans.

E. External Sector

36. The Gambia’s key sources of foreign exchange earnings in recent years have
been the tourism sector, reexport trade and groundnut-related exports. Net earnings from
these sectors averaged about US$75 million in the last five years, equivalent to about three-
fourths of the value of The Gambia’s merchandise imports for domestic use. As described
in Section III, the relative importance of the sectors has fluctuated considerably, reflecting
the sensitivity of groundnut production to climatic conditions, changes in the role of the
port of Banjul as a trade hub (affected in part by political developments in the West African
region, as well as The Gambia’s actual and perceived competitiveness) and the impact on
tourist arrivals of world developments and concern about local political events. Tourism
revenues, which largely depend on relatively low-spending visitors, declined between 1998
and 2002, but recovered in 2003 following a drive to upgrade existing facilities, increase
off-season arrivals and rebrand the Gambian “tourism product.” As discussed in the
subsection on output and inflation, there has been a substantial improvement in The
Gambia’s external competitiveness since 2000, but evidence of its impact on trade in goods
and services is, to date, mainly limited to the observed recovery in tourism and some
apparent compression in imports in 2003.

37. Sizable foreign assistance has enabled The Gambia to maintain high current
account deficits, of the order of 10 percent of GDP, excluding grants, in recent years.
However, measurement of the precise magnitude and time path of these deficits has been
handicapped by the inadequate coverage and poor quality of the available data. Substantial
revisions have recently been made to the estimates shown in Table 33, on the basis of new
 - 21 -

indicators and revised methods of calculation (see Section IV), but considerable
uncertainties remain regarding all the data series. Information on the capital account is also
very limited. A further complication is the reporting by the authorities in October 2003 of a
payment of US$28.5 million from the foreign exchange reserves in 2001 without
accompanying information on the use of this payment.

38. In 2000 and 2001, the current account deficit (excluding official transfers) is
estimated to have been about 11 percent of GDP. Exports of groundnut products were
substantially above previous years’ levels, and recorded imports were well below trend
(particularly in 2001). These factors led to a relatively low recorded trade deficit, below
11 percent of GDP in 2001, which offset the impact on the current account of a large drop
in factor services and private transfers. However, against a background of high real GDP
growth during 2001, the drop in imports is more likely to reflect inadequate customs
controls, thereby raising further concerns about the robustness of conclusions drawn from
official current account data.14 Large swings were recorded in the 2000 and 2001 capital
and financial accounts, reflecting extraordinary items, such as compensation payments to
the Swiss company, Alimenta, for the seizure of its assets by the government in 1999 and a
supplier’s credit to finance the importation of three electricity generators.

39. The current account deficit widened to 13 percent of GDP in 2002, as a surge in
exports of groundnut products, reflecting a good 2001 crop and utilization of additional
processing capacity, was more than offset by higher recorded imports despite the
depreciation in the exchange rate. However, in 2003, groundnut-related exports dropped
precipitously (by 3.6 percent of GDP measured in U.S. dollars) as a result of the scarce
supply of raw groundnuts following poor rainfall during the 2002 growing season. The fall
in volumes far outweighed the impact of higher world prices for groundnut products (which
nevertheless were sufficiently large to boost substantially The Gambia’s terms of trade in
2002 and 2003). A contraction in imports, in part due to the real exchange rate
depreciation, only partially offset the decrease in exports, and the current account deficit
is estimated to have widened in 2003 to 14 percent of GDP. Meanwhile, the available
data from which estimates are derived for reexport trade15 do not indicate any expansion in
activity during 2002-03, despite the improved external competitiveness of The Gambia and
the diversion of trade away from conflict-laden Cote d’Ivoire, Sierra Leone, and Liberia.
Political tensions with Senegal, leading to border closures, as well as the steady erosion of
The Gambia’s price advantage following liberalization of WAEMU members’ trade
regimes, may have in part accounted for the relative stagnation. Nevertheless, performance
in other, smaller export sectors was positive, owing to a recovery in the fisheries sector, the

14
There are also indications that imports that have been granted duty waivers or are awaiting
determination on duty waivers may sometimes not be included in import data. See Section
IV.
15
See Section IV.
 - 22 -

embryonic diversification into horticulture and the successful extraction of zirconium; the
latter contributed an estimated US$1.6 million to export revenues in 2002 and 2003. An
estimated 17 percent rise in travel income also helped ease pressures on the current account
during 2003, following a surge in tourist arrivals that was helped by an the increase in
competitiveness and extension of the season beyond the European winter.

40. Official project-related lending was boosted in 2002 by a US$20 million loan
disbursement from the Export-Import Bank of Taiwan Province of China to support the
previous year’s importation of three new electricity generators and the upgrading of the
electricity distribution network. Meanwhile, the steep depreciation of the dalasi appears to
have prompted a surge in private capital outflows—of the order of 4 percent of GDP during
2003—either in the form of an increase in the net foreign assets of commercial banks
(facilitated by swelling foreign currency deposits at home) or through unofficial channels.
At the same time, new construction and upgrading of hotels, in line with the drive to move
the tourism sector up market, helped to increase the level of foreign direct investment. As a
result, the capital and financial account is estimated to have deteriorated from an
overall US$20 million surplus in 2002 to a US$1 million deficit in 2003.

41. Gross official reserves declined from SDR 84.5 million in 2000 (US$110 million
at end-of-period exchange rates) to SDR 42 million in 2003 (US$62.3 million). Of this
decrease, SDR 34 million (US$44 million)—equivalent to 10 percent of GDP—occurred
during 2001, reflecting in part unspecified and previously unreported public expenditure.
The import cover dropped from 7 months in 2000 to 4 ½ months in 2003.16

42. Since reaching its decision point under the enhanced HIPC initiative in
December 2000, The Gambia has been receiving interim debt relief, including
contributions from the IMF, World Bank, African Development Bank, European
Investment Bank and the OPEC Fund. The HIPC Initiative completion point was originally
targeted for end-2002 but it has been delayed by serious policy slippages, which have put
the program supported by the IMF Poverty Reduction and Growth Facility (PRGF)
offtrack. As of December 2003, the ratio of the NPV of external debt to exports17 stood at
around 300 percent, compared with 196 percent at the decision point at end-2000; the rise
reflected in part an accumulation of new (official) debt.

43. The Gambia rationalized the structure of its import tariffs in July 2000 by
reducing its maximum tariff rate from 20 percent to 18 percent and the number of bands

16
Import cover figures in 2000 are higher than previously reported owing to a revision in
official data on imports.
17
A three-year export average is used. The NPV reflects only the interim assistance under the
enhanced HIPC Initiative.
 - 23 -

from eight to four (0, 10, 15, and 18 percent).18 This cut the import-weighted average tariff
from 12 percent to 11.8 percent. Duty exemptions were commonly in use during this
period, either on a discretionary basis or on the basis of two acts introduced in 2001: The
Free Zones Act (exempting licensed companies operating in free zones from duties on
goods imported into a zone); and the Investment Promotion Act (exempting eligible
companies operating in strategic sectors from duties on imports of raw materials and capital
goods). The authorities are reportedly working toward switching from the Brussels
definition of value to the WTO-based customs valuation system.

44. Export duties continue to be levied on fish and fish products (10 percent)19, and
gold and diamonds (3 percent). Following the 2003 groundnut harvest, the government has
attempted to impose a ban on exports of unprocessed groundnuts. Since September 2000,
The Gambia has benefited from preferential access to the EU market under the Everything-
But-Arms initiative for least-developed countries. Also, since January 2003, it has been
eligible for preferential access to the U.S. market under the U.S. African Growth and
Opportunity Act (AGOA).

18
Information on the tariff structure was provided by the Customs and Excise Department.
However, six tariff bands were identified by The Gambian authorities in submitting evidence
for the World Trade Organization (WTO) Trade Policy Review.
19
Exports to the EU are exempt.
 - 24 -

II. ON THE CONDUCT OF MONETARY POLICY IN THE GAMBIA20

A. Introduction

45. This section provides an assessment of the conduct of monetary policy in The
Gambia during the period 1998 to 2003 and argues that the serious deterioration in the
internal and external value of the local currency in The Gambia after 2000 was mainly
caused by an excess supply of money. Fiscal dominance accounted for much of the surge in
money supply. However, significant losses incurred by the Central Bank of The Gambia
(CBG) through its conduct of foreign exchange transactions also contributed to the
excessive monetary growth. These losses stemmed from three major sources: implicit
subsidies to the government or other parties by providing foreign exchange below market
rates; large premiums paid for foreign currencies, compared with market rates; and
interventions in foreign exchange markets to influence the exchange rate.

46. Subsection B reviews briefly the institutional framework under which the CBG
operates. Subsection C presents the evolution of the main monetary variables during the
period 1998 to 2003 and analyzes the sources of reserve money growth. For 2002, a
detailed analysis of central bank losses incurred through foreign exchange transactions is
provided. Subsection D discusses the changes in the institutional and operational
framework of the CBG that would be needed to ensure a return to a stable monetary
environment in The Gambia.

B. Institutional Framework

47. The Central Bank of The Gambia Act of 1992 (the CBG Act) constitutes the current
legal framework for monetary policy in The Gambia. Among the multiple objectives listed
in the CBG Act, the CBG has chosen price stability as its principal policy objective.
However, limited policy autonomy, in practice, over interest rates has restricted the choice
of effective monetary policy instruments, while a weak internal control system has eroded
the efficiency of policy implementation.

48. The CBG Act contains several provisions that allow for direct government
intervention in monetary policy and limit the autonomy of the CBG. The Minister of
Finance can override CBG policy if he determines that the policy pursued by the CBG is
not adequate for the achievement of the objectives of the central bank.21 Moreover, officials
of the Ministry of Finance participate actively in several policy committees of the CBG
(and the Permanent Secretary of the Ministry of Finance is a member of the CGB board).

20
Prepared by Thomas Harjes.
21
Article 44 of the CBG Act provides for a government override but also states that, during
the period of any override, the government accepts responsibility for the policy adopted.
 - 25 -

Finally, the CBG Act allows for the removal of the Governor or appointive directors
without investigation or other process requirements.

49. In an effort to deliver price stability, the CBG uses reserve money as its main
operational target.22 To control reserve money, the CBG has primarily relied on indirect
monetary policy instruments.23 In view of the CBG’s modest capital base and relatively
shallow domestic securities markets, primary issues of treasury bills for monetary policy
purposes served as the main policy instrument of the CBG during the 1990s. More recently,
the CBG has increasingly issued its own bills as an alternative to treasury bills and has
twice raised reserve requirements to restrain the growth in broad money. Outright sales and
purchases of foreign currencies have frequently been used in an attempt to influence the
exchange rate, in recognition of its impact on the price level.

C. Recent Developments in Monetary Aggregates and Prices, 1998-2003

50. Starting from a period of low inflation during 1998-2000, The Gambia experienced
a sharp decline in the external value of the domestic currency and inflation rose
significantly in the 2001-03 period. The pickup in inflation and the sharp decline in the
external value of the domestic currency initially lagged and then accompanied the
monetary expansion that started in early 2000.24 Figure II.1 shows the close comovement of
these variables over the past two years. Table II.1 provides information on annual inflation,
the depreciation of the dalasi, and monetary aggregates for the period 1998-2003.

51. In 2000, broad money grew by about 35 percent. A large part of this increase
reflected a buildup in the domestic banking sector’s net foreign assets position. In 2001,
broad money growth slowed to about 20 percent. In 2002, broad money rose by 35 percent,
22
The conduct of monetary policy has been severely complicated by the lack of a
comprehensive price index. The current consumer price index, measured by the Central
Statistics Department, reflects a consumption basket for low-income households in the
capital city, Banjul, and its weights have not been updated since 1977. It consists
overwhelmingly of domestically produced food items. Imported consumption goods,
including oil products, have very small weights in this index, and some are not included at
all. Given the recent sharp decline in the external value of the domestic currency and the
sharp increase in prices of imported consumption goods, the current measurement of inflation
understates significantly actual inflation.
23
See William Alexander, Tomas Balino, and Charles Enoch, The Adoption of Indirect
Instrument of Monetary Policy. IMF Occasional Paper No. 126 (Washington: International
Monetary Fund, 1995). for a classification of monetary policy instruments. The CBG began
using indirect monetary policy instruments in the mid-1980s.
24
Some negative exogenous shocks, including a drought in 2002 and the peak in oil prices in
early 2003, contributed to the pressure on the exchange rate and the profile of prices.
 - 26 -

mainly driven by a sharp rise in credit extension to the private sector. This trend continued
into 2003, and broad money grew by 43 percent, while private sector credit growth was
about 48 percent. The dalasi depreciated against the SDR by a cumulative 190 percent in
dalasi terms during December 1999 – December 2003, and inflation rose steadily during
this period, starting from virtually zero in 2000 and reaching 18 percent in 2003.

Table II.1. The Gambia: Inflation, Depreciation and Money Growth, 1998-2003
(Percentage change of end-of-period stocks, unless otherwise indicated)

1998 1999 2000 2001 2002 2003

Reserve money 7.2 14.5 16.8 21.0 34.1 62.7

Broad money (M2) 10.2 12.1 34.8 19.4 35.3 43.4
Private sector credit 15.0 21.0 10.3 12.8 72.3 48.0
CPI index 4.8 1.7 0.2 8.1 13.0 17.6
Dalasi–SDR exchange rate 1/ 8.9 2.4 22.4 9.7 49.4 44.7
Dalasi–U.S. dollar exchange rate 1/ 4.4 5.1 28.9 13.7 38.1 32.3
Treasury bill interest rate (three-month maturity;
in levels) 14.0 12.5 12.0 15.0 20.0 31.0

Sources: CBG and Central Statistics Department.

1/ Increase implies depreciation.

The sources of reserve money growth

52. The high and rising broad money growth during 1998-2003 was sustained by large
and increasing liquidity injections by the monetary authorities (Figure II.2). Reserve money
growth rose from 7.2 percent in 1998 to 62.7 percent in 2003. In principle, changes in
reserve money can originate from transactions affecting either side of the central bank’s
balance sheet. Usually, changes in holdings of foreign reserves or central government
assets—determined primarily by the share of the central government that is not financed by
the private or external sectors—are the main driving force. Sometimes, however, other
transactions can become just as important, such as payments for the operating expenses of
the central bank, loans to the private sector, or any quasi-fiscal activities—involving
implicit subsidies—undertaken by the central bank.

53. To determine the sources of the rise in reserve money growth in The Gambia,
therefore, requires a detailed analysis of changes in the balance sheet of the CBG and
particularly of movements in the individual components of its net foreign and net domestic
assets. There is, however, a major complication to be faced. As reserve money can be
 - 27 -

generated only by actual transactions, revaluations of items in the balance sheet to reflect
price movements cannot have a net impact on reserve money. This means that the CBG’s
accounts, which are constructed on the basis of current costs—and so require all changes in
market prices (particularly for foreign currency) to be reflected immediately in the daily
balances—have also to include offsetting adjustments. These adjustments are incorporated
within a separate “revaluation account” in the balance sheet within “Other items, net”
(OIN). A meaningful breakdown of the sources of reserve money growth can therefore be
obtained only by both reversing the impact of price changes on individual items in the
balance sheet and removing the offsetting adjustments within OIN.

54. In the case of the CBG, such a process is, however, not straightforward because the
revaluation account includes realized gains and losses from foreign exchange transactions,
as well as unrealized gains and losses stemming from revaluations.25 For the purposes of
this exercise, therefore, foreign exchange transactions and revaluations had to be separately
identified so that rigorous calculations could be made of the required adjustments. The
procedures are described in Box II.1. These resulted in a set of adjustments for the stocks
of net foreign assets, net domestic assets, and OIN which were applied to the raw balance
sheet data.

55. Table II.2 displays movements in both the unadjusted and adjusted components of
the balance sheet.26 They tell very different stories. While the unadjusted data seem to
imply that reserve money growth stemmed overwhelmingly from net credit to government,
with net foreign assets providing a relatively small overall net contractionary influence, the
adjusted data demonstrate a strong impact from OIN, with a much larger contractionary
influence for net foreign assets. Furthermore, it emerges from the detailed data that the OIN
component is itself the result of sizable injections of liquidity stemming from losses on
foreign exchange transactions. These come, inter alia, from the following sources:

• implicit subsidies to the government or other parties by providing foreign exchange

below market rates;

• large premiums paid for foreign currencies, compared with market rates; and

• interventions in foreign exchange markets to influence the exchange rate.

25
Realized gains and losses should not be booked into the revaluation account but should
directly enter the income statement. The CBG officials reported that, given their current
technical accounting system, they cannot differentiate between realized and unrealized gains
and losses of foreign exchange transactions without manually going through all individual
transactions.
26
Detailed net foreign asset data are available only starting from December 1999. Therefore,
the valuation adjustments are confined to the period 2000 – 2003.
 - 28 -

Box II.1. Revaluation Adjustments of the CBG’s Balance Sheet

Changes in stocks of those balance sheet items that are affected by exchange rate
fluctuations are decomposed into changes due to transactions and changes due to
valuation. These valuation adjustments are also explained in Abdessatar Ouanes and
Subhash Thakur, 1997, Macroeconomic Accounting and Analysis in Transition
Economics, (Washington: International Monetary Fund). The decomposition is based
on the detailed foreign reserve data provided by the CBG, which include all individual
foreign currencies and foreign securities held by the CBG. The starting point is the
actual stock of net foreign assets in dalasi, valued at current exchange rates at the
beginning of the period under investigation. For the initial period, the adjusted stock of
net foreign assets is set equal to the actual stock of net foreign assets. Each consecutive
year, the actual net transactions in each currency, converted into dalasi at the average
annual exchange rate, are added to the adjusted stock of net foreign assets to arrive at
the following year’s adjusted stock of net foreign assets, as described by the formula
below:
n
RtL = RtL−1 + ∑ ( Ati − Ati−1 ) ∗ eti , R0L ≡ A0L , Vadjt = RtL − AtL , where
i =1
L
R = net foreign assets (adjusted) in local currency units at historic prices at
t
time t;
AtL = net foreign assets in local currency units at current prices at time t;
Ati = net foreign assets in foreign currency units i=1, 2... n at time t; and
ei = exchange rate (local currency units per foreign currency unit i), period
average.

The valuation adjustment is then added to the OIN position, removing the estimated
unrealized gains and losses due to valuation changes for that year. Annual average
exchange rates are used to convert foreign currency-denominated transactions into
dalasis. This reflects the assumption that these transactions took place evenly
throughout the period. Valuation adjustments that refer to foreign currency deposits of
the government at the CBG are added to the government deposits position. Table II.2
presents the detailed net foreign assets and net domestic assets, including various
components, which are contributions to reserve money growth before and after these
adjustments. Changes in the OIN position after valuation adjustments reflect realized
gains and losses of the CBG, as the other components subsumed under the OIN
position—other assets and liabilities, including fixed assets and capital and reserves—
stayed roughly constant. Operating losses, excluding losses due to foreign exchange
transactions, remained steadily in the range of D 20-30 million during 1998 – 2002.
We estimate the annual gain or loss due to foreign exchange transactions as the
difference between these operating losses and the change in the adjusted OIN position.
 - 29 -

Table II.2. The Gambia: Sources of Reserve Money Growth, 1998-2003

(In percent of beginning-of-period reserve money, unless otherwise indicated)

1998 1999 2000 2001 2002 2003

Reserve Money 7.2 14.5 16.8 21.0 34.1 62.7

Net foreign assets 30.9 19.9 35.9 -92.3 13.9 5.6
Net domestic assets -23.8 -5.4 -19.1 113.3 20.2 57.1
Domestic credit -20.4 -6.7 -34.1 130.5 28.5 74.4
Net claims on government /1 -12.9 -5.0 -31.1 35.1 22.1 69.5
Advances to gov. in foreign currencies 0.0 0.0 0.0 68.7 0.0 0.0
Net claims on banks -7.6 -1.7 -3.1 2.0 -4.8 7.6
Claims on foreign exchange bureaus in foreign 0.0 0.0 0.0 24.7 11.2 -2.7
currencies
Other items, net -3.3 1.3 15.0 -17.2 -8.3 -17.3

Adjusted for revaluation effects

Net foreign assets ... ... 19.6 -120.3 -11.3 -23.8

Net domestic assets ... ... -2.8 141.4 45.4 86.5
Domestic credit ... ... -32.8 129.9 20.7 66.5
Net claims on government 1/ -12.9 -5.0 -29.7 34.5 24.6 70.3
Advances to gov. in foreign currencies 0.0 0.0 0.0 68.7 0.0 0.0
Net claims on banks -7.6 -1.7 -3.1 2.0 -4.8 7.6
Claims on foreign exchange bureaus in foreign
currencies 0.0 0.0 0.0 24.7 0.9 -11.5
Other items, net ... ... 30.0 11.5 24.7 20.1
Of which : est. foreign exchange losses ... ... 25.5 7.5 21.2 13.7

Memorandum items: (in units indicated)

Change in reserve money (in millions of dalasis) 35.2 76.1 101.0 147.8 290.0 715.3
Est. CBG foreign exchange losses (in millions of dalasis) ... ... 153.5 52.7 180.0 156.8
Domestic financing (fiscal deficit; in millions of dalasis) 2/ 78.5 178.2 144.3 522.9 183.3 533.0
Sterilization account (in millions of dalasis) ... 632.3 738.1 498.8 266.9 ...
CBG holdings of treasury bills (in millions of dalasis) 1.3 12.4 1.8 30.7 197.1 192.2
Treasury bills outstanding (in millions of dalasis) 1020.7 1201.6 1564.0 1919.5 2117.6 1948.1
Dalasi-SDR exchange rate (end of period) 15.5 15.8 19.4 21.3 31.8 46.0

Source: CBG; and IMF staff estimates.

1/ 2003 figure includes the credit in the amount of US$5 million to a newly founded public enterprise on
behalf of the government for the conduct of an offshore oil survey. The 2001 figure does not include advances
in foreign currencies, which are listed separately.
2/ The 2001 figure does not include advances in foreign currencies. The 2003 figure is an estimate.
 - 30 -

56. In this context, the definition of losses includes transactions that lead to the issuance
of reserve money and that do not result from the acquisition of additional assets. Such
transactions may not have an immediate impact on the measurement of profits or losses in
the income statement, but the additional liquidity that the CBG injects as a result clearly
represents a cost and is, therefore, included in the measure of domestic currency losses
associated with foreign exchange transactions.

57. Looking in more detail at changes in the adjusted components of the balance sheet
in Table II.2 reveals the following major sources of the growth in reserve money during
2000-03:

Table II.3. The Major Sources of Reserve Money Growth, 2000-03

(In percent of beginning-of-period reserve money)

2000 2001 2002 2003

Reserve money 16.8 21.0 34.1 62.7

Adjusted for revaluation effects

Net Foreign Assets 19.6 -120.3 -11.3 -23.8

Net Domestic Assets -2.8 141.4 45.4 86.5
Of which:
Net claims on government -29.7 34.5 24.6 70.3
Estimated foreign exchange losses 25.5 7.5 21.2 13.7

Source: Table II.2.

58. Net credit to government provided by the CBG amounted to D 1,090 million
(10 percent of GDP, or 60 percent of end-of period reserve money, in 2003) during
2001-03 and reflected the following main facts:

• In 2001, domestic financing amounted to more than D 500 million, or about 8 percent
of GDP.27 The government produced a record fiscal deficit, which more than tripled

27
This number does not include the CBG foreign currency advance to the government in the
amount of US$28.5 million. This foreign currency advance was most likely used to pay
outlays abroad and, therefore, did not affect domestic monetary aggregates or reserve money.
 - 31 -

domestic financing needs, compared with the year before.28 In addition, the
government made payments in the amount of D 50 million to reduce arrears. While a
large part, about D 350 million, was financed with additional treasury bills, the
government financed the rest by drawing down the deposit in the sterilization account
at the CBG.

• In 2002, the domestic financing needs of the government more or less returned to
former levels and amounted to about D 180 million, or about 2 percent of GDP.
However, at the given interest rates, the CBG was not able to sell any substantial
additional amounts of treasury bills, and the government made further withdrawals
from the sterilization account at the CBG to cover its domestic financing needs.29

• This trend continued into 2003, and the CBG financed the bulk of the fiscal deficit
and, in addition, a large amount of domestic public debt that commercial banks were
no longer willing to finance.

59. Losses stemming from foreign exchange transactions which together are
estimated to explain D 540 million of the increase in reserve money during 2000-03 (5
percent of GDP, or 29 percent of end-of-period reserve money in 2003) followed the
following path:

Table II.4. Estimated Foreign Exchange Losses, 2000-03

(In dalasi millions)
2000 2001 2002 2003

Estimated foreign exchange losses 154 53 180 157

Source: Staff estimates.

28
About 15 percent of domestic financing reflected a settlement payment to Alimenta, a
Swiss company that had been operating in the Gambian groundnut sector and whose property
had been seized in 1999.
29
In the 1990s, the CBG used primary issues of government securities as its main policy
instrument and issued treasury bills on behalf of the government in excess of domestic
financing needs in order to reduce excess liquidity. The proceeds of these sales were initially
kept in a special government deposit, the sterilization account, at the CBG.
 - 32 -

Foreign exchange losses in 2002

60. To decompose the losses among the different sources requires a detailed analysis of
the complete set of daily transaction data of the CBG. This has been completed in full for
2002, as described below.

Implicit subsidies

61. The CBG manages the foreign exchange activities of the central government by
using its reserve assets to balance shortfalls or surpluses in the foreign currency budget of
the government. In conducting foreign exchange transactions with the government, the
CBG applies official market exchange rates that are based on realized rates in the official
market of the previous week.30 Given the relatively small volumes of market transactions in
some currencies, such as the Swiss franc, the official exchange rates of these currencies can
be highly volatile, and the implied exchange rates can substantially differ at times from
international market exchange rates.

62. This means that the government can at times obtain or sell foreign currencies to the
CBG at rates that vary considerably from implied international market rates. For example,
during the week of June 24-28, 2003, the CBG recorded official market exchange rates of
18.96, 17.01 and 11.39 dalasi to the U.S. dollar, the euro, and the Swiss franc, respectively.
According to IMF exchange rate data on June 28, 2003 for cross exchange rates between
the U.S. dollar, euro, and Swiss franc, the implicit exchange rates for the euro and the
Swiss franc would have been 18.66 and 12.85, respectively on the basis of a dalasi-U.S.
dollar rate of 18.96. Hence, compared with international markets, the euro and the Swiss
franc were undervalued in the local market by 8.8 percent and 11.4 percent. According to
the daily trial balances, on June 28, the CBG purchased from the government US$ 17.7
million and sold to the government EUR 6.5 million and CHF 19.1 million at official rates.
Using the above rates, the CBG provided to the government an estimated implicit
subsidy of about D 38.7 million by selling to the government foreign currencies that
were substantially undervalued.31 For 2002, the total estimate of these implicit
subsidies is about D 50 million.

30
In The Gambia, the official market includes all commercial banks and licensed foreign
exchange bureaus. The CBG calculates trade-weighted buying and selling rates using
realized rates of all transactions in which either a commercial bank or a foreign exchange
bureau is a counterpart. Transactions that involve the CBG are excluded. The official market
exchange rates are unweighted averages of these buying and selling rates.
31
We do not have detailed information that would prove whether these foreign currency
amounts went directly to the government, thus giving the government an implicit subsidy, or
whether other parties earned some rents through these transactions.
 - 33 -

63. The use of official exchange rates that lagged market rates also gave rise to implicit
subsidies to other parties. On several occasions, the government instructed the CBG to
provide foreign currencies to companies that were involved in the importation of oil.
Although the CBG sold foreign currencies to these companies at official rates, these rates
were lagging market rates by up to a week and were based on average market rates rather
than market selling rates. In 2002, these payments could have led to subsidies to various
companies in the amount of D 10 million. In total, during the year 2002, the CBG is
estimated to have provided a total of about D 60 million in indirect subsidies to the
government and other parties.

Premiums paid for foreign currencies

64. Losses due to foreign exchange transactions can also emerge if the CBG pays large
premiums, compared with international market rates. For example, in 2002, the CBG
bought about CHF 41 million from foreign exchange bureaus, paying large premiums at
times exceeding 15 percent compared to both official CBG market rates and international
cross market rates between the U.S. dollar and the Swiss franc. Losses incurred through
these transactions are estimated by comparing the actual rates of these transactions to
market rates based on the official dalasi-U.S. dollar rates and international Swiss franc-U.S.
dollar rates.32 In 2002, the CBG may have incurred losses of up to D 70 million due to
premiums paid. No clear explanation has been made for these transactions. CBG officials
reported that, because the commercial banks were not willing to sell a sufficient amount of
foreign currencies at reasonable rates, they, therefore, had to revert to the use of foreign
exchange bureaus. However, in 2002, the official foreign exchange market volume was
about US$550 million, of which more than 95 percent of the transactions were conducted
in U.S. dollars, euros, the U.K. pound sterling and CFA francs. Yet, the CBG bought only
US$ 16 million from commercial banks, compared with purchases of CHF 41 million.

Foreign exchange interventions

65. The CBG has frequently intervened in foreign exchange markets to influence the
exchange rate. At times of excess demand for foreign currencies, the CBG has sold foreign
reserves to ease the pressure on the exchange rate. Eventually, though, the CBG has had to
replenish its reserves to maintain an adequate level of reserves. Against the backdrop of a
steadily depreciating exchange rate, these temporary interventions have proved very costly
and, overall, led to significant injections of liquidity over time. In addition, in 2002 the
CBG apparently entered into forward contracts (or swaps) in U.S. dollars with commercial
banks; these swaps proved very costly against the rapidly depreciating exchange rate, as the

32
As noted above, official exchange rates for several currencies, including the Swiss franc,
are highly volatile due to the very small volumes traded. Therefore, it is more reasonable to
assume that the CBG could have purchased U.S. dollars locally close to the official rate and
converted them into Swiss francs abroad at international market rates.
 - 34 -

CBG provided the dalasi amounts without any interest charges and purchased and
repurchased these U.S. dollars at the same rate. In 2002, the costs incurred through these
currency swaps are estimated at about D 20 million, whereas other intervention costs
that year are estimated at about D 40 million.

66. Adding up the different loss components estimated on the basis of the set of daily
foreign exchange transactions, we arrive at an annual loss estimate of D 190 million, which
is very close to the estimate of D 180 million derived from the annual aggregate data
provided by the CBG.

D. Conclusion and Policy Recommendations

67. This section has argued that excessive money supply was responsible for the sharp
depreciation of the dalasi and the rise in inflation in the past years. The persistent and
increasing overshooting of reserve money growth during 2000-03 raises serious issues
about the monitoring and control of monetary conditions in The Gambia. On the basis of
the above analysis, a series of factors would seem to require urgent attention:

• Fiscal deficits. Budget and program targets were consistently exceeded. With
limited available external financing, domestic sources had to fill the gap.
Continuing large deficits and insufficient adjustments in interest rates of treasury
bills shifted the provision of domestic financing to the central bank. A return to
stable monetary conditions will require fiscal policies that avoid central bank
financing of the deficit.

• Insufficient policy autonomy. Policy autonomy of the CBG could be strengthened

by reducing the cap on government borrowing and by appointing technical experts
to the board of the CBG. In view of the limited capital base of the CBG, the
government and the CBG need to agree on a formal framework that ensures a
sufficient endowment of marketable assets of the CBG to safeguard its operational
independence. From an institutional point of view, a revised Central Bank Act will
need to ensure a sufficient degree of operational independence of the CBG in
conducting monetary policy.

• Indirect subsidies. The official exchange rate of the dalasi to the U.S. dollar,
which is applied to foreign currency transactions with the government, is being
determined daily on the basis of actual transactions conducted by commercial
banks and other licensed dealers. In view of the small size of the Gambian foreign
exchange market, it might be preferable for the CBG to use the U.S. dollar, the
most commonly traded foreign currency in The Gambia, as the vehicle currency.
Official exchange rates of the dalasi against other convertible currencies would
then be determined by using international market cross-currency exchange rates
against the U.S. dollar.
 - 35 -

• Quasi-fiscal deficits. The government should refrain from instructing the CBG to
sell foreign currencies to non-government-related parties for payments that are not
captured by the foreign currency budget of the government. Although the change in
the procedure for fixing official exchange rates may have reduced the risks
associated with this, the system remains open to abuse.

• Other losses related to foreign exchange transactions of the CBG. To prevent a

recurrence of the large losses stemming from foreign exchange transactions with
foreign exchange bureaus, formal guidelines for foreign reserve management have
to be established addressing procedural responsibilities and ensuring a segregation
of duties in foreign exchange operations. Especially with regard to foreign reserve
management and other potential conflicts of interest, a code of conduct for bank
employees should be in place.

• Central bank interventions. Attempts to influence the exchange rate have been
very costly and of limited effectiveness and are better avoided.

• Unrecorded foreign currency payments. To ensure that all payments made by the
CBG will be recorded correctly, internal procedures for reporting and monitoring
need to be improved, including an independent daily check that all transactions
have been entered correctly into the accounting system. In this regard, the
International Financial Reporting Standards (IFRS) should be adopted as the
underlying accounting framework. The external audit process should be
strengthened by rotating internationally approved external auditors more frequently
and ensuring a steady information flow between the auditor and the entire board of
the CBG.

• Data and accounting issues. To improve the monitoring and transparency of

central bank operations, the CBG will need to establish a methodology that
determines and accounts for unrealized gains and losses due to revaluations
separately from realized gains and losses.
 - 36 -

Figure II.1. The Gambia. Broad Money, Depreciation and Inflation, 1998 – 2003
(Three-month moving average of 12-month rates, in percent)

70 25

60
20

50

15
40
Broad money (left scale)

30 10

20
5

10
NEER (inverted, left scale)
0
0
CPI (right scale)

-10 -5
Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03
 - 37 -

Figure II.2. The Gambia: Broad Money and Reserve Money Growth, 1998 – 2003

80 50

45
70

40

60

35

50
Reserve money (six-month moving average 30
of 12-month rate, left scale)
Broad money (six-month moving average of
12-month rate, left scale)
40 25

20
30

15

20
T-bill rate
10

10
5

0 0
Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03
 - 38 -

III. THE GAMBIA’S EXTERNAL POSITION AND VULNERABILITIES TO SHOCKS33

A. Background

68. The Gambia’s revenue-generating capacity is primarily concentrated in

tourism, reexport trade, and the groundnut sector and has been supported by
remittances from expatriates (Table III.1). Foreign exchange earnings have been
vulnerable to shocks, including adverse weather conditions, regional conflicts, domestic
politics, and changes in the terms of trade, while structural impediments across the
economy have worked to accentuate the impact of these shocks on the current account.

Table III.1. The Gambia's Foreign Exchange Earnings, 1997–2003

(In percent of total, unless otherwise indicated)
1997 1998 1999 2000 2001 2002 2003 Average
Groundnuts 3.8 8.7 7.3 10.7 15.3 19.6 9.0 10.6
Other domestic merchandise exports 7.2 6.0 4.4 5.8 7.1 7.3 9.4 6.7
Of which: fisheries 3.4 2.2 2.3 2.0 1.9 2.3 2.7 2.4
Reexport trade, net 20.5 16.9 19.9 22.7 17.3 16.8 17.9 18.8
Transportation 10.1 10.0 10.8 11.4 11.3 11.0 10.9 10.8
Travel income (net) 40.0 40.2 37.3 28.0 26.9 27.2 33.1 33.2
Remittances (inflows from expatriates) 18.4 18.2 20.4 21.4 22.1 18.1 19.5 19.8

Total (U.S. dollars, million) 127.8 142.5 135.5 128.6 115.1 122.2 117.5
Sources: The Gambia authorities, and staff estimates.

69. The country has historically run large current account deficits, reflecting its
low national savings—compared with its investment needs—and the provision of
sizable foreign assistance. Mobilization of national savings has been traditionally poor, in
part due to an underdeveloped financial sector and the lack of access to banking services by
rural households (microfinance has only recently become available). At the same time, the
substantial investment needs in infrastructure and services have been met primarily by
external financing, largely from official sources.

70. Financing of the current account has primarily consisted of official grants and
concessional loans, amounting on average to about 11 percent of GDP (Table III.2).
Official financing has recently targeted capacity building—such as education, health, and
private sector development— and infrastructure projects in priority sectors vital for the
country’s development (e.g., the electricity sector or the expansion of the road network).

33
Prepared by Katerina Alexandraki.
 - 39 -

Table III.2. The Gambia: Composition of External Financing, 1998–2003

(In percent of GDP)

1998 1999 2000 2001 2002 2003 Average

Official grants 8.5 6.9 7.4 7.3 10.5 8.6 8.2
Official loans 1.3 0.6 1.5 2.0 9.2 2.4 2.8
FDI (net) 3.7 0.1 3.8 2.4 2.5 3.5 2.7
Other investment 1/ -1.0 0.9 0.3 -6.5 -10.9 -3.8 -3.5
IMF (net) -0.1 0.3 1.8 2.0 1.0 0.0 0.8
Exceptional financing 0.0 0.0 0.0 0.0 0.1 0.2 0.1

Total 12.3 8.8 14.8 7.1 12.4 10.9 11.5

Sources: The Gambia authorities; and staff estimates.
1/ Includes short-and medium-term capital flows, suppliers' credits, and errors and omissions.

71. Foreign direct investment (FDI) has been the second-biggest source of current
account financing, although a clear assessment of the size of flows is constrained by
data deficiencies. FDI has been directed toward The Gambia’s principal economic
sectors—groundnuts, banking, tourism, and wholesale/retail trade—and its composition has
reflected profitability considerations, liberalization policies (e.g., the rationalization and
reduction of import tariffs and the opening of the financial sector to foreign investment in
the late 1980s), and the recent drive to revitalize and upgrade the tourism and trade
industries.

72. The Gambia’s reliance on foreign debt for its external financing needs had
resulted in an accumulation of foreign debt of US$258 million by end-1999 in net
present value (NPV) terms (217 percent of exports of goods and nonfactor services). In
November 2000, The Gambia was declared eligible for debt relief under the enhanced
Initiative for Heavily Indebted Poor Countries (HIPC Initiative). This provided for a
reduction of US$66.6 million in NPV terms at the completion point, originally envisaged
for end-2002. The completion point has been subsequently postponed until 2005 at the
earliest, due to serious policy slippages that put the program supported by the IMF’s
Poverty Reduction and Growth Facility (PRGF) far off track in July 2003.

B. Principal Sources of Vulnerability in the Gambian Balance of Payments

73. The vulnerabilities of The Gambia’s balance of payments stem from persistent
macroeconomic imbalances, which are largely financed with debt flows; a high level of
foreign currency debt; and a narrow-based and volatile revenue stream that is subject to
external shocks. Thus, over the medium term, the sustainability of The Gambia’s external
position will depend on (i) the country’s ability to raise foreign exchange revenues; (ii) its
capacity to attract non-debt-creating capital inflows, especially as debt-servicing
requirements begin to rise; and (iii) its progress in implementing structural reforms that
would aim at mitigating the impact of exogenous shocks on the agricultural, reexport trade,
or other sectors. Specific sources of vulnerability include the factors identified below.
 - 40 -

74. The country’s principal exportables—groundnuts and derivatives—are

excessively dependent on exogenous factors, including climatic conditions and changes
in the terms of trade. As an example, poor rainfall in 2002 caused the groundnut harvest
to drop by half, with the quality34 of groundnuts also adversely affected. Other agricultural
crops showed declines in volumes of around 30 percent. This had a drastic negative impact
on 2003 groundnut exports,35 as domestic consumption and efforts to secure seeds for the
following year’s harvest absorbed the bulk of output (the volume of groundnuts available
for export in 2003 is estimated to have dropped by 63 percent). In addition, exports of high-
value-added groundnut oil dropped precipitously, as the small volumes made the costs of
processing and freight prohibitive. As a result, groundnut-related exports dropped by 56
percent in dollar terms during 2003.

75. The volatility of groundnut exports due to heavy dependence on rainfall is

exacerbated by structural obstacles in The Gambia that constrain farmers’ capacity
to respond to sudden changes in weather conditions or price incentives. The lack of
irrigation facilities36 continues to be a major problem, while inadequate storage facilities
and the absence of an efficient policy for seed management may protract the negative
effects of a bad year into subsequent years by limiting the availability of seeds for the
following year’s harvest. Moreover, weak infrastructure for transportation, distribution, and
marketing reduce exporters’ ability to respond quickly and effectively to price movements.

76. The range of domestically produced exports is not diversified, reflecting The
Gambia’s narrow—and to a large degree unsophisticated—productive capacity and
the failure so far to create economies of scale by generating linkages among different
economic sectors.

77. Sporadic closures at the Gambian-Senegalese border are reported to have

caused temporary slowdowns in reexport trade. These border closures have sometimes
reflected political tensions (including in the aftermath of a Senegal-The Gambia football
game in June 2003). Although the direct magnitude of their impact is not clear owing to the
absence of relevant data, there may also be indirect adverse effects that harm The Gambia’s
image as a stable trade gateway in the region or increase the country’s cost competitiveness
for the transport/transit of goods in the region.

34
The “quality” determines the recovery rate of usable groundnuts after the shelling process. During
2002–03, the recovery rate dropped, due to poor quality.
35
Owing to the timing of the groundnut season, groundnuts harvested in the summer of one year are
considered as available for export in the following year.
36
At present, only 8 percent of cultivable land is estimated to be irrigated, and this is mostly for rice
crops.
 - 41 -

78. Tourism revenues have been vulnerable to domestic and external shocks,
including the impact of the 1994 coup d’état and the international slowdown in the travel
industry in the aftermath of the 2001 terrorist attacks in the United States.

79. Official grants and loans, which are the primary financing source, can be
erratic and time limited. In addition, and despite the concessional nature of official
financing to The Gambia, loans augment the country’s already large external debt stock.
FDI inflows remain limited, perpetuating The Gambia’s dependence on debt
financing. Exogenous factors—including small market size, limited natural resources, and
lack of proximity to big markets—as well as internal determinants—poor infrastructure,
uncertainty with regard to macroeconomic policy commitments, unskilled labor, weak
enforcement of contracts, governance concerns, etc.—have been an obstacle to larger FDI
inflows and need to be tackled in order to ensure the sustainability of FDI flows in the
future.

80. The capital and financial account is very vulnerable to shocks in confidence or
to slippages in monetary and/or fiscal policies. The openness of The Gambia’s capital
account, while desirable for fostering a market-based economy, enhances the sensitivity of
capital flows to shocks in confidence stemming from policy errors or adverse events in the
real sector. Recent high rates of growth in private sector credit may have rendered the
economy particularly susceptible to capital outflows.

C. Mitigating Balance of Payments Vulnerabilities Through Growth in Exports of

Goods and Services: Structural Impediments and Ongoing Measures

81. Structural impediments have often amplified The Gambia’s vulnerability to external
shocks. This subsection explores these factors in more depth and presents some of the steps
that are being taken—or that could be taken—to address these impediments. The
subsection focuses on The Gambia’s principal economic sectors, including reexport trade,
tourism, groundnut, and fisheries.

Reexport and transit trade

82. Reexport and transit trade appear to be holding up well despite continuing
border problems. They have benefited particularly from the superior efficiency and speed
of the Banjul port in handling and clearing cargo compared with its regional rivals, The
Gambia’s liberal exchange system that poses no restrictions to capital flows, and the large
trading community in Banjul. At the same time, The Gambia has benefited from political
shocks in the west African region (including the civil conflicts in Côte d’Ivoire, Liberia,
and Guinea Bissau), which have led to the diversion of trade from the ports of Abidjan and
Monrovia to Banjul. Until recently, The Gambia’s lower import duties had been another
factor encouraging the routing of trade to Banjul and its subsequent reexport to other
destinations in the region. However, against a background of increasing trade liberalization
 - 42 -

in the countries of the WAEMU,37 the profitability of trade through The Gambia appears to
be increasingly relying on the avoidance of duty payments in Banjul as well as at the
Senegalese border (Table III.3).

Table III.3. Average Tariff Protection (Import Duties) in the West African
Region, 1996 and 2002

The Gambia Senegal Guinea-Bissau Mali Guinea Côte d’Ivoire

2002 11.8 12.0 1/ 12.0 1/ 12.0 1/ 12.0 1/ 12.0 1/
1996 16.5 20.0 27.6 16.7 33.0 19.1
1/ This simple average tariff does not include a number of import surcharges permitted within the WAEMU
framework, which typically raise the average duties to about 14.5 percent.

83. Looking ahead, despite the Banjul port’s current edge in cargo handling and
clearance, its outdated infrastructure and capacity constraints are likely to hinder
future traffic growth unless action is taken. To address these concerns, the emphasis at
present is on upgrading the port’s infrastructure and improving its productivity. In this
context, the port authority commissioned the creation of a master plan that has provided a
framework for the modernization and expansion of the Banjul port. Investment needs for
these projects are estimated at around €48 million over the period 2003–06, and are likely
to be financed in part by foreign donors and in part by the private sector. The latter could
be especially involved in the area of cargo-handling services, warehousing, and security.

84. In the case of transit trade, there is substantial growth potential from an
impending agreement with Mali to reroute part of its trade from the Senegalese port of
Dakar to Banjul. The port authority estimates that the agreement would increase annual
port traffic by up to 25 percent over the next three years, provided the necessary facilities
are established, including an upgrading of river transport. Political impediments would also
have to be addressed, if transit and reexport trade are to continue to flourish in the future.
Border closures with Senegal are a persistent source of uncertainty and could deter the
sustainability of any bilateral transit trade agreement between The Gambia and regional
partners.

85. Finally, in the area of customs, first steps are being taken to harmonize the
customs valuation system with World Trade Organization (WTO) standards, in line with
The Gambia’s obligations under WTO membership, while progress is being made in the
creation of a training center for customs officers. However, maintaining an advantage as a
regional entrepôt would require more efforts toward streamlining customs procedures and
formulating a transparent, economically efficient, and administratively friendly framework
for providing duty exemptions. In this latter context, there is a need for increased
37
West African Economic and Monetary Union.
 - 43 -

coordination between the finance and trade ministries in the setting of investment-related
incentives and better communication with the Customs and Excise Department regarding
implementation. Coordination would also encourage better analysis of the cost-
effectiveness of incentives against the background of The Gambia’s poor revenue-raising
capacity and pervasive rent-seeking activities in the customs area, as evidenced by recent
arrests of high-ranking customs and other officials. Enhanced cooperation among the
ministries would also assist in making trade policy more supportive of the government’s
overall macroeconomic and development strategy.

Agriculture

Groundnuts (peanuts)

86. The volatility of the groundnut sector’s contribution to export earnings—between

4 percent and 20 percent over the past six years—reflects the harvest’s high sensitivity to
climatic conditions. The lack of irrigation facilities—exacerbated by the high saline content
in the Gambian waters—means that the prospects of mitigating the impact of weather on
output and exports will be limited in the near term. Improvements in irrigation are further
hampered by the inadequacies of the electricity generation and distribution system.

87. One major issue in the sector has been the supply of high-quality seeds. The
impact of the government’s role as the primary provider of seeds, fertilizer, and credit to
farmers on production efficiency is ambiguous. While it addresses the inability of many
small farmers to save and store safely groundnut seeds (due to unavailability of storage
space, transport facilities, and liquidity) it may also work towards distorting the incentive
structure. Farmers have, in practice, often sold their seeds to the informal domestic or
foreign (primarily Senegalese) markets, instead of engaging in effective seed management
and storage, expecting that the government will provide seeds regardless.38 This in turn has
had a negative impact on export earnings because of the reduced availability of groundnuts
for processing into higher-value-added exportables.

88. Another issue is the availability of credit both, at the beginning of the groundnut
season, to farmers (for the purchase of fertilizers, seeds, etc.); and to cooperatives, during
the final stages of the season (for the purchase of nuts from the farmers to sell on to the
processing operators). In past years, the biggest society of cooperatives, FACS, has been
observed to buy unshelled groundnuts from farmers on credit but then to have difficulty
paying on time, thus forcing cash-constrained farmers to sell their seeds to Senegal rather
than to Gambian depots for onward processing. Notwithstanding the urgent need to
improve the availability of credit, it is not clear whether the government’s contribution in

38
Farmers do engage to some extent in seed storage, even in adverse conditions, as evidenced by the
experience in 2002–03 season: while the government failed to secure the targeted quantities of seeds
for distribution following a calamitous drop in output in 2002, the unexpected jump in estimated 2003
output demonstrates that farmers had in fact stored seeds for multiplication and sowing.
 - 44 -

this area has so far been optimal. Government loans in the past to farmers39 have often been
soft in nature, fostering further the informal seed/groundnut market by encouraging farmers
to default and sell their seeds at a higher price at home or abroad. Anecdotal reports also
suggest that such credit has been provided selectively, with considerable potential for
corruption.

89. An important step for improving efficiency in the sector will be to expand
private sector involvement into areas such as provision of credit or financing of related
infrastructure. Microfinance activities in rural areas, while growing, are still at an
embryonic stage and, to some extent, are still dependent on external financing from official
or nongovernmental organizations. Given the importance of access to credit, measures to
encourage the provision of private sector led financial services in rural areas (e.g., mobile
bank branches), or to improve risk-assessment mechanisms by creditors, should receive
high priority. In the same context, the implications of macroeconomic policies for interest
rates and credit to the private sector need to be borne in mind. Poor infrastructure—and, in
particular, road and river transport—has also been an obstacle to efficiency and an area
where private sector led investment is needed.

90. The privatization of the largest groundnut processing company, Gambian

Groundnut Corporation (GGC) would be a step in this direction. The privatization
scheme is driven by the need to increase GGC’s operating efficiency and includes plans to
expand activities into transport, operations and trading. However, administrative
bottlenecks and prolonged deliberations over the role of the privatized GGC in the sector
have delayed the privatization process.40 The company was first sold to Swiss company
Alimenta in 1993, but was subsequently renationalized amid concerns over abuse of its
monopoly status. Monopoly considerations are no longer of such concern due to the
presence of a second processing company—Premier Agro—in The Gambia since 2001.

91. Nevertheless, limitations to growth in the sector are inevitable, given the small
size of the Gambian land and market and its limited manufacturing base, which forces
operators to import all machinery and spare parts, thus raising the time and cost of
production.

Other agricultural crops

92. One area of potential diversification is the production of fruit and vegetables and
of exotic or medicinal plants, for which The Gambian soil is believed to be propitious.
The bulk of horticultural production occurs during the dry season, making it less dependent
on irrigation facilities and providing a natural hedge against shortfalls in the groundnut

39
Farmers are expected to repay the government in kind, once the harvest has been collected, but
repayment rates are reportedly low.
40
Although a target date of December 2002 was originally set to bring GGC to the point of sale, it has
still not been put on the market.
 - 45 -

harvest arising from insufficient rainfall. To some degree, diversification toward

horticulture is already occurring, primarily at the subsistence farming level, as the volatility
in groundnut production has forced farmers to experiment with the cultivation of
alternative crops. However, so far only one company, Radville Farm—a subsidiary of
U.K.-based Wilmore—has managed to translate this potential to horticultural exports, as
structural difficulties—including the lack of access to credit and insurance schemes or to
transportation facilities, such as cheap air cargo—have inhibited the commercialization of
the sector.

93. Another obstacle has been that of market penetration for the Gambian exports.
Although The Gambia now enjoys preferential access to the European Union (EU) market
under the Everything-But-Arms (EBA) initiative and, as of January 1st, 2003, to the U.S.
market under the US Africa Growth and Opportunity Act (AGOA), it will have to address
supply-side constraints that have so far limited the utilization of preferential access.41 These
constraints include achieving economies of scale in order to cover fixed costs, such as those
related to meeting required standards (e.g., the EU standards on agricultural imports,
EUREP, for which each farm needs to obtain a certification that is too costly for small-
scale farmers) or to marketing local produce abroad. A higher mobilization by the
government to raise awareness on eligibility for preferential schemes would also be crucial.
In the case of AGOA for example, it appears that The Gambia has yet to apply for
eligibility for the so-called “Wearing Apparel Provision”42, in order to be able to export
textiles to the United States duty-free. This would encourage development of the textiles
and clothing industry as well as boost FDI flows into the sector.

94. To some extent, the above difficulties seem to stem from one common factor, which
is the fragmentation of agricultural production and lack of economies of scale. To
address this problem, the Department of Agriculture has been promoting the creation of
cooperatives that would pool farmer resources to finance projects of common use, such as
road transport, collective credit schemes, and the purchase of fertilizers, as are already
functioning to some extent in the groundnut sector. In addition, the possibility of synergies
with other economic sectors are being explored, either in the form of supply linkages (e.g.,
with the tourism industry) or in the form of pooling to cover costs for air transport etc.
(e.g., with the fisheries sector). Finally, consideration should be given on the role of
regional integration in fostering economies of scale through a freer flow of goods, lower

41
In 2003—the year of eligibility under AGOA—15 percent of The Gambia’s exports to the United
States entered preferentially, under the GSP scheme, while none entered under the—more
preferential—AGOA scheme. While 2003 is not a good indicator for the future due to the adverse
impact of weather on exports, the statistics still show both the low utilization rates of existing
preferential schemes, as well as the minimal awareness and use of export opportunities.
42
In order to be able to export apparel (and certain textile items) to the U.S. duty free under AGOA,
countries have to ensure that they have implemented a 'Visa System' that ensures compliance with the
AGOA Rules of Origin.
 - 46 -

transaction costs and increased specialization. In this context, The Gambia could play an
active role within ECOWAS, aiming at nurturing the political will necessary for the
implementation of the group’s integration objectives. ECOWAS could also provide a
context for fostering more constructive economic relations with Senegal, which is crucial
given The Gambia’s geography.

Fisheries

95. The fisheries sector has registered a real growth of 76 percent over the past decade,
primarily as a result of the establishment of a number of fishing-village facilities—financed
by Japanese grants—providing high-standard storage, processing, and distribution which
have reduced losses from inadequate storage from 35 percent to 5 percent of the daily
catch. However, the growth in output has failed to translate into an equivalent growth in
recorded fish exports due to capacity constraints in the industrial fishing sector, which is
the one primarily catering to the foreign markets.43 Such constraints include the lack of
appropriate factory facilities, a poor marketing and distribution system, inadequate
facilities for the maintenance, repair, and refueling of fishing boats, difficult access to
credit, and scarcity of trained personnel for the management of industrial fishing
companies. The absence of a fisheries port has been another major factor hampering export
growth, as it deprives The Gambia from earnings stemming from processing. This latter
impediment is being addressed by a project to establish such a port—financed by the
African Development Bank (AfDB) and the Arab Bank for Economic Development in
Africa (BADEA)—and is expected to considerably boost export revenues from value-
added products over the coming decade.44 Other efforts to expand foreign exchange
revenues include the establishment of joint ventures with foreign operators fishing in
Gambian waters; a tighter supervision of Gambian waters to minimize usurpation by
foreign users; a more aggressive search for new markets, from Nigeria to Europe; and the
signing of fishing agreements with other countries that safeguard Gambian interests and
avoid overexploitation of resources. Currently, The Gambia has a reciprocal fishing
agreement with Senegal and a tuna-fishing agreement with Japan’s Tuna-Fishing
Association, and it is seeking to conclude one with Spain.

43
As opposed to the smaller-scale artisanal sector, which primarily caters to the domestic market as
well as being exported informally.
44
The Ministry of Fisheries believes that, given the present capacity, output/export of value-added
fish as a result of the new port facilities, upgraded technology and new fishing agreements could
increase fivefold over the next decade, which would translate into the doubling in the share of fishing
revenues in total foreign exchange revenues to 10 percent.
 - 47 -

Services

Tourism

96. The tourism sector is The Gambia’s largest source of foreign exchange,
accounting for around 33 percent of total foreign exchange earnings after allowing for
associated imports. The sector’s reliance on imports is indicative of the absence of strong
linkages between the tourism industry and the domestic economy (e.g., the agricultural or
handicraft sectors), and suggests that measures to improve such linkages could have a
beneficial impact on the current account.

97. Tourist arrivals have also been highly seasonal—concentrated in the European
“winter” season—thus contributing to a seasonal volatility of the Gambian current account
(and exchange rate) during the course of each year. Given the sector’s substantial share in
total foreign exchange earnings, shocks to tourism can pose a significant threat to the
stability of the current account.

98. Monitoring the sector’s performance in recent years has been hampered by
inadequate statistical data; however, a qualitative assessment shows that the industry is still
far from reaching its full potential. Structural, as well as sector/country-specific
constraints—including limited air access, weak marketing strategy, poor infrastructure
outside the Banjul area, capacity constraints, strong seasonality, etc—have been the
primary obstacles to a rapid growth of tourism in The Gambia. As a result, advantages such
as cost-competitiveness, an English-speaking population, and relative geographic proximity
with Europe and the United States,45 have not been exploited fully by the industry.

99. The absence of a dedicated marketing and promotion strategy has also hampered
tourism growth, especially with regard to attracting more upscale tourism and increasing
the levels of visitors’ out-of-pocket expenditure while in the country. Weakness in this area
is compounded by poor infrastructure (including availability of electricity or extensive road
networks), outdated hotel facilities, beach erosion, insufficient capacity, inadequately
trained personnel, the lack of a classification system of hotels, and the absence of facilities
for value-added activities such as water sports or ecotourism. However, significant steps to
address some of these issues have been recently taken.

100. As part of a strategy to tackle these constraints, the authorities are taking
action to improve tourist access to The Gambia and rebrand the country as a tourist
destination. More charter links between The Gambia and major European markets such as
the Netherlands and Belgium, have boosted package tour business, while upgrading
measures—including a donor-financed beach recovery project, incentives to invest in the
renovation and improvement of hotels, and the adoption of the international star-
classification system for Gambian hotels—are being implemented to improve perceptions
45
Six hours’ flying time from the eastern seaboard.
 - 48 -

of the Gambian tourist “product” abroad. The recent boom in hotel construction by foreign
and domestic investors—ten new hotels are expected to be built over the next two years
around the coastal zone—and the resulting expansion in capacity should create a
considerable potential for growth, as well as encourage the influx of more upscale tourism.

101. In addition, to address the marketing “vacuum” that has characterized the industry
so far, the authorities have established the Gambian Tourism Authority, which has a
mandate to promote The Gambia abroad—including to new markets—and conduct an
analysis of the industry’s performance and priorities (which also involves efforts to
improve data collection in the sector). A Tourism Master Plan is currently being prepared
under the sponsorship of the AfDB. The government has also been upgrading the tourism
program in the training school for employees in the sector, as part of the strategy to
improve tourism services in The Gambia. Finally, apart from efforts to increase the
quantity and value added associated with tourist arrivals, the government aims at further
moderating the seasonality in the sector by building on recent initiatives that have
successfully promoted tourism during the European summer.

102. Besides the promotion of tourism per se, there is a growing awareness of the
potential benefits of increased linkages between a high-growth tourism industry and
other sectors in the economy. Steps taken to enhance such linkages have included the
establishment of an Association of Small-Scale Enterprises in Tourism, which is in charge
of organizing farmers into cooperatives that would market and supply their produce to
hotels in a reliable manner, thus reducing hotels’ reliance on imported goods and
improving The Gambia’s trade balance. The association also conducts similar activities
with other parts of the economy, such as small-scale manufacturers of crafts and cultural
goods.

Other Services

103. The financial services sector has, along with tourism, attracted the bulk of FDI
inflows, in particular following the liberalization drive in the early 1990s, which
considerably reduced restrictions on foreign ownership. However, the sector’s growth
potential remains underutilized due to the high perception of risk in local projects, which
has impeded financial intermediation, and caused persisting macroeconomic uncertainty.

104. Given the constraints faced by the manufacturing sector—including lack of

economies of scale, insufficient domestic natural resources and raw materials, and high
transport costs—financial or telecommunication services may provide a more promising
source of export earnings. The recent success of a local Internet-service provider in
exporting services in the west African region serves to confirm the reality of this potential.
The present lack of skilled labor could be addressed by undertaking appropriate capacity-
building projects and gradual knowledge transfers through spillover effects from FDI, as
well as by attracting skilled Gambian expatriates who would be willing to invest capital
and labor in the country.
 - 49 -

105. At the same time, the impediments mentioned above, as well as regulatory
barriers—including the absence of a transparent competition law—would need to be
urgently addressed, in order to attract the necessary foreign capital to jump-start a
sustainable growth in these sectors.

Exploitation of natural resources

Oil exploration

106. The Gambian government has devoted substantial attention and resources to
oil (hydrocarbon) exploration in recent years and has sought the collaboration of a
number of foreign oil companies in the assessment of the country’s potential reserves. The
country’s hydrocarbon prospects are believed to be good, as it is located at the northern
extent of the Casamance-Bissau subbasin, where studies have indicated the existence of
petroleum systems.

107. Recent exploration efforts have included a six-year petroleum production license to
the Australian company Fusion Oil and Gas, signed in October 1999, for the survey of a
5,000-square-kilometer offshore block off Banjul and the potential drilling of two wells.
Fusion carried out an in-depth study of the data available for the deepwater areas offshore
The Gambia, and in December 1999, it conducted a two-dimensional seismic survey. In
August 2002, the company signed an agreement with Amerada Hess, under which the latter
would conduct a three-dimensional seismic survey on Fusion’s block and have the right to
drill the two wells. However, the Gambian government terminated the license agreement
with Fusion before the survey on drilling could commence.46

108. In early 2003, The Gambian government signed a US$5 million contract with a
consortium led by Buried Hill Energy Incorporated. Under the contract, that company
would conduct a three-dimensional seismic survey that would aim at quantifying any
commercially viable resources within particular onshore and offshore blocks in the
Gambian territory.

109. The consortium is said to have completed an evaluation of the oil potential of
500 square kilometers (out of the 2,000 square kilometers of deepwater and the 3,000
square kilometers of shallow water) of The Gambia’s maritime offshore territory. While the
results of the survey have not been made public, in February 2004, the Gambian
President announced that preliminary indications suggest that “there exists oil in The
Gambia in very large quantities, especially in the [surveyed] area.” The government
intends to conduct an exploratory well drill during 2004 in order to confirm the results of
the survey.

46
Fusion Oil later reported that it had agreed to a settlement with the government at undisclosed
terms.
 - 50 -

Mining

110. The growth potential of the Gambian mining sector will depend on the heavy-
mineral content of the country’s beach deposits, the assessment of which has been the
objective of a joint venture between the Gambian government and the Australian
company Carnegie Corporation over the past four years. Carnegie explored the mineral
content of the Brufut deposits, located along the Gambian coast, during which it found a
high-grade zircon concentration of about 25 percent.

111. In June 2002, Carnegie signed a joint venture agreement with Atlantic Mines to
bring the zircon stockpile into production by the end of 2002. Up to June 2003, around
12,000 tones of zircon, worth some US$1.1 million, had been exported from The Gambia.

D. Conclusion

112. External and internal factors continue to render The Gambia’s balance of
payments vulnerable to shocks. The country’s small market size, limited natural
resources, and lack of proximity to big markets are exacerbated by the macroeconomic
uncertainty, poor infrastructure, unskilled labor, weak enforcement of contracts, and
governance concerns. As a result, the potential for growth in private sector activity has
been hampered, reliance on official financing has persisted in order to meet external needs,
and debt accumulation has continued.

113. Looking ahead, the sustainability of The Gambia’s external position will rely
on a quick resolution of macroeconomic imbalances, including steps to allow the
resumption of IMF support under the PRGF arrangement, in conjunction with parallel
efforts to undertake medium-term structural reforms at the institutional as well as sectoral
levels, along the lines described above. The involvement of the private sector (domestic
and foreign) in the structural reforms will be key, but will be possible only in a transparent
and stable macroeconomic and institutional environment.
 - 51 -

IV. DATA DEFICIENCIES IN THE GAMBIA’S BALANCE OF PAYMENTS47

114. Figures reported for the Gambia’s balance of payments (Tables 33) are based on
submissions of raw data by the Gambian authorities (including on imports and official
financing), together with a series of assumptions about key variables based on past and
present trends in the country and on the experience of comparator countries. The figures
reflect significant revisions in import data for the 1997-2002 period, which seem to suggest
that data previously identified as “imports, f.o.b.” actually reported “imports, c.i.f.” No
official balance of payments statistics are currently published.

115. This note describes the methodology used to compile the IMF’s data for
The Gambia balance of payments, the most important constraints and data deficiencies
faced in the compilation, and the implications for the interpretation of balance of payments
figures.

A. Current Account

Exports of Goods

116. Merchandise exports comprise groundnut products, “other” domestic exports, and
reexports (Table 34). Data provided by the Central Statistics Department (CSD) appear to
substantially underestimate actual exports, in part because they do not capture exports
occurring informally at the Gambia-Senegal border. To address this handicap, exports have
been estimated as follows:

• Groundnut products. The quantity of groundnuts available for exports is deduced

from actual figures on the total annual production of groundnuts (issued by the CSD)
and an assumption about the level of domestic consumption. A percentage of this
quantity is assumed to be exported informally (not necessarily in a processed form
and, therefore, yielding a relatively low unit price) while the remainder is divided into
high- and low-quality processed groundnuts (the so-called HPS and FAQ types),
groundnut oil, and groundnut cakes, on the basis of information provided to the IMF
by the biggest private groundnut processing and exporting company in The Gambia,
Premier Agro. One caveat in the methodology is that it relies on anecdotal estimates
about the level of domestic consumption (including seed accumulation) and ad hoc
estimates on the portion exported informally, and it is not clear in which direction the
bias would go.

47
Prepared by Katerina Alexandraki.
 - 52 -

• Reexport trade. Exports classified under “reexport trade” are goods entering the
Gambian territory as if The Gambia were their final destination, but then reexported
to neighboring countries by land. This distinguishes them from transit trade, where
goods are officially marked with their final destination and are thus charged no
customs duties and sales taxes while passing through The Gambia. Goods for
reexport are—officially—charged the full amount of duties and sales taxes. In the
balance of payments, the value of reexports is based on assumptions about the total
amount of imports for reexport, to which an estimate of a markup is applied. As a
rough estimate, the markup should include the following: sales tax of 10 percent; an
average customs duty of 12 percent; a profit margin of 10 percent; and a cost of
freight and insurance of 14.3 percent (12.4 percent for freight and 1.9 percent for
insurance)48. The value of reexports is thus estimated at 1.55 times the value of
imports for reexport f.o.b.. or around 1.35 times the value of imports for reexport,
c.i.f..

Imports of Goods

117. Data on imports, c.i.f. from the Customs and Excise Department have been used,
with the qualification that they are likely to underestimate actual imports, owing to the
following factors:

• There seems to have been a practice of not recording items that have been either duty
exempt or have been granted (or waiting to be granted) duty waivers. This, and other
deficiencies in recording proceedings, may explain the sharp drop in recorded imports
during 2001, rather than a proportionate drop in domestic absorption.

• Informal cross-border imports of items such as cooking oil, animals, footwear, and
cereals have been unrecorded (given the porousness of the border).

118. Another uncertainty concerns the share of the category of “imports for reexport” in
total imports. Numerous studies based on surveys have arrived at estimates for this share
that range from 35 percent to 75 percent of total imports. To compute the entries in the
balance of payments tables, a figure near the lower bound of this range has been adopted.

119. Caution should also be applied in using the data for oil import levels, which, for the
years 1997-2002, have been taken from CSD data. As reported, the value of oil imports is
highly volatile, which, even given the changes in world oil prices, implies very volatile
changes in the volume of oil imports. In turn, such fluctuations in volume terms are
difficult to account for on the basis of changes in demand or in other economic
fundamentals. This supports the conclusion that CSD data on imports are not very reliable,
in part due to inadequate customs controls.

48
Based on information compiled by an IMF statistics mission in 1999.
 - 53 -

Nonfactor services

120. Travel Income. Travel income is effectively set equal to an estimate of the revenue
from tourism, given that no data are currently available on the expenditure of Gambians
traveling abroad. The estimate of tourism revenues is based on data from the CSD and
Tourism Authority on tourist arrivals, daily expenditure and average length of stay, as well
as data on the average price of a hotel bed and the amount of airport tax. However, data on
tourist arrivals are believed to underestimate actual figures, and the CSD has not published
data on daily expenditure and average length of stay since 1996. The resulting
underestimation could be partly offsetting the absence of negative travel income by
Gambian travelers abroad.

121. Other transport services. The category ”other transport” includes services
provided by the Gambian Port Authority (GPA) (ferry-crossing fees, etc.), the Civil
Aviation Authority (GCAA) (e.g., landing fees and sale of fuel) and the Gambian Public
Transport Corporation (GPTC) (which operates trucks) to nonresidents. Revenues of the
GPA should grow along with port traffic, those of the GCAA should grow in line with
airport traffic and air cargo, and those of the GPTC should grow in line with transit trade.
However, in the absence of actual data on either form of revenues and/or growth rates (only
the GPA has provided data on growth in traffic), the balance of payments estimate of
“other transport” is rather weak.

122. Other services. An estimate for “other services” (which, in the case of The
Gambia, should include tele/postal communications, fees on financial services,
construction services, etc., paid to nonresidents) was made by looking at the share of such
services in GDP in comparable countries.

Income and transfers

123. The key sources of uncertainty in this category are remittances and net interest
income by the private sector.

124. Remittances. Remittances in the balance of payments consist of two components:

outflows, which are assumed to be a particular percentage of technical assistance (TA)
funds received by The Gambia (the rationale being that most TA funds are directed to
salaries of expatriate consultants in The Gambia); and inflows, which are in part based on
Western Union data on money transfers to The Gambia from abroad, and in part on
assumptions about the portion of inflows that enter the country informally. Equally, the
estimation of outflows ignores repatriation of earnings by seasonal foreign workers who
come to work in Gambian farms during the summer harvest season. Finally, there is some
uncertainty over the amount of TA funds on which the figure for outflows is based.

125. Net interest income of the private sector. Components of net interest income of
the private sector include dividend payments to nonresidents and—in the absence of data
on net interest income of the nonbank private sector—net interest income of (resident)
banks’ net foreign assets. The underlying assumption for the latter is that banks receive/pay
 - 54 -

the London interbank offered rate (LIBOR) on their net foreign assets. In the case of
dividend payments, data from a business survey (published in February 2002) have been
used to derive estimates for the return on foreign investment in the Gambia—estimated at
about 20 percent in 2002 (or around 15 percent above the LIBOR). Of this, a portion is
assumed to be distributed as dividends (between two-thirds and 80-90 percent, depending
on the year) and the remainder is assumed to be reinvested.

126. Private transfers. The level of private transfers is set equal to the amount of
transfers by private residents abroad to the Gambian government, as cited in the foreign
currency budget of the Central Bank of The Gambia (CBG). No data are available on any
other form of private transfers into (and out of) the country.

127. Official transfers. The accuracy of data on official transfers is compromised by the
lack of clarity in the submissions of such data by the Department of State for Finance and
Economic Affairs (DOSFEA) and the difficulty of reconciling the DOSFEA data with
those by the CBG. Given that not all transfers are disbursed via the CBG, more weight is
placed on the DOSFEA submissions, as shown in the central government budget execution
report. This underestimates the total amount granted annually, as it excludes off-budget
project aid.

B. Capital and Financial Account

128. Official budgetary loans. As in the case of official transfers, the accuracy of data
on budgetary official loans is constrained by unclear DOSFEA data—especially with
regard to the disbursement schedule—and difficulties in reconciling CBG and DOSFEA
data.

129. Official nonbudgetary (project) loans. In the absence of such data, the relevant
balance of payments entry sets this equal to zero and therefore underestimates the actual
amounts.

130. Foreign direct investment (FDI). Reliable FDI data are not available. A business
survey, published in February 2002, contained estimates that appeared to substantially
underreport actual FDI flows, given anecdotal evidence of FDI in the tourism, banking,
groundnut processing, and other sectors, and was therefore not adopted as the source of
FDI data. Instead, current FDI data are based on on-the-ground discussions with the
authorities and various agencies in key sectors (e.g., the Tourism Authority) and have been
cross-checked—on an order-of-magnitude basis—with UNCTAD data49 on FDI inflows to
The Gambia (up to 1999). The unavailability of reliable FDI data places a serious
constraint on the assessment of the level of private capital flows. Further efforts should
thus be made by the authorities to collect data from the foreign companies themselves and
reconcile them with data from organizations such as the Gambian Investment Promotion
49
UNCTAD, “FDI in Least Developed Countries at a Glance,” 2001.
 - 55 -

and Free Zones Authority (GIPFZA), the Gambian Tourism Authority, the Chamber of
Commerce, and the CBG (for data on the banking sector).

131. Other private capital inflows. These consist primarily of “other investments”
(including profits of resident trading companies taken offshore and the change in the net
foreign assets position of commercial banks) and suppliers’ credits. For the latter, data on
the net (short-term) credit position of the wholesale/retail sector were taken from a business
survey for the year 2000, the assumption being that the large majority of these credits were
trade related. Projecting forward, the 2000 data are assumed to grow in line with total
imports.

C. Institutional Weaknesses and Steps Forward

132. Two technical assistance missions from IMF Statistics Department visited the
Gambia between 1999 and 2001 to help build capacity in the compilation of the Gambian
balance of payments, as well as the collection of data. The main “institutional” weaknesses
identified during these missions were the lack of a special balance of payments unit at the
central bank (subsequently established), insufficient collaboration among the balance of
payments unit and potential providers of data—including the Department of State for
Finance and Economic Affairs (including the Customs and Excise Department, and the
CSD) the Chamber of Commerce, and the Tourism Authority, —and an inadequate
mobilization of key companies and banks to submit data for balance of payments purposes–
partly due to the absence of legislation enabling the CBG to solicit relevant data from
banks and enterprises.

133. Other recommendations of the statistics missions that have yet to be adequately
implemented included developing a register of all firms and establishments that could
provide relevant data for the balance of payments; undertaking surveys of major importers
and exporters—including companies involved in reexport trade—with a view to
determining the size of The Gambia’s external trade; identifying foreign firms and the
systematic assessment of the international investment position; and collaborating more
closely with the United Nations Development Program (UNDP) to obtain information on
current and capital transfers.

134. The Gambian authorities have taken steps to address some of the weaknesses,
including training local personnel in balance of payments accounting methodology,
amending the Financial Institutions Act to cover statistical reporting obligations of
commercial banks, and conducting surveys on the banking sector, travel agents, hotels, etc.
However, these surveys seem to have been incomplete and only part of a one-off exercise.

135. Significant challenges thus remain, especially in the area of monitoring informal
trade flows and capital flows, that can be addressed only through a general mobilization of
key contributors, a closer collaboration among relevant government units, a clear division
of labor, the de jure as well as de facto ability of the CBG to enforce compliance in data
 - 56 -

submission, and the provision of incentives to trained personnel to prevent high rates of
employee turnover.
 - 57 -

Table 1. The Gambia: GDP by Sector at Constant Prices, 1998-2003

(In millions of dalasis, at constant 1976/77 prices, unless otherwise indicated)

1998 1999 2000 2001 2002 2003

Est. Prel. Prel.

Agriculture 121.4 157.0 173.4 188.9 135.7 175.7

Groundnuts 26.3 44.1 49.5 54.2 25.7 45.5

Other crops 51.6 67.6 77.2 84.9 57.7 75.1
Livestock 32.0 33.3 34.3 36.3 38.1 40.0
Forestry 3.7 3.8 4.0 4.2 4.4 4.6
Fishing 7.7 8.2 8.4 9.3 9.7 10.4

Industry 70.2 71.8 75.5 80.1 88.0 93.6

Manufacturing 34.7 35.2 35.9 36.9 38.5 39.5

Large and medium manufacturing 23.5 23.8 24.3 25.0 26.3 26.8
Small manufacturing 11.2 11.4 11.6 11.9 12.3 12.8
Construction and mining 30.3 31.3 34.4 37.9 43.6 47.9
Electricity and water supply 5.2 5.3 5.1 5.3 5.9 6.2

Services 383.4 390.5 403.7 432.9 451.4 469.7

Trade 79.5 75.9 81.1 87.0 90.6 91.0

Groundnuts 9.7 10.0 11.2 12.9 13.6 14.0
Others 69.8 65.9 69.9 74.0 77.0 77.0
Hotels and restaurants 33.4 34.6 30.1 33.1 35.5 40.8
Transport and communications 145.9 153.2 161.0 175.1 183.1 192.3
Transport 64.2 64.4 66.8 71.4 74.3 78.0
Communications 81.7 88.8 94.2 103.7 108.8 114.3
Real estate and business services 38.8 39.0 39.8 41.8 43.5 44.8
Public administration 67.5 69.4 72.6 76.2 78.5 80.1
Other services 18.3 18.5 19.0 19.6 20.2 20.8

GDP at factor costs 574.9 619.3 652.6 701.8 675.0 739.1

Indirect tax (net) 84.1 81.9 87.4 80.7 82.1 84.4

GDP at constant market prices 659.0 701.2 739.9 782.5 757.1 823.5
Real GDP growth (in percent) 6.5 6.4 5.5 5.8 -3.2 8.8

Sources: The Gambian authorities; and staff estimates.

 - 58 -

Table 2. The Gambia: GDP by Sector at Current Market Prices, 1998-2003

(In millions of dalasis, unless otherwise indicated)

1998 1999 2000 2001 2002 2003

Est. Prel. Prel.

Agriculture 1,228.1 1,493.3 1,654.3 2,042.3 1,832.7 3,054.8

Groundnuts 236.2 347.1 389.7 464.7 284.5 866.5

Other crops 471.5 566.0 662.7 838.3 655.6 1,039.7
Livestock 358.0 390.1 405.8 494.6 597.3 765.1
Forestry 48.9 58.5 60.8 73.4 88.7 113.6
Fishing 113.4 131.6 135.3 171.1 206.7 269.8

Industry 507.1 545.4 584.4 736.8 964.4 1,274.2

Manufacturing 219.0 233.0 244.8 301.6 378.2 485.4

Large and medium manufacturing 146.0 155.3 163.2 201.7 254.1 324.0
Small manufacturing 73.1 77.7 81.7 100.0 124.1 161.4
Construction and mining 218.2 234.4 265.5 350.5 483.7 665.1
Electricity and water supply 70.0 78.0 74.0 84.7 102.5 123.7

Services 2,177.8 2,311.4 2,497.3 3,174.0 3,845.0 4,989.7

Trade 466.3 462.8 490.6 650.5 778.6 1,012.7

Groundnuts 6.8 6.4 7.4 10.3 12.9 17.3
Others 459.5 456.4 483.2 640.2 765.7 995.4
Hotels and restaurants 181.1 194.3 213.8 305.7 408.9 611.4
Transport and communications 656.8 693.8 798.5 1,040.4 1,279.8 1,740.8
Transport 336.9 364.1 378.7 486.3 581.6 824.4
Communications 319.9 329.7 419.8 554.2 698.2 916.4
Real estate and business services 282.1 312.5 331.5 400.3 478.8 567.1
Public administration 394.1 438.0 455.3 525.8 607.7 712.9
Other services 197.5 210.0 207.6 251.2 291.1 344.8

GDP at factor costs 3,913.1 4,350.1 4,736.1 5,953.1 6,642.1 9,318.7

Indirect tax (net) 566.0 571.8 646.3 602.8 722.2 956.6

GDP at market prices 4,479.1 4,921.9 5,382.4 6,555.9 7,364.3 10,275.2

Nominal GDP growth (in percent) 7.2 9.9 9.4 21.8 12.3 39.5
Real GDP growth (in percent) 6.5 6.4 5.5 5.8 -3.2 8.8
GDP deflator (in percent) 0.6 3.3 3.6 15.2 16.1 28.3
CPI (annual average change, in percent) 1.1 3.8 0.9 4.5 8.6 17.0

Sources: The Gambian authorities; and staff estimates.

 - 59 -

Table 3. The Gambia: GDP Growth by Sector at Constant Prices, 1998-2003

(Percentage changes)

1998 1999 2000 2001 2002 2003

Est. Prel. Prel.

Agriculture -9.4 29.4 10.5 8.9 -28.2 29.5

Groundnuts -5.9 67.4 12.3 9.4 -52.6 77.5

Other crops -17.7 31.0 14.2 10.0 -32.0 30.0
Livestock 4.0 4.0 3.0 6.0 5.0 5.0
Forestry 3.9 4.1 3.9 5.0 5.0 5.0
Fishing -13.1 5.9 2.9 10.0 5.0 7.0

Industry 5.7 2.3 5.1 6.1 9.8 6.4

Manufacturing 2.4 1.4 2.0 2.7 4.5 2.6

Large and medium manufacturing 2.6 1.3 2.0 3.0 5.0 2.0
Small manufacturing 2.1 1.8 2.0 2.0 3.5 4.0
Construction and mining 6.4 3.3 10.0 10.0 15.0 10.0
Electricity and water supply 27.1 1.9 -3.0 4.0 10.0 5.0

Services 13.2 1.9 3.4 7.2 4.3 4.1

Trade 8.9 -4.5 6.8 7.2 4.1 0.4

Groundnuts 6.7 3.1 12.3 15.0 5.0 3.0
Others 9.2 -5.5 6.0 6.0 4.0 0.0
Hotels and restaurants 7.5 3.4 -12.8 10.0 7.0 15.0
Transport and communications 26.6 5.0 5.1 8.8 4.6 5.0
Transport 7.0 0.3 3.7 7.0 4.0 5.0
Communications 47.8 8.7 6.1 10.0 5.0 5.0
Real estate and business services 1.1 0.4 2.2 5.0 4.0 3.0
Public administration 7.0 2.8 4.6 5.0 3.0 2.0
Other services 1.4 1.1 3.0 3.0 3.0 3.0

GDP at factor costs 6.6 7.7 5.4 7.5 -3.8 9.5

Indirect tax (net) 5.6 -2.6 6.7 -7.7 1.7 2.8

GDP at constant market prices 6.5 6.4 5.5 5.8 -3.2 8.8

Sources: The Gambian authorities; and staff estimates.

 - 60 -

Table 4. The Gambia: Implicit GDP Deflators, 1998-2003

(Base year, 1976/77=100)

1998 1999 2000 2001 2002 2003

Est. Prel. Prel.

Agriculture 1,012.1 951.3 954.1 1,081.3 1,350.7 1,738.5

Groundnuts 897.2 787.6 787.4 858.2 1,109.2 1,902.7

Other crops 913.8 837.3 858.4 987.1 1,135.2 1,385.0
Livestock 1,119.2 1,172.5 1,184.1 1,361.7 1,565.9 1,910.4
Forestry 1,326.1 1,523.4 1,524.6 1,753.3 2,016.3 2,459.9
Fishing 1,465.3 1,604.9 1,603.4 1,844.0 2,120.5 2,587.1

Industry 722.4 759.6 774.3 920.1 1,096.4 1,360.9

Manufacturing 631.2 661.9 681.9 818.2 981.7 1,227.3

Large and medium manufacturing 621.1 652.5 672.1 806.5 967.8 1,209.8
Small manufacturing 652.3 681.6 702.3 842.7 1,011.3 1,264.1
Construction and mining 720.0 748.9 771.3 925.5 1,110.6 1,388.3
Electricity and water supply 1,345.3 1,471.7 1,439.9 1,583.9 1,742.3 2,003.6

Services 568.1 591.9 618.6 733.3 851.8 1,062.2

Trade 586.9 609.7 605.1 748.1 859.8 1,113.3

Groundnuts 69.9 64.0 66.3 79.6 95.5 124.1
Others 658.8 692.6 691.7 864.6 994.3 1,292.6
Hotels and restaurants 541.6 562.2 709.8 922.7 1,153.3 1,499.3
Transport and communications 450.2 452.9 496.0 594.2 698.9 905.3
Transport 524.7 565.4 567.3 680.8 782.9 1,056.9
Communications 391.6 371.3 445.5 534.6 641.5 801.9
Real estate and business services 726.9 802.1 832.4 957.3 1,100.9 1,266.0
Public administration 583.9 631.1 627.0 689.7 773.9 890.0
Other services 1,079.0 1,135.1 1,089.9 1,280.6 1,440.7 1,656.8

GDP at factor costs 680.6 702.4 725.8 848.3 984.0 1,260.9

Indirect tax (net) 704.6 712.4 739.6 747.0 879.9 1,133.3

GDP at constant market prices 679.7 701.9 727.4 837.8 972.7 1,247.8

Sources: The Gambian authorities; and staff estimates.

 - 61 -

Table 5. The Gambia: Supply and Use of Resources, 1998-2003

1998 1999 2000 2001 2002 2003

Est. Prel. Prel.

(In millions of dalasis)

Supply of resources 7,063.9 7,473.5 8,241.7 9,435.7 11,170.5 15,660.9

GDP at current prices 4,479.1 4,921.9 5,382.4 6,555.9 7,364.3 10,275.2

Imports of goods and
nonfactor services 2,584.8 2,551.6 2,859.3 2,879.8 3,806.2 5,385.7

Use of resources 7,063.9 7,473.5 8,241.7 9,435.7 11,170.5 15,660.9

Gross domestic absorption 4,789.6 5,210.4 5,824.8 6,952.3 7,846.6 11,101.2

Consumption 3,969.9 4,334.1 4,895.7 5,814.6 6,284.8 9,084.6
Private 3,226.6 3,508.0 3,970.0 4,199.2 5,050.6 7,567.5
Public 743.3 826.1 925.6 1,615.4 1,234.2 1,517.1
Gross fixed investment 819.7 876.3 929.1 1,137.7 1,561.8 2,016.6
Private 559.9 615.2 683.6 852.3 1,008.9 1,428.3
Public 259.9 261.0 245.6 285.4 552.9 588.3
Change in stocks ... ... ... ... ... ...

Exports of goods and

nonfactor services 2,274.2 2,263.1 2,416.9 2,483.4 3,323.9 4,559.7

Memorandum items:
(In percent of GDP)

Consumption 88.6 88.1 91.0 88.7 85.3 88.4

Private 72.0 71.3 73.8 64.1 68.6 73.6
Public 16.6 16.8 17.2 24.6 16.8 14.8
Domestic savings 1/ 11.4 11.9 9.0 11.3 14.7 11.6
Domestic investment 18.3 17.8 17.3 17.4 21.2 19.6
Imports of goods and
nonfactor services 57.7 51.7 53.1 44.1 51.7 52.4
Exports of goods and
nonfactor services 50.8 46.0 44.9 37.9 45.1 44.4

Sources: The Gambian authorities; and staff estimates.

1/ Defined as GDP minus consumption.
 - 62 -

Table 6. The Gambia: Savings-Investment Balance, 1998-2003

(In percent of GDP)

1998 1999 2000 2001 2002 2003

Est. Prel. Prel.

GDP market prices 100.0 100.0 100.0 100.0 100.0 100.0

Factor services, net -4.8 -5.0 -4.9 -5.6 -7.1 -6.7
Remittances of technical assistance staff -6.2 -6.9 -7.3 -7.6 -9.1 -8.6
Interest receipts, net 1.4 1.9 2.4 2.1 2.0 1.8
GNP market prices 95.2 95.0 95.1 94.4 92.9 93.3
Unrequited transfers, net 1/ 9.3 8.0 9.9 8.1 11.5 9.6
Of which: official transfers 8.5 7.1 7.4 7.3 10.5 8.6
Gross disposable national income 104.5 103.0 105.1 102.6 104.4 102.9
Total consumption 88.6 88.1 91.0 88.7 85.3 88.4
Private consumption 2/ 72.0 71.3 73.8 64.1 68.6 73.6
Government consumption 3/ 16.6 16.8 17.2 24.6 16.8 14.8
Gross domestic savings 11.4 11.9 9.0 11.3 14.7 11.6
Government domestic savings 4/ 2.0 1.1 1.3 -9.5 -0.4 0.5
Private domestic savings 5/ 9.4 10.9 7.7 20.8 15.1 11.1
Gross national savings 15.9 14.9 14.1 13.9 19.0 14.5
Government national savings 10.4 8.1 8.7 -2.2 10.1 9.1
Of which: domestically generated 2.0 1.1 1.3 -9.5 -0.4 0.5
Private national savings 4/ 5.5 6.8 5.4 16.1 8.9 5.4
Total domestically generated 5/ 7.4 7.9 6.7 6.6 8.5 5.9
Gross domestic investment 18.3 17.8 17.3 17.4 21.2 19.6
Government investment 6/ 5.8 5.3 4.6 4.4 7.5 5.7
Private investment 2/ 12.5 12.5 12.7 13.0 13.7 13.9
Private investment rate (% of GDP) 12.5 12.5 12.7 13.0 13.7 13.9
Memorandum items:

External current account

Including transfers -2.4 -2.9 -3.1 -3.5 -2.2 -5.1
Excluding transfers -10.9 -9.9 -10.6 -10.8 -12.7 -13.8

Government financial balance 7/ -3.8 -4.2 -3.3 -13.9 -7.9 -5.2

Government savings 2.0 1.1 1.3 -9.5 -0.4 0.5
Government investment 5.8 5.3 4.6 4.4 7.5 5.7
Private financial balance 7/ -7.0 -5.7 -7.3 3.1 -4.8 -8.5
Private savings 5.5 6.8 5.4 16.1 8.9 5.4
Private investment 12.5 12.5 12.7 13.0 13.7 13.9

Sources: The Gambian authorities; and staff estimates.

1/ Consists of both official and private transfers.

2/ Includes public enterprise sector.
3/ Government current expenditure (excluding Gambia Local Fund), less capital component of recurrent budget,
plus current component of development budget.
4/ Domestic revenue (excluding capital revenue) less government consumption.
5/ Gross national savings excluding official transfers.
6/ Development expenditure (excluding net lending), plus capital component of recurrent budget, less current
component of development budget.
7/ Domestically generated financial balances.
 - 63 -

Table 7. The Gambia: Agricultural Production, 1998-2003

1998 1999 2000 2001 2002 2003

Prel. Prel.

Acreage (In thousands of hectares)

Export crops 77.7 113.0 125.7 140.1 106.8 ...

Groundnuts 75.3 112.2 124.9 138.9 105.6 ...
Cotton 2.4 0.8 0.8 1.2 1.2 ...

Food crops 119.5 125.3 136.2 #REF! 133.7 ...

Rice (paddy) 18.3 15.7 16.7 18.1 ...
Irrigated 1/ ... 2.2 2.3 ... ... ...
Rainfed 18.3 13.5 14.4 ... ... ...
Sorghum 2/ 14.2 18.5 24.4 26.2 18.3 ...
Millet 2/ 75.3 76.3 80.3 97.4 97.0 ...
Maize 11.7 14.8 14.8 17.2 18.4 ...

Production (In thousands of metric tons)

Export crops 75.0 123.4 138.2 151.7 72.0 ...

Groundnuts 73.5 123.0 138.0 151.1 71.5 ...
Cotton 1.5 0.4 0.2 0.6 0.5 ...

Food crops 114.1 150.8 175.6 199.8 138.7 ...

Rice (paddy) 26.5 31.5 34.1 32.4 20.3 ...
Irrigated 1/ 7.8 13.2 13.4 ... ... ...
Rainfed 18.7 18.3 20.7 ... ... ...
Sorghum 2/ 9.9 17.9 24.9 33.4 15.2 ...
Millet 2/ 64.7 81.0 94.6 105.0 84.6 ...
Maize 13.0 20.4 22.0 29.0 18.6 ...

Source: The Gambian authorities.

1/ Including double-cropped area.

2/ Including area intercropped with groundnuts.
 - 64 -

Table 8. The Gambia: Minimum Producer Prices for Agricultural Commodities, 1998-2003
(In dalasis per ton)

1998 1999 2000 2001 2002 2003

Prel. Prel. Prel.

Cotton 3,400 3,400 3,750 3,650 4,150 …

Groundnuts (undecorticated) 2,790 2,700 2,600 2,650 4,250 …

Rice (paddy) 1,750 1,750 1,750 2,250 2,500 …

Source: The Gambian authorities.

 Table 9. The Gambia: Purchases and Disposition of Groundnuts, 1998-2003

(in metric tons)

1998 1999 2000 2001 2002 2003

Prel. Prel. Prel. Proj.

Delivery purchases (undecorticated) … … 41,912 42,813 62,203 12,833

Export sales … … 20,105 25,484 40,803 7,700

Decorticated FAQ groundnuts 1/ … … 15,204 8,228 2,097 3,000
Decorticated HPS groundnuts 2/ … … 672 7,267 3,290 4,000
Oil … … 3,000 1,438 15,707 700
Cake … … 1,229 2,581 19,709 0

Local sales 3/ … … 20,700 22,400 … …

- 65 -

Seednuts … … … … … …

Wastage in shelling/processing 4/ … … 13,412 13,700 21,400 5,133

Source: The Gambian authorities.

1/ FAQ= fair average quality.

2/ HPS= handpicked selected.
3/ Estimated as 15 percent of total production, including seeds.
4/ Estimated as 32 percent of delivery purchases.
 Table 10. The Gambia: Indicators of Tourism Activity, 1998-2003

1998 1999 2000 2001 2002 2003

Prel. Prel. Prel. Prel.

Air charter tourists

Number of tourists 91,106 94,207 82,117 75,212 78,893 ...
Germany 22,189 25,393 19,708 ... ... ...
Sweden 5,574 5,556 4,927 ... ... ...
Other Scandinavian 3,720 4,141 3,285 ... ... ...
United Kingdom 37,437 40,588 35,310 ... ... ...
Other 22,186 18,529 18,887 ... ... ...

Average length of stay (in days) 12.9 12.9 12.9 ... ... ...
Average daily expenditure (in dalasis) 1/ 327.8 306.0 290.0 ... ... ...
- 66 -

Gross earnings (in millions of dalasis) 734.4 726.9 608.2 ... ... ...

Source: The Gambian authorities.

1/ Amount spent in The Gambia; excludes the cost of package tours.

 - 67 -

Table 11. The Gambia: Energy Statistics, 1998-2003

1998 1999 2000 2001 2002 2003

Prel. Prel.

Electricity (In thousands of kilowatt-hours)

Total production 122,187 123,401 117,553 134,001 144,124 ...

Residential consumption 37,462 48,851 45,676 55,324 62,060 ...
Business consumption
(including government) 33,405 23,213 21,530 25,698 24,934 ...
Street lighting 462 ... ... 740 507 ...
Other consumption 7,274 11,337 10,347 12,917 17,301 ...
Losses (including powerhouse
consumption) 43,584 40,000 40,000 39,322 39,322 ...

(In dalasis per kilowatt-hour)

Retail electricity prices
Residential 2.08 1.55-2.21 1.55-2.21 ... ... ...
Business 2.21 2.21 2.21 ... ... ...
Hotels/industries 2.54 2.54 2.54 ... ... ...

(In millions of liters)

Petroleum imports 44.0 ... ... ... ... ...

Gas oil 17.7 ... ... ... ... ...
Diesel oil 26.4 ... ... ... ... ...

Retail petroleum prices

Gasoline 8.50 8.95 8.95 ... ... ...
Diesel oil 6.50 6.50 6.75 ... ... ...

Sources: The Gambian authorities; and the National Water and Electricity Company Ltd.
 Table 12. The Gambia: Public Sector Wage Scale, 1998-2003
(In dalasis per year)

1998 1999 2000 2001 2002 1/ 2003

Min. Max. Min. Max. Min. Max. Min. Max. Min. Max. Min. Max.

Grade 1 4,860 5,784 5,100 6,108 5,352 6,444 5,352 6,444 5,352 6,444 5,673 6,830
Grade 2 5,916 7,008 6,168 7,260 6,168 7,260 6,168 7,260 6,168 7,260 6,988 8,146
Grade 3 7,068 8,244 7,344 8,604 7,716 9,060 7,716 9,060 7,716 9,060 8,299 9,723
Grade 4 8,352 10,536 8,652 10,920 9,084 11,436 9,084 11,436 9,084 11,436 9,845 12,338
Grade 5 10,824 13,596 10,980 13,836 11,532 14,556 11,532 14,556 11,532 14,556 12,440 15,645
Grade 6 13,872 17,148 13,872 17,148 14,568 18,012 14,568 18,012 14,568 18,012 15,778 19,428
Grade 7 17,604 20,880 17,604 20,880 18,480 21,924 18,480 21,924 18,480 21,924 19,589 23,239
Grade 8 21,276 24,636 21,276 24,636 22,344 25,872 22,344 25,872 22,344 25,872 23,685 27,424
Grade 9 25,176 28,536 25,176 28,536 26,436 29,964 26,436 29,964 26,436 29,964 28,022 31,761
Grade 10 29,100 33,552 29,100 33,552 30,552 34,752 30,552 34,752 30,552 34,752 32,385 36,837
Grade 11 34,116 39,578 34,116 39,576 35,820 40,020 35,820 40,020 35,820 40,020 37,969 42,421
- 68 -

Grade 12 40,368 46,920 40,368 46,920 40,368 46,920 40,368 46,920 40,368 46,920 42,790 49,735

Source: The Gambian authorities.

1/ In 2002, an additional cost of living allowance of 10 percent of the basic salary was paid to staff at grades 1-3.
 Table 13. The Gambia: Minimum Daily Wages, 1998-2003
(In dalasis)

1998 1999 2000 2001 2002 2003

General workers
Foreman ... ... ... ... ... ...
Artisan (second class) ... ... ... ... ... ...
Head laborer ... ... ... ... ... ...
Laborer ... ... ... ... ... ...

Dockworkers
Supervisor/foreman 36.40 36.40 36.40 36.40 38.58 48.23
Headman (Banjul) 22.50 22.50 22.50 22.50 23.85 29.81
- 69 -

Headman (river ports) 22.50 ... ... ... ... ...

Tally clerk (Banjul, Grade A) ... ... ... ... ... ...
Tally clerk (Banjul, Grade B) ... ... ... ... ... ...
Winchman (Banjul) 20.25 20.25 20.25 20.25 21.47 26.84
Winchman (river ports) 22.50 ... ... ... ... ...
Gangwayman (Banjul) 18.50 18.50 18.50 18.50 19.61 24.51
Gangwayman (river ports) ... ... ... ... ... ...
Laborer (Banjul) 17.70 17.70 17.70 17.70 18.76 23.45
Laborer (river ports) ... ... ... ... ... ...

Source: The Gambian authorities.

 - 70 -

Table 14. The Gambia: Civil Service Structure, 1998-2003 1/

1998 1999 2000 2001 2002 2003

(Number of employees)

Executive and legislative offices 2/ 951 948 1,007 814 827 857
Defense 1,456 1,573 1,708 ... ... ...
Interior 2,448 2,567 2,586 ... ... ...
Information and tourism 51 51 66 66 40 45
External affairs 64 68 72 93 104 126
Finance and economic affairs 470 462 466 584 598 612
Local government and lands 383 377 381 415 416 413
Agriculture 1,146 916 913 920 896 934
Works and communications 619 827 816 346 349 226
Trade and industry 160 154 155 170 172 146
Education, youth, and sports 6,022 5,969 5,903 5,064 5,067 5,455
Of which
Gambia Technical Institute 128 129 ... ... ... ...
Gambia College 162 212 ... ... ... ...
National Council of Arts and Culture 51 52 ... ... ... ...
Health 1,474 1,517 1,586 1,859 1,878 1,569
Of which
Royal Victoria Hospital 874 866 887 902 938 936
Bansang Hospital 264 274 272 307 305 305
Autonomous organizations 3/ 272 278 281 283 299 296
Of which
Agricultural Research (NARI) 134 137 137 137 148 148
Environmental Agency 36 39 42 42 47 47
Communication, Information, and Technology ... ... ... ... ... 148

Total 15,516 15,707 15,659 ... ... ...

(In percent)

Executive and legislative offices 2/ 6.1 6.0 6.4 ... ... ...
Defense 9.4 10.0 10.9 ... ... ...
Interior 15.8 16.3 16.5 ... ... ...
Information and tourism 0.3 0.3 0.4 ... ... ...
External affairs 0.4 0.4 0.5 ... ... ...
Finance and economic affairs 3.0 2.9 3.0 ... ... ...
Local government and lands 2.5 2.4 2.4 ... ... ...
Agriculture 7.4 5.8 5.8 ... ... ...
Works and communications 4.0 5.3 5.2 ... ... ...
Trade and industry 1.0 1.0 1.0 ... ... ...
Education, youth, and sports 38.8 38.0 37.7 ... ... ...
Health 9.5 9.7 10.1 ... ... ...
Autonomous organizations 3/ 1.8 1.8 1.8 ... ... ...
... ... ...
Total 100.0 100.0 100.0 ... ... ...

Source: The Gambian authorities.

1/ From 2000 onward, data are based on budget figures.

2/ Includes the Office of the President, legislature, judiciary, Public Service Commission, and National Audit Office.
3/ Includes the Management Development Institute, National Library, National Environmental
Agency, and National Agricultural Research Institute (NARI).
 Table 15. The Gambia: Private Employment by Industry, 1998 - 2003

1998 1999 2000 2001 2002 2003

Public 1/ 15,429 ... ... ... ... ...

Agriculture, fishing, and forestry 5,487 ... ... ... ... ...
Manufacturing 947 ... ... ... ... ...
Construction 764 ... ... ... ... ...
Trade, hotels, and restaurants 6,084 ... ... ... ... ...
Transport 2,664 ... ... ... ... ...
Business services 1,453 ... ... ... ... ...
Community, social, and personal services 2,505 ... ... ... ... ...
Electricity 2,128 ... ... ... ... ...
- 71 -

Total private 22,032 ... ... ... ... ...

Total employment 37,461 ... ... ... ... ...

Memorandum items:
Population 1,215,940 1,286,155 1,324,740 1,361,832 1,397,240 ...
Labor force 2/ 575,140 ... ... ... ... ...
Percent of labor force in formal employment 6.5 ... ... ... ... ...

Sources: The Gambian authorities; and World Bank, World Development Indicators .

1/ Includes government and parastatals. For 1998, data are based on employment surveys.
2/ Estimate. The economically active population is supposed to be 47.3 percent of the population, based on the 1983 census.
 Table 16. The Gambia: Private Sector Employment by Size of Establishments and Industry, 1997-1998

Size of Establishments
1-4 5-9 10-19 20-49 50-99 100-199 200+ Total
Economic Activity 1997 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997 1998

Agriculture, hunting, and forestry 8 9 21 22 45 48 148 156 150 158 0 0 4,824 5,094 5,196 5,487

Manufacturing 43 45 217 229 122 129 171 181 62 65 282 298 … … 897 947

Construction 9 10 0 0 28 30 62 65 309 326 315 333 0 0 723 764

Wholesale and retail trade 464 490 329 348 155 164 353 373 54 57 123 130 208 220 1,686 1,782

Hotels and restaurants 69 73 131 138 63 67 105 111 378 399 774 818 2,553 2,696 4,073 4,302

Transport, storage, and communication 21 22 86 91 139 147 104 110 199 210 250 264 1,723 1,820 2,522 2,664

Financial, business, and real estate services 30 32 33 35 148 156 259 274 355 375 338 357 212 224 1,375 1,453
- 72 -

Community, social, and personal services 321 340 291 307 315 333 610 644 684 722 150 159 0 0 2,371 2,505

Electricity, gas, and water supply 3 3 37 39 27 29 28 30 220 232 436 461 1,263 1,334 2,014 2,128

Total 968 1,024 1,145 1,209 1,042 1,103 1,840 1,944 2,411 2,544 2,668 2,820 10,783 11,388 20,857 22,032

Source: The Gambian authorities.

 - 73 -

Table 17. The Gambia: Overall Consumer Price Index for Low-Income
Households in Banjul and Kombo St. Mary, January 1998-December 2003

(Base year, 1974=100, unless otherwise indicated)

1998 1999 2000 2001 2002 2003

January 1,379.7 1,501.3 1,523.9 1,576.7 1,682.6 1,876.4

February 1,407.0 1,501.8 1,524.0 1,577.1 1,681.7 1,904.9
March 1,407.2 1,502.6 1,524.0 1,577.3 1,682.3 1,929.7
April 1,420.5 1,502.7 1,525.3 1,577.4 1,684.3 1,971.7
May 1,413.9 1,502.5 1,525.4 1,578.3 1,685.1 1,983.9
June 1,490.3 1,502.6 1,525.6 1,586.7 1,685.6 2,006.2
July 1,477.3 1,522.5 1,526.4 1,592.6 1,686.7 2,026.9
August 1,495.2 1,523.1 1,527.1 1,599.4 1,697.0 2,054.6
September 1,497.5 1,523.8 1,526.8 1,603.2 1,779.5 2,098.9
October 1,499.4 1,523.0 1,526.0 1,605.3 1,807.9 2,119.2
November 1,502.2 1,523.8 1,526.5 1,606.3 1,840.1 2,151.6
December 1,497.6 1,523.8 1,526.9 1,650.1 1,864.7 2,192.2

Memorandum items:

Overall index
(period average) 1,457.3 1,512.8 1,525.7 1,594.2 1,731.5 2,026.4

Annual percentage change

(period average) 1.1 3.8 0.9 4.5 8.6 17.0

Annual percentage change

(end of period) 4.4 1.7 0.2 8.1 13.0 17.6

Source: The Gambian authorities.

 - 74 -
Table 18. The Gambia: Central Government Operations, 1998-2003
(In millions of dalasis)
1998 1999 2000 2001 2002 2003
Prel. Est.

Revenue and grants 919.9 944.5 1,117.2 1,125.7 1,528.7 1,776.4

Domestic revenue 831.5 878.7 995.4 989.9 1,201.8 1,569.1
Tax revenue 751.1 773.7 869.9 853.8 1,040.2 1,371.4
Direct tax 185.1 201.8 223.6 251.0 318.0 414.8
Of which : personal 76.4 81.3 90.4 102.6 122.4 149.3
corporate 93.7 102.2 115.0 132.7 176.8 244.9
Indirect tax 566.0 571.8 646.3 602.8 722.2 956.6
Domestic tax on goods and services 65.3 77.3 72.8 73.9 124.9 233.6
Of which: excise duties 0.0 11.0 18.4 11.5 10.8 25.6
domestic sales tax 63.0 64.7 52.4 59.8 108.0 203.0
Tax on international trade 500.7 494.5 573.5 528.9 597.3 722.9
Duty 322.4 315.3 360.0 327.4 367.7 420.4
Sales tax on imports 178.3 179.2 213.6 201.5 229.6 302.6
Nontax revenue 80.4 105.0 125.4 136.0 161.5 197.8
Of which: government services and charges 35.1 75.1 97.7 97.6 134.8 152.2
interests and dividends 38.6 22.0 22.9 34.2 24.1 42.1
Grants 88.5 65.8 121.8 135.9 326.9 207.2
Program 25.6 11.3 60.3 0.0 94.9 0.0
Projects 62.9 54.5 61.5 67.9 109.9 97.2
HIPC 0.0 0.0 0.0 68.0 122.1 110.0

Expenditure and net lending 1/ 1,028.4 1,118.2 1,192.1 2,037.4 1,870.7 2,327.9
Current expenditure 799.8 887.0 985.8 1,237.1 1,318.2 1,703.3
Wages and salaries 282.9 301.7 341.2 342.0 395.2 450.4
Other charges 279.9 336.9 397.4 533.4 512.5 561.5
Interest 236.9 248.3 247.3 293.8 370.5 620.8
External 56.4 60.9 60.2 68.7 84.0 186.2
Domestic 180.4 187.5 187.1 225.0 286.6 434.6
HIPC expenditure ... ... ... 68.0 39.9 70.7
Capital expenditure and net lending 1/ 228.7 231.2 206.3 800.3 552.5 624.6
Capital expenditure 259.9 261.0 245.6 732.5 585.3 656.2
External 211.2 221.0 196.7 224.5 495.2 511.0
GLF (Gambia Local Fund) 48.7 40.1 48.9 60.9 57.7 77.4
HIPC funded ... ... ... ... 32.4 67.9
PRSP-related expenditure ... ... ... ... 0.0 0.0
Extrabudgetary expenditure 1/ 0.0 0.0 0.0 447.1 0.0 0.0
Net lending -31.2 -29.8 -39.3 67.8 -32.8 -31.6

Overall balance (commitment basis) -108.5 -173.7 -75.0 -911.6 -342.0 -551.5
Excluding grants -197.0 -239.5 -196.8 -1,047.5 -668.9 -758.7
Excluding grants, HIPC and PRSP expenditure -197.0 -239.5 -196.8 -979.5 -596.6 -620.2

Adjustment to cash basis (float) 6.1 -34.5 -23.7 -34.7 17.8 -39.4
Errors and omissions -30.6 0.0 0.0 0.0 0.0 0.0

Overall balance (cash basis)

Including grants -133.0 -208.2 -98.7 -946.3 -324.2 -590.9

Financing 133.0 208.2 98.7 946.3 324.2 590.9

External (net) 54.5 30.0 -45.6 -23.6 140.9 57.9
Borrowing 148.3 155.2 135.2 233.6 725.8 413.8
Project 148.3 155.2 135.2 156.6 368.4 413.8
Program 0.0 0.0 0.0 0.0 0.0 0.0
Other loans 2/ 0.0 0.0 0.0 77.0 357.4 0.0
Amortization -93.8 -125.2 -180.8 -257.2 -591.9 -368.3
HIPC debt relief … … ... 0.0 7.0 12.4

Domestic 78.5 178.2 144.3 969.9 183.3 533.0

Bank 1/ -20.0 71.2 45.0 952.8 22.9 399.9
Nonbank 86.5 93.2 139.5 68.1 197.0 95.1
Accumulation / repayment (minus) of arrears 12.0 13.9 -40.2 -51.0 -36.7 -6.5
Privatization proceeds ... ... 0.0 0.0 0.0 4.5
CBG (unrealized profits) ... ... ... ... ... 40.0

Basic primary balance 3/ 251.1 229.8 247.2 -529.2 196.8 373.0

Memorandum items:
Nominal GDP 4,479.1 4,921.9 5,382.4 6,555.9 7,364.3 10,275.2
Stock of domestic debt 1,146.8 1,328.6 1,693.5 2,496.1 2,694.2 2,524.7

Sources: The Gambian authorities; and staff estimates.

1/ Data for 2001 include US$28.5 million capital expenditure financed by a retroactive loan by the Central Bank of
The Gambia (CBG) which the authorities indicated in October 2003 had not been recorded in official accounts.
2/ Includes loan disbursements (D 287.8 million in January and D 94.7 million in April 2001) from Taiwan Province of China for
electricity generators and improvement of distribution network. The generators were delivered to the National Water and
Electricity Corporation in October 2001. The inflows were used to pay the suppliers.
3/ Domestic revenue minus total expenditure and net lending, excluding interest payments and externally financed capital expenditure.
 - 75 -
Table 19. The Gambia: Central Government Operations, 1998-2003
(In percent of GDP)
1998 1999 2000 2001 2002 2003
Prel. Est.

Revenue and grants 20.5 19.2 20.8 17.2 20.8 17.3

Domestic revenue 18.6 17.9 18.5 15.1 16.3 15.3
Tax revenue 16.8 15.7 16.2 13.0 14.1 13.3
Direct tax 4.1 4.1 4.2 3.8 4.3 4.0
Of which : personal 1.7 1.7 1.7 1.6 1.7 1.5
corporate 2.1 2.1 2.1 2.0 2.4 2.4
Indirect tax 12.6 11.6 12.0 9.2 9.8 9.3
Domestic tax on goods and services 1.5 1.6 1.4 1.1 1.7 2.3
Of which: excise duties 0.0 0.2 0.3 0.2 0.1 0.2
domestic sales tax 1.4 1.3 1.0 0.9 1.5 2.0
Tax on international trade 11.2 10.0 10.7 8.1 8.1 7.0
Duty 7.2 6.4 6.7 5.0 5.0 4.1
Sales tax on imports 4.0 3.6 4.0 3.1 3.1 2.9
Nontax revenue 1.8 2.1 2.3 2.1 2.2 1.9
Of which: government services and charges 0.8 1.5 1.8 1.5 1.8 1.5
interests and dividends 0.9 0.4 0.4 0.5 0.3 0.4
Grants 2.0 1.3 2.3 2.1 4.4 2.0
Program 0.6 0.2 1.1 0.0 1.3 0.0
Projects 1.4 1.1 1.1 1.0 1.5 0.9
HIPC 0.0 0.0 0.0 1.0 1.7 1.1

Expenditure and net lending 1/ 23.0 22.7 22.1 31.1 25.4 22.7
Current expenditure 17.9 18.0 18.3 18.9 17.9 16.6
Wages and salaries 6.3 6.1 6.3 5.2 5.4 4.4
Other charges 6.2 6.8 7.4 8.1 7.0 5.5
Interest 5.3 5.0 4.6 4.5 5.0 6.0
External 1.3 1.2 1.1 1.0 1.1 1.8
Domestic 4.0 3.8 3.5 3.4 3.9 4.2
HIPC expenditure 0.0 0.0 0.0 1.0 0.5 0.7
Capital expenditure and net lending 1/ 5.1 4.7 3.8 12.2 7.5 6.1
Capital expenditure 5.8 5.3 4.6 11.2 7.9 6.4
External 4.7 4.5 3.7 3.4 6.7 5.0
GLF (Gambia Local Fund) 1.1 0.8 0.9 0.9 0.8 0.8
HIPC funded 0.0 0.0 0.0 0.0 0.4 0.7
PRSP-related expenditure 0.0 0.0 0.0 0.0 0.0 0.0
Extrabudgetary expenditure 1/ 0.0 0.0 0.0 6.8 0.0 0.0
Net lending -0.7 -0.6 -0.7 1.0 -0.4 -0.3

Overall balance (commitment basis) -2.4 -3.5 -1.4 -13.9 -4.6 -5.4
Excluding grants -4.4 -4.9 -3.7 -16.0 -9.1 -7.4
Excluding grants, HIPC and PRSP expenditure -4.4 -4.9 -3.7 -14.9 -8.1 -6.0

Adjustment to cash basis (float) 0.1 -0.7 -0.4 -0.5 0.2 -0.4
Errors and omissions -0.7 0.0 0.0 0.0 0.0 0.0

Overall balance (cash basis)

Including grants -3.0 -4.2 -1.8 -14.4 -4.4 -5.8

Financing 3.0 4.2 1.8 14.4 4.4 5.8

External (net) 1.2 0.6 -0.8 -0.4 1.9 0.6
Borrowing 3.3 3.2 2.5 3.6 9.9 4.0
Project 3.3 3.2 2.5 2.4 5.0 4.0
Program 0.0 0.0 0.0 0.0 0.0 0.0
Other loans 2/ 0.0 0.0 0.0 1.2 4.9 0.0
Amortization -2.1 -2.5 -3.4 -3.9 -8.0 -3.6
HIPC debt relief 0.0 0.0 0.0 0.0 0.1 0.1

Domestic 1.8 3.6 2.7 14.8 2.5 5.2

Bank 1/ -0.4 1.4 0.8 14.5 0.3 3.9
Nonbank 1.9 1.9 2.6 1.0 2.7 0.9
Accumulation / repayment (minus) of arrears 0.3 0.3 -0.7 -0.8 -0.5 -0.1
Privatization proceeds 0.0 0.0 0.0 0.0 0.0 0.0
CBG (unrealized profits) 0.0 0.0 0.0 0.0 0.0 0.4

Basic primary balance 3/ 5.6 4.7 4.6 -8.1 2.7 3.6

Memorandum items:
Stock of domestic debt 25.6 27.0 31.5 38.1 36.6 24.6

Sources: The Gambian authorities; and staff estimates.

1/ Data for 2001 include US$28.5 million capital expenditure financed by a retroactive loan by the Central Bank of The Gambia (CBG) which the authorities indicated
in October 2003 had not been recorded in official accounts.
2/ Includes loan disbursements (D 287.8 million in January and D 94.7 million in April 2001) from Taiwan Province of China for electricity generators and
improvement of distribution network. The generators were delivered to the National Water and Electricity Corporation in October 2001. The inflows .
were used to pay the suppliers
3/ Domestic revenue minus total expenditure and net lending, excluding interest payments and externally financed capital expenditure.
 Table 20. The Gambia: Functional Classification of Central Government Current Expenditure, 1998-2003

(In millions of dalasis)

1998 1999 2000 2001 2002 2003

Prel. Prel. Prel. Prel.

Total current expenditure 1,266.6 1,295.4 1,437.5 1,237.1 1,318.2 1,707.3

General public services … … … … … …
- 76 -

Defense 43.1 40.1 42.5 38.5 48.6 51.1

Education 130.4 146.0 148.2 142.0 177.6 208.3
Of which: elementary education 87.5 86.9 … … … …
Health 81.5 88.7 94.3 127.8 133.6 180.9
Of which: basic health care 17.7 24.8 … … … …
Social welfare … … … … … …
Housing … … … … … …
Economic affairs and services … … … … … …
Other … … … … … …
Of which: interest on government domestic debt 290.0 264.7 187.1 225.0 286.6 434.6

Source: The Gambian authorities.

 - 77 -

Table 21. The Gambia: Central Government Social Expenditure and Social Indicators, 1998-2003

1998 1999 2000 2001 2002 2003

(In millions of dalasis)

Education expenditure 154.5 273.0 331.6 297.8 354.6 …

Of which
Primary education 63.3 111.9 136.0 … … …
Secondary education 34.0 60.1 73.0 … … …
Higher education 27.8 49.1 59.7 … … …

Health expenditure 83.0 175.0 253.9 192.8 225.3 …

Primary and secondary health care 36.7 77.4 112.2 … … …
Tertiary health care 34.1 71.9 104.4 … … …
Administration and training 12.2 25.7 37.3 … … …

(In percent, unless otherwise indicated)

Social indicators
Illiteracy rate 65.7 64.5 63.4 62.2 61.1 …
Gross school enrollment rate
Primary school enrollment … 69.8 … 75.0 91.0 …
Of which: female … … … … … …
Secondary school enrollment … … … … … …
Of which: female … … … … … …
Life expectancy at birth (years) 53.2 53.2 … 53.7 … …
Population with access to health care … … … … … …
Population with access to safe water … … 62.0 … … …
Population below the poverty line … … … … … …
Infant mortality rate
(per 1,000 live births) 76.4 74.8 … 91.0 … …

Sources: The Gambian authorities; and World Bank, World Development Indicators, 1998.
 - 78 -

Table 22. The Gambia: Public Investment Program and Its Financing, 1998-2003

(In millions of dalasis)

1998 1999 2000 2001 2002 2003

Agricultural/natural resources 55.8 68.4 134.3 … … …

Jahally/Pacharr rice project 1.9 … … … … …
Rice development project 4.8 … … … … …
Cotton development project 1.4 0.3 1.8 … … …
Livestock development 0.1 0.4 0.1 … … …
Small-scale water project 1.9 … … … … …
Other 45.7 67.7 132.4 … … …

Industry 0.2 0.1 0.1 … … …

Public utilities 22.7 25.3 12.4 … … …

Improvement of transmission/distribution
Urban water supply … … … … … …
Rural water supply 21.9 17.2 12.1 … … …
Banjul sewerage and drainage project … … … … … …
Other 0.8 8.1 0.3 … … …

Transportation and communications 192.1 223.8 158.3 … … …

Banjul Serrekunda and other highways 152.4 176.4 104.5 … … …
Banjul streets rehabilitation 0.5 … … … … …
Feeder roads … … … … … …
Banjul port development … … … … … …
Yundum Airport, Phase IV … … … … … …
Other 39.2 47.4 53.8 … … …

Education 127.0 171.7 97.4 … … …

Health 86.3 159.6 80.8 … … …

Other public investment 26.4 32.7 93.9 … … …

Housing and community development 20.0 11.8 58.3 … … …
Tourism, trade, and finance 0.9 1.5 6.3 … … …
General public services 5.4 19.3 29.2 … … …
Unallocated expenditure 0.1 0.1 0.1 … … …

Total public investment financed by: 575.2 745.0 662.0 … … …

Foreign grants 121.8 163.1 226.5 … … …
Foreign loans 353.4 474.1 305.6 … … …
Gambia local fund (GLF) 100.0 107.8 129.9 … … …

Source: The Gambian authorities.

 Table 23. The Gambia: List of Public Enterprises, End-2002

Name Sector Legal Status Government Participation Capital Turnover Personnel

(In percent) (In millions of dalasis)

Social Security and Housing

Finance Corporation Social security and housing ... 100 ... ... 206
National Water and Electricity Corporation Energy Limited company 100 68.5 323.5 886
Gambia Ports Authority Marine Authority 100 16.3 231.1 423
Gambia International Airlines Air transport Limited company 100 16.8 155.5 300
Gambia Telecommunications Company Ltd. Telecommunications Limited company 100 60.0 489.3 1,066
Gambia Public Transport Corporation Transport Limited company 100 38.0 25.2 380
Maintenance Services Agency Company Ltd. Maintenance Limited company 100 3.0 5.0 82
Gambia Civil Aviation Authority Aviation Authority 100 20.6 148.1 466
Asset Management and Recovery Corporation Asset recovery ... 100 ... ... ...

Source: The Gambian authorities.

- 79 -
 - 80 -

Table 24. The Gambia: Monetary Survey, December 1998-December 2003

1998 1999 2000 2001 2002 2003

Dec. Dec. Dec. Dec. Dec. Dec.

Monetary survey (In millions of dalasis, unless otherwise noted; end of period)

Net foreign assets 1/ 977 989 1,320 650 958 1,894

Net domestic assets 335 482 663 1,717 2,244 2,699
Domestic credit 508 661 770 2,020 2,699 3,709
Claims on government (net) 2/ -7 38 83 589 612 1,012
Advances to the gov. in foreign currencies 3/ 0 0 0 483 483 483
Claims on the private sector and public enterprises 4/ 515 623 687 775 1,335 1,977
Claims on foreign exchange bureaus 5/ 0 0 0 174 269 238
Other items (net) -173 -179 -107 -303 -454 -1,010
Broad money 1,312 1,470 1,982 2,367 3,203 4,593
Currency outside banks 348 380 540 601 797 1,183
Deposits 964 1,091 1,442 1,767 2,405 3,410

Memorandum items:

Nominal GDP (calendar year) 4,479.1 4,922 5,382 6,556 7,364 10,275
(percentage change) 7.2 9.9 9.4 21.8 12.3 39.5
Velocity (calendar-year GDP/avg. broad money) ... 3.6 3.0 3.2 2.7 2.8
Reserve money multiplier (broad/reserve money) 2.5 2.4 2.8 2.8 2.8 2.5

(Annual percentage change)

Broad money 10.2 12.1 34.8 19.4 35.3 43.4

Reserve money 7.2 14.5 16.8 21.0 34.1 62.7
Total deposits 16.2 13.1 32.2 22.5 36.2 41.8

Contribution to growth of broad money (In percent of beginning-of-period broad money, unless otherwise noted)

Net foreign assets 11.9 0.9 22.5 -33.8 13.0 29.2

Net domestic assets -1.7 11.2 12.3 53.2 22.3 14.2
Domestic credit 6.2 11.7 7.4 63.1 28.6 31.5
Claims on government (net) 2/ 0.5 3.4 3.1 25.5 1.0 12.5
Advances to the gov. in foreign currencies 3/ 0.0 0.0 0.0 24.3 0.0 0.0
Claims on the private sector and public enterprises 4/ 5.4 7.8 4.4 4.4 23.7 20.0
Claims on foreign exchange bureaus 5/ 0.0 0.0 0.0 8.8 4.0 -1.0
Other items (net) -7.8 -0.5 4.9 -9.9 -6.4 -17.4

Credit to the private sector and public enterprises (excl. foreign exchange bureaus)
Rate of growth in percent 15.0 21.0 10.3 12.8 72.3 48.0
In percent of GDP 11.5 12.6 12.8 11.8 18.1 19.2

Percent ratios
Currency/broad money 26.5 25.8 27.3 25.4 24.9 25.8
Currency/deposits 36.1 34.8 37.5 34.0 33.2 34.7
Deposits/broad money 73.5 74.2 72.7 74.6 75.1 74.2

Sources: The Gambian authorities; and staff estimates.

1/ Valued at current exchange rates.

2/ Excluding advances to the government in foreign currencies.
3/ These advances reflect previously unrecorded public spending and borrowing in 2001, financed by the Central Bank of The Gambia (CBG),
and previously unrecorded depletion of foreign exchange reserves in 2001-03 as reported by the authorities on October 28, 2003.
4/ In March 2003, the government instructed the CBG to lend the equivalent of D 137 million in U.S. dollars to a newly created public enterprise
for a seismic survey of offshore oil deposits.
5/ Claims on foreign exchange bureaus reflect the delayed delivery of foreign currency purchased on a spot basis.
 - 81 -

Table 25. The Gambia: Summary Accounts of the Central Bank, December 1998 - December 2003
(In millions of dalasis; end of period)

1998 1999 2000 2001 2002 2003

Dec. Dec. Dec. Dec. Dec. Dec.

Net foreign assets 1/ 1,047 1,059 1,314 698 816 881

Foreign assets 1,185 1,206 1,594 1,137 1,564 1,962
Foreign liabilities -138 -147 -280 -439 -747 -1,081

Net domestic assets -521 -457 -612 152 324 975

Domestic credit -537 -573 -778 139 381 1,230
Claims on government (net) 2/ -519 -546 -732 -486 -298 358
Advances to the gov. in foreign currencies 3/ 0 0 0 483 483 483
Claims on private sector 21 22 23 24 24 25
Claims on banks (net) -39 -49 -68 -56 -96 -10
Claims on public enterprises 4/ 0 0 0 0 0 137
Claims on foreign exchange bureaus 5/ 0 0 0 174 269 238

Other items (net) 16 115 166 13 -57 -255

Reserve money 526 602 703 851 1,141 1,856

Currency outside banks 348 380 540 601 797 1,183
Bank reserves 178 222 162 250 343 673
Cash 15 32 35 55 52 68
Deposits at the central bank 163 190 127 195 291 605

Required reserves 135 153 202 247 337 614

Excess reserves 43 69 -39 2 6 59

Sources: The Gambian authorities; and staff estimates.

1/ Valued at current exchange rates.

2/ Excluding advances to the government in foreign currencies.
3/ These advances reflect previously unrecorded public spending and borrowing in 2001, financed by the Central Bank of The Gambia (CBG),
and previously unrecorded depletion of foreign exchange reserves in 2001-03 as reported by the authorities on October 28, 2003.
4/ In March 2003, the government instructed the CBG to lend the equivalent of D 137 million in U.S. dollars to a newly created public enterprise
for a seismic survey of offshore oil deposits.
5/ Claims on foreign exchange bureaus reflect the delayed delivery of foreign currency purchased on a spot basis.
 - 82 -

Table 26. The Gambia: Summary Accounts of the Commercial Banks, December 1998 - December 2003
(In millions of dalasis; end of period)

1998 1999 2000 2001 2002 2003

Dec. Dec. Dec. Dec. Dec. Dec.

Net foreign assets 1/ -70 -70 5 -48 142 1,014

Foreign assets 72 126 137 128 568 1,056
Foreign liabilities -142 -196 -132 -176 -426 -42
Net domestic assets 1,034 1,161 1,437 1,814 2,263 2,396
Domestic credit 1,006 1,185 1,480 1,826 2,221 2,469
Claims on government (net) 513 584 816 1,075 910 654
Claims on private sector and public enterprises 490 591 664 751 1,312 1,815
Of which: in foreign currency 0 0 0 95 95 ...
Reserves 178 222 162 250 343 673
Cash 15 32 35 55 52 68
Deposits at the central bank 163 190 127 195 291 605
Net claims on central bank 39 49 68 56 96 10
Other items (net) -189 -294 -274 -317 -398 -756

Total deposit liabilities 964 1,091 1,442 1,767 2,405 3,410

Of which : foreign currency deposits 0 0 0 0 273 ...
Demand deposits 279 336 443 525 959 1,690
Savings deposits 462 556 705 832 1,084 1,375
Time deposits 223 198 293 410 362 345

Sources: The Gambian authorities; and staff estimates and projections.

1/ Valued at current exchange rates.

 - 83 -

Table 27. The Gambia: Monthly Interest Rates on Treasury Bills,

January 1998-December 2003
(In percent per annum)

1998 1999 2000 2001 2002 2003

January 16.0 14.0 12.5 12.0 15.0 20.0

February 16.0 14.0 12.5 12.5 15.0 20.0

March 16.0 14.0 12.0 12.5 15.0 23.0

April 16.0 14.0 12.0 12.5 15.0 24.0

May 16.0 14.0 12.0 12.5 15.0 24.0

June 16.0 14.0 12.0 12.5 15.0 25.0

July 16.0 13.5 12.0 12.5 15.0 26.0

August 16.0 13.5 12.0 12.5 15.0 31.0

September 16.0 13.5 12.0 12.5 15.0 31.0

October 15.5 13.5 12.0 15.0 18.0 31.0

November 14.5 13.5 12.0 15.0 19.0 31.0

December 14.0 12.5 12.0 15.0 20.0 31.0

Source: Central Bank of The Gambia.

 - 84 -

Table 28. The Gambia: Structure of Interest Rates, 1998-June 2003 1/

(In percent per annum; end of period)

1998 1999 2000 2001 2002 2003

Commercial bank lending rates 2/

Agriculture 19.0-24.0 18.0-24.0 18.0-24.0 18.0-24.0 17.0-24.0 ...
Manufacturing 19.0-24.0 18.0-24.0 18.0-24.0 18.0-24.0 17.0-24.1 ...
Building 19.0-24.0 18.0-24.0 18.0-24.0 18.0-24.0 17.0-24.2 ...
Trading 19.0-24.0 18.0-24.0 18.0-24.0 18.0-24.0 17.0-24.3 ...
Tourism 19.0-24.0 18.0-24.0 18.0-24.0 18.0-24.0 17.0-24.4 ...
Other 19.0-24.0 18.0-24.0 18.0-24.0 18.0-24.0 17.0-24.5 ...

Deposits
Short-term deposit account 9.0 7.0 7.0 7.0 7.0 ...
Savings bank account 9.5-11.5 9.0-10.0 8.0-10.0 8.0-10.0 8.0-10.0 ...

Time deposits
Three months 11.5-12.5 9.5-12.5 9.5-12.5 9.5-12.5 6.0-13.0 ...
Six months 11.5-12.5 10.2-12.5 10.0-12.5 10.0-12.5 6.0-13.0 ...
Nine months 12.0-15.0 11.0-12.5 10.8-12.5 10.8-12.5 7.0-13.0 ...
Twelve months and over 12.0-15.0 12.0-12.5 11.0-12.5 11.0-12.5 7.0-13.0 ...
Government
Treasury bills 14.0 12.5 12.0 15.0 20.0 31.0
Government development loans
1994-99 15.5 15.5 15.0 15.0 15.0 ...
1999-2002 … 14.0 14.0 14.0 14.0 ...
Central bank
Bank rate 12.0 10.5 10.0 13.0 18.0 29.0

Secondary market operations

Discount rate … … … … … …
Rediscount rate 17.0 15.5 15.0 18.0 23.0 34.0

Source: Central Bank of The Gambia.

1/ Until 1996/97, fiscal years (July-June); from 1997, calendar years.

2/ One commercial bank retains historical nonperforming loans on its books that were made at 9 percent.
Figures from 1990 onward reflect prevailing lending rates.
 - 85 -

Table 29. The Gambia: Distribution of Commercial Bank Credit by Sector, 1998-2003

(In percent, unless otherwise specified; end of period)

1998 1999 2000 2001 2002 2003

Agriculture 11.0 7.8 15.2 5.0 5.4 ...

Fishing 1.8 0.2 0.5 0.7 0.4 ...
Mining and quarrying 0.0 0.0 0.0 0.0 0.0 ...
Building and construction 5.6 5.2 7.5 7.4 5.9 ...
Transportation 4.4 8.0 4.1 6.3 7.0 ...
Distributive trade 42.8 47.9 46.1 44.1 40.4 ...
Tourism 3.9 4.0 3.7 4.1 1.6 ...
Personal loans 23.9 18.3 15.9 24.7 23.5 ...
Other 6.5 8.7 7.0 7.6 15.9 ...

Total 100.0 100.0 100.0 100.0 100.0 ...

Total commercial bank credit

(in millions of dalasis) 590.6 620.7 677.0 792.8 1,337.4 ...

Source: Central Bank of The Gambia.

 Table 30. The Gambia: Liquidity Position of Commercial Banks, 1998 - 2003

(End-of-period data; in millions of dalasis, unless otherwise specified)

1999 2000 2001 2002 2003

Dec. Dec. Dec. Dec. Dec. Dec.

Liquid assets 720.8 798.8 1,034.6 1,368.0 972.3 ...

Reserves 178.1 213.7 162.6 248.9 342.0 ...
Deposits at central bank 163.5 187.5 127.0 193.3 292.2 ...
Cash holdings 14.6 26.1 35.6 55.6 49.8 ...

Treasury bills 503.6 667.3 923.6 1,191.2 893.0 ...

Required cash reserves 1/ 135.0 152.7 201.9 247.0 337.0 ...

Excess cash reserves 2/ 43.1 61.0 (39.3) 1.9 5.0 ...

Required liquid assets 3/ 289.2 318.3 408.5 511.7 689.3 ...

- 86 -

Excess liquidity 4/ 431.6 480.5 626.0 856.3 283.0 ...

Required reserves/total
deposits (in percent) 14.0 14.0 14.0 14.0 14.0 ...

Memorandum item:
Total deposit liabilities 964.1 1,090.6 1,442.0 1,767.0 2,405.0 ...

Source: Central Bank of The Gambia.

1/ Based on reserve requirements of 24 percent of demand deposits and 8 percent of time and savings deposits;
calculated on the basis of end-of-period data. From September 1998 onward, the unified rate of 14 percent
on all deposits has been applied.
2/ Actual reserves less required reserves.
3/ Based on statutory requirements of 30 percent of total liabilities to the public.
4/ Liquid assets less statutory requirement.
 Table 31. The Gambia: Commercial Banks, December 2002
(In millions of dalasis, unless otherwise specified)

Date of Shareholders 1/ Capital and Total Total Number of Minimum

Establishment Public Private 2/ Reserves Deposits Loans Branches Deposits

Standard Chartered Bank (Gambia) 1895 0 100 200.0 1,123.9 630.3 5 3,000

International Bank of Commerce

and Industry 1968 0 100 72.7 252.0 158.7 3 3,000

Trust Bank Limited 1997 0 100 154.3 785.7 387.1 8 1,000

Arab Gambia Islamic Bank 1996 0 100 13.2 118.8 109.5 1 1,000
- 87 -

First International Bank 1999 0 100 20.4 34.4 36.7 2 500

Guaranty Trust Bank (Gambia) LTD 2002 0 100 32.3 86.4 15.8 ... ...

Source: Central Bank of The Gambia.

1/ In percent.
2/ Including Social Security and Housing Finance Corporation (SSHFC).
 Table 32. The G ambia: D istribution of O utstanding G overnment Securities, 1998-2003
(In million of dalasis, unless otherw ise indicated; end of period)

1998 1999 2000 2001 2002 2003

M ar. Jun. Sep. D ec.

G overnment treasury bills 1,020.8 1,201.6 1,564.0 1,919.5 2,117.6 2,037.1 1,868.1 2,179.2 1,948.1
(as percent of total debt) 89.0 90.4 92.4 93.7 94.2 94.0 93.5 94.4 93.8
C entral bank 1.3 12.4 2.4 30.7 197.1 194.3 169.6 553.3 192.2
C ommercial banks 503.6 582.4 814.2 1,073.4 908.1 801.9 579.3 552.6 648.5
N onbanks 515.9 606.9 747.3 815.4 1,012.4 1,040.9 1,119.2 1,073.3 1,107.5
O f which: public enterprises 429.2 516.3 625.3 692.2 848.8 860.3 906.5 890.0 881.5

G overnment development stocks 24.4 23.2 23.2 23.2 23.2 23.2 23.2 23.2 23.2
C entral bank 11.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
C ommercial banks 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5
N onbanks 7.8 17.7 17.7 17.7 17.7 17.7 17.7 17.7 17.7
O f which: public enterprises 7.3 17.7 17.7 17.7 17.7 17.2 17.2 17.2 17.2

G overnment discount note series 101.6 103.8 106.3 106.3 106.3 106.3 106.3 106.3 106.3
C entral bank 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
C ommercial banks 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
N onbanks 101.6 103.8 106.3 106.3 106.3 106.3 106.3 106.3 106.3
O f which
Public enterprises 100.4 102.4 102.4 102.4 102.4 102.4 102.4 102.4 102.4

Total domestic debt 1,146.8 1,328.6 1,693.5 2,049.0 2,247.1 2,166.6 1,997.6 2,308.7 2,077.6
C entral bank 12.4 12.4 2.4 30.7 197.1 194.3 169.6 553.3 192.2
C ommercial banks 509.1 587.9 819.7 1,078.9 913.6 807.4 584.8 558.1 654.0
- 88 -

N onbanks 625.3 728.3 871.4 939.4 1,136.4 1,164.9 1,243.2 1,197.3 1,231.5
O f which
Public enterprises 536.9 636.3 745.4 812.3 968.8 979.9 1,026.1 1,009.5 1,001.1

A s a percent of total domestic debt

C entral bank 1.1 0.9 0.1 1.5 8.8 9.0 8.5 24.0 9.3
C ommercial banks 44.4 44.2 48.4 52.7 40.7 37.3 29.3 24.2 31.5
N onbanks 54.5 54.8 51.5 45.8 50.6 53.8 62.2 51.9 59.3
O f which: parastatals 46.8 47.9 44.0 39.6 43.1 45.2 51.4 43.7 48.2

M emorandum items:
Total securitized debt
(in percent of G D P) 25.6 27.0 31.5 31.3 30.5 21.1 19.4 22.5 20.2
Long-term central bank loan
(in percent of G D P) … … … 6.8 6.1 … … … 4.4
Source: The G ambian authorities.
 - 89 -

Table 33. The Gambia: Balance of Payments, 1998-2003

(In millions of U.S. dollars, unless otherwise indicated)

1998 1999 2000 2001 2002 2003

Prel.

Trade balance -78.9 -68.7 -63.3 -43.1 -49.1 -51.8

Exports, f.o.b. 130.4 120.2 126.6 101.6 111.0 102.0

Groundnuts/groundnut products 12.5 9.9 13.7 17.6 23.9 10.6
Other domestic exports 8.6 5.9 7.4 8.2 8.9 11.1
Reexports 109.3 104.4 105.4 75.8 78.2 80.3
Imports, c.i.f. -209.3 -188.9 -189.9 -144.7 -160.1 -153.8
For domestic use -124.0 -111.4 -113.6 -88.7 -102.4 -94.6
Of which: oil products -13.7 -10.5 -22.6 -9.2 -17.0 -17.7
For reexport -85.3 -77.5 -76.3 -55.9 -57.7 -59.2
Factor services (net) -20.0 -21.1 -20.5 -23.2 -26.4 -24.7
Nonfactor services 49.7 43.8 28.7 17.8 24.9 22.3
Of which: travel income 69.2 63.8 47.7 38.2 41.1 48.0
Private unrequited transfers (net) 3.5 3.8 10.6 3.5 3.6 3.7
Official unrequited transfers (net) 35.6 30.0 31.3 30.5 39.0 31.6
Current account balance
Excluding official transfers -45.7 -42.2 -44.5 -45.0 -47.0 -50.5
Including official transfers -10.1 -12.2 -13.2 -14.5 -8.0 -18.9
Capital account 17.3 7.5 5.7 22.7 20.9 4.3
Official loans (net) 5.4 2.7 6.3 8.4 34.0 8.6
Project related 14.2 13.7 20.5 24.8 47.4 21.8
Amortization -8.8 -11.0 -14.1 -16.4 -14.6 -13.2
Private capital inflow
Foreign direct investment (net) 15.6 0.4 15.8 10.2 9.1 12.7
Other investment (net) -3.6 4.4 -16.4 4.1 -22.2 -17.0
Of which : suppliers' credits 3.6 3.3 3.3 16.7 -12.5 3.1

Unaccounted-for loss in official reserves 0.0 0.0 0.0 -28.5 0.5 0.0

Errors and omissions -0.8 -0.6 17.6 -31.4 -18.3 3.2

Overall balance (excl. PRSP) 6.5 -5.3 10.1 -51.7 -4.9 -11.4
Financing -6.5 5.3 -10.1 51.7 4.9 11.4
Change in gross official reserves (increase = -) -5.5 4.8 -16.9 43.8 0.8 10.5
Of which
Repurchases/repayments (IMF) -4.9 -3.5 -1.6 -0.2 0.0 0.0
Purchases/loans (IMF) 4.7 4.7 9.1 8.7 3.7 0.0
Exceptional financing 1/ 0.0 0.0 0.0 0.0 0.4 0.9
Memorandum items:
Current account balance (in percent of GDP)
Excluding official transfers -10.9 -9.8 -10.6 -10.8 -12.7 -13.8
Including official transfers -2.4 -2.8 -3.1 -3.5 -2.2 -5.1

Gross official reserves (end of period)

In millions of U.S. dollars 102.0 98.0 111.4 63.8 64.1 58.7
In months of imports, c.i.f. 5.8 6.2 7.0 5.3 4.8 4.6
In months of imports, c.i.f.
Over the next 12 months 6.5 6.0 8.9 4.9 5.4 3.9
Plus all other services payments 4.8 4.4 6.1 3.5 3.7 2.8
External debt-service ratio 2/
Including the Fund 11.1 11.8 15.4 18.5 7.8 9.8
Excluding the Fund 8.4 9.6 14.3 18.1 7.6 9.7
Nominal GDP 420.8 431.9 420.9 417.9 369.7 367.0
Nominal GDP (in millions of dalasis) 4,479.1 4,921.9 5,382.4 6,555.9 7,364.3 10,275.2
Official rate (average) 10.64 11.40 12.79 15.69 19.92 28.00

Sources: The Gambian authorities; and staff estimates.

1/ Includes debt relief by Paris Club; interim relief by multilaterals is treated as grants
2/ As a percentage of exports and travel income. After interim debt relief and HIPC grants.
 Table 34. The Gambia: Composition of Merchandise Exports, 1998-2003
(In thousands of U.S. dollars)

1998 1999 2000 2001 2002 2003

Prel.
Total exports, f.o.b. 130,352 120,192 126,579 101,607 110,989 101,968

Groundnut products 12,464 9,916 13,738 17,553 23,920 10,622

Fish and fish products 3,130 3,154 2,562 2,199 2,857 3,124
Fruit and vegetables 1,714 1,641 3,561 4,467 4,089 4,868
Cotton products 1,422 307 171 421 319 467
Other domestic products 2,311 793 1,104 1,118 1,614 2,634
Reexports 109,312 104,381 105,442 75,849 78,190 80,253

Sources: The Gambian authorities; and staff estimates.

- 90 -
 - 91 -

Table 35. The Gambia: Composition of Merchandise Imports, 1998-2003

(In thousands of U.S. dollars)

1998 1999 2000 2001 2002 2003

Total imports, c.i.f. 209,203 189,944 189,858 144,659 160,105 ...

Food and live animals 71,096 61,721 59,800 29,642 37,581 ...

Beverages and tobacco 6,989 7,288 4,527 13,782 8,231 ...

Raw materials 2,496 3,203 1,526 3,799 7,188 ...

Minerals, fuel, lubricants, and

related materials 13,418 10,640 22,627 9,160 17,008 ...

Animal and vegtable oils 9,277 5,856 6,023 7,252 6,078 ...

Chemicals 12,324 14,133 13,154 8,701 16,201 ...

Manufactured goods classified

by material 22,652 22,272 23,162 17,823 24,294 ...

Machinery and transport equipment 47,234 39,034 35,820 36,755 27,262 ...

Miscellaneous manufactured articles 19,497 23,308 21,561 12,557 15,563 ...

Commodities and transactions not ...

classified according to kind 4,222 2,489 1,660 5,188 700

Source: The Gambian authorities.

 - 92 -

Table 36. The Gambia: D irection of Trade, 1998-2002 1/

(In percent of total)

1998 1999 2000 2001 2002 2003

Exports 100.0 100.0 100.0 100.0 100.0 ...

Industrial countries 81.9 75.1 83.7 82.6 78.4 ...

O f which
U nited States 0.4 3.2 0.7 2.1 1.0 ...
Japan 1.7 2.2 8.7 2.1 0.5 ...
EU -15 79.7 69.7 73.5 70.0 76.6 ...

D eveloping countries 18.1 24.9 16.3 17.4 21.6 ...

O f which
Africa 10.9 18.1 4.0 3.6 3.8 ...
O f which
Ghana 1.0 1.8 0.4 0.7 0.7 ...
Guinea 2.5 4.2 0.2 0.1 0.1 ...
Senegal 2.5 2.8 0.7 1.2 1.2 ...
Guinea Bissau 2.3 6.4 0.4 0.0 0.6 ...
Asia 3.3 5.8 7.0 10.6 16.7 ...
O f which
China 2.2 1.5 0.0 0.0 0.0 ...
H ong K ong SAR 0.5 0.8 1.9 0.9 1.0 ...
Thailand 0.2 0.2 0.8 3.3 0.6 ...
O ther 3.9 1.1 5.3 3.2 1.0 ...

Imports 100.0 100.0 100.0 100.0 100.0 ...

Industrial countries 42.3 57.4 35.5 39.6 36.3 ...

O f which
U nited States 3.2 5.0 2.5 2.4 2.6 ...
Japan 2.2 3.2 2.0 1.4 1.7 ...
EU -15 36.3 48.6 30.4 35.4 31.0 ...

D eveloping countries 57.7 42.6 64.5 60.4 63.7 ...

O f which
Africa 11.7 8.7 16.6 13.1 15.1 ...
O f which
Guinea 0.4 0.0 0.0 0.0 0.0 ...
Senegal 5.4 2.3 11.0 7.5 9.2 ...
Côte d'Ivoire 4.5 4.1 3.9 3.4 3.6 ...
Asia 39.0 20.3 38.9 34.7 36.6 ...
O f which
China 17.0 6.4 20.6 20.3 22.3 ...
H ong K ong SAR 11.5 4.4 8.8 4.3 3.5 ...
Thailand 1.0 1.2 1.0 2.1 1.3 ...
O ther 7.0 13.6 9.0 12.5 12.0 ...

Source: IM F, D irection of Trade Statistics.

1/ Based on The Gambia's trading partners' data.

 - 93 -
Table 37. The Gambia: Foreign Trade Indicators, 1998-2003

1998 1999 2000 2001 2002 2003

(Annual percentage changes)

Value (U.S. dollar terms)

Exports, f.o.b. 19.9 -7.8 5.3 -19.7 9.2 -8.1
Groundnuts 1/ 158.3 -20.4 38.6 27.8 36.3 -55.6
Other domestic exports -6.7 -31.3 25.5 10.9 8.2 24.9
Reexports 15.4 -4.5 1.0 -28.1 3.1 2.6

Travel income 9.2 -7.8 -25.1 -19.9 7.4 16.9

Imports, c.i.f. 20.3 -9.7 0.5 -23.8 10.7 -3.9

For domestic use 17.6 -10.1 2.0 -21.9 15.4 -7.6
Of which: oil products 12.0 -23.4 116.2 -59.5 85.4 4.2
For reexports 24.5 -9.2 -1.5 -26.7 3.1 2.6

Price indices (U.S. dollar terms)

Exports, f.o.b. -2.0 -6.3 -5.1 -2.6 5.6 18.8

Groundnuts 1/ -9.1 -11.9 -2.9 -19.0 41.8 19.1
Other domestic exports -34.8 -24.8 -6.9 -12.8 -4.0 145.6
Reexports -10.1 0.7 -3.3 -4.1 3.1 14.0

Travel income 1.0 -30.7 17.7 -17.5 5.1 1.7

Imports, c.i.f. -5.0 -1.6 -0.7 -3.2 3.0 14.2

For domestic use -6.3 2.0 2.7 -3.2 3.0 14.3
Of which: oil products -32.1 37.5 57.0 -13.8 2.5 15.8
For reexports -3.1 -4.2 -5.7 -2.2 3.1 14.0

Volume indices

Exports, f.o.b. 22.4 -1.6 11.0 -17.6 3.5 -22.7

Groundnuts 1/ 184.2 -9.7 42.7 57.7 -3.9 -62.7
Other domestic exports 43.0 -8.6 34.8 27.1 12.8 -49.1
Reexports 28.4 -5.2 4.4 -25.0 0.0 -10.0

Travel income 8.1 33.0 -36.4 -2.9 2.3 15.0

Imports, c.i.f. 26.7 -8.3 1.2 -21.3 7.4 -15.9

For domestic use 25.6 -11.9 -0.8 -19.3 12.1 -19.2
Of which: oil products 65.0 -44.3 37.7 -52.9 80.8 -10.0
For reexports 28.4 -5.2 4.4 -25.0 0.0 -10.0

Terms of trade

Domestic trade 11.8 -18.0 -3.5 -0.4 9.6 13.8

Total trade 3.1 -4.9 -4.4 0.6 2.5 4.0

(In percent of GDP)

Exports, f.o.b. 31.0 27.8 30.1 24.3 30.0 27.8

Groundnuts 1/ 3.0 2.3 3.3 4.2 6.5 2.9
Other domestic exports 2.0 1.4 1.8 2.0 2.4 3.0
Reexports 26.0 24.2 25.1 18.1 21.1 21.9

Travel income 16.4 14.8 11.3 9.1 11.1 13.1

Imports, c.i.f. 49.7 43.7 45.1 34.6 43.3 41.9

Of which: for domestic use 29.5 25.8 27.0 21.2 27.7 25.8

Sources: The Gambian authorities; and staff estimates.

1/ Including undecorticated groundnut exports.

 - 94 -

Table 38. The Gambia: Public External Debt Outstanding and Debt Service, 1998-2003

1998 1999 2000 2001 2002 2003

External public debt 1/ 2/ 460.5 451.5 455.1 475.5 560.4 562.0

Medium and long term 450.4 440.0 453.2 462.2 496.6 502.4
IMF 10.0 11.5 18.4 26.2 30.4 32.9

External public debt service 22.8 21.2 14.8 21.4 19.1 20.0

Principal 16.8 15.0 9.4 16.6 14.6 13.2

Medium and long term 8.8 11.0 14.1 16.4 14.6 13.2
IMF repurchases/repayments 4.9 3.5 1.6 0.2 0.0 0.0

Interest 6.0 6.2 5.3 4.8 4.5 6.8

Medium and long term 5.6 5.7 5.0 4.4 4.2 6.7
Short term 0.0 0.0 0.0 0.0 0.0 0.0
IMF charges 0.4 0.5 0.3 0.4 0.3 0.1

IMF 5.3 4.0 1.9 0.6 0.3 0.1

Others 17.5 17.2 12.9 20.8 18.8 19.9

Memorandum items:
External public debt
(in percent of GDP) 109.4 104.5 108.1 113.8 151.6 153.2
Debt service
(in percent of GDP) 5.4 4.9 3.5 5.1 5.2 5.4
Debt-service ratio 3/ 11.4 11.5 8.5 15.3 12.6 13.3
IMF 2.7 2.2 1.1 0.4 0.2 0.1
Others 8.8 9.3 7.4 14.9 12.4 13.2
IMF repayments and charges
(in percent of total debt-
service payments) 23.2 19.0 12.9 2.9 1.4 0.6
(in percent of gross
international reserves) 5.2 4.1 1.7 1.0 0.4 0.2

Sources: Staff estimates based on 1999 debt-stock data at decision point; and submissions by the authorities
on subsequent disbursements and debt-servicing.
1/ After revaluation for changes in the exchange rate between the U.S. dollar and other currencies
of denomination of the debt.
2/ 2003 figure is preliminary and does not fully incorporate all disbursements by the African Development Bank.
It therefore underestimates total debt.
3/ In percent of exports and travel income. Debt service presented on a commitment basis.
 - 95 -
Table 39. The Gambia: Exchange Rate Indicators, 1990-2003
(Period average)
Market Rate Market Rate Exchange Rate Index Nominal Effective 1/ Real Effective 1/
Dalasis per US Dollar Dalasis per SDR Dalasis per SDR Exchange Rate Exchange Rate
(1995=100) (1995=100) (1995=100)

1990 7.88 10.77 121.5 88.3 104.7

1991 8.80 12.38 109.4 85.0 100.2
1992 8.89 12.51 86.4 87.5 102.8
1993 9.13 12.75 88.0 99.8 111.2
1994 9.58 13.71 94.7 104.8 103.2
1995 9.55 14.48 100.0 100.0 100.0
1996 9.79 14.21 98.1 100.7 98.9
1997 10.20 14.03 96.9 104.6 103.3
1998 10.64 14.44 99.7 103.5 101.6
1999 11.40 15.58 107.6 98.5 99.4
2000 12.79 16.85 116.3 94.9 94.5
2001 15.69 19.97 137.9 81.5 82.9
2002 19.92 25.86 178.6 63.1 68.4
2003 28.53 40.03 276.4 40.0 49.3
1997
1st quarter 9.97 13.89 95.9 104.2 103.1
2nd quarter 10.08 13.94 96.2 104.7 104.5
3rd quarter 10.32 14.08 97.2 105.4 104.3
4th quarter 10.42 14.24 98.3 104.1 101.3

1998
1st quarter 10.54 14.18 97.9 106.2 101.0
2nd quarter 10.56 14.15 97.7 105.5 103.0
3rd quarter 10.65 14.28 98.6 104.3 104.0
4th quarter 10.82 15.16 104.7 97.9 98.6

1999
1st quarter 11.08 15.32 105.7 98.9 99.9
2nd quarter 11.30 15.22 105.1 100.3 101.0
3rd quarter 11.55 15.71 108.5 98.2 99.2
4th quarter 11.66 16.08 111.0 96.7 97.6

2000
1st quarter 11.83 16.00 110.5 97.8 98.0
2nd quarter 12.40 16.45 113.6 96.6 96.7
3rd quarter 12.73 16.65 115.0 96.3 95.5
4th quarter 14.20 18.28 126.2 89.0 87.8

2001
1st quarter 14.96 19.32 133.4 83.8 84.8
2nd quarter 15.38 19.38 133.8 84.5 85.4
3rd quarter 15.85 20.14 139.1 80.7 82.2
4th quarter 16.56 21.03 145.2 77.1 79.4

2002
1st quarter 17.60 21.99 151.8 73.4 77.7
2nd quarter 18.66 23.85 164.7 67.4 71.6
3rd quarter 20.40 27.02 186.5 59.2 64.1
4th quarter 23.01 30.60 211.3 52.4 60.0

2003
1st quarter 24.65 33.74 232.9 46.8 54.7
2nd quarter 27.15 37.94 262.0 41.0 50.3
3rd quarter 30.60 42.64 294.4 36.6 46.5
4th quarter 31.72 45.81 316.3 33.6 44.2

Sources: Central Bank of The Gambia; and IMF, International Financial Statistics .
1/ 2003 figures reflect indices up to November 2003.
 - 96 -
Tab le 40. The Gam bia: Interb ank and Parallel M arket Exchange R ates, 1998 - 2003
(Dalasis per unit of foreign currency, un less oth erwise indicated; end of period )

U .K. Po und Sterling U .S. D o llar C FA Franc 1/

Interbank Parallel Spread Interbank Parallel Spread Interbank Parallel Spread
mid-market mid-market (percent) mid-market mid-market (percent) mid-market mid-market (percent)

1998 January 16.80 17.15 2.08 10.56 10.62 0.57 88.32 87.25 -1.21
February 16.86 17.23 2.19 10.53 10.76 2.18 88.72 88.25 -0.53
M arch 16.84 17.53 4.10 10.53 10.87 3.23 88.76 89.25 0.55
April 16.96 17.64 4.01 10.54 10.88 3.23 87.48 88.50 1.17
M ay 16.98 17.80 4.83 10.54 10.93 3.70 86.90 88.50 1.84
June 17.00 17.53 3.12 10.59 10.87 2.64 87.51 89.25 1.99
July 17.27 17.97 4.05 10.59 10.97 3.59 89.69 89.50 -0.21
August 17.02 17.53 3.00 10.68 10.87 1.78 89.38 89.25 -0.15
September 17.08 17.53 2.63 10.68 10.87 1.78 91.20 89.25 -2.14
O cto ber 17.22 18.55 7.75 10.73 11.20 4.36 91.01 98.25 7.95
N o vember 17.32 18.45 6.53 10.90 11.23 3.04 101.19 98.00 -3.15
D ecember 17.35 18.53 6.80 10.99 11.45 4.17 95.55 99.50 4.13
1999 January 17.47 18.25 4.46 11.04 11.43 3.54 88.05 97.00 10.16
February 17.48 18.40 5.28 11.07 11.45 3.40 93.84 95.50 1.77
M arch 17.85 18.40 3.09 11.07 11.45 3.41 93.37 95.50 2.29
April 17.84 18.93 6.13 11.25 12.03 6.95 94.61 96.25 1.74
M ay 17.69 19.28 9.01 11.49 12.10 5.31 94.68 96.50 1.92
June 18.12 19.40 7.06 11.30 12.30 8.84 94.42 95.50 1.14
July 18.00 19.20 6.64 11.37 12.20 7.32 94.52 94.50 -0.02
August 17.85 19.28 8.03 11.42 12.15 6.36 95.18 96.50 1.38
September 17.96 19.18 6.81 11.66 12.33 5.76 95.22 94.00 -1.28
O cto ber 18.16 19.20 5.72 11.53 12.20 5.81 94.30 94.50 0.21
N o vember 18.39 19.28 4.86 11.75 12.15 3.43 90.73 96.50 6.36
D ecember 18.65 19.20 2.96 11.55 12.20 5.65 92.91 94.50 1.71
2000 January 18.45 20.28 9.90 11.68 12.60 7.89 94.47 95.50 1.09
February 18.64 20.05 7.56 12.01 12.68 5.60 93.49 92.50 -1.06
M arch 18.58 20.55 10.58 12.14 13.20 8.74 94.92 94.50 -0.44
April 18.80 20.95 11.45 12.29 13.45 9.48 94.82 94.50 -0.33
M ay 19.70 20.50 4.05 12.41 13.75 10.82 94.30 95.00 0.74
June 19.53 20.78 6.38 12.65 13.80 9.11 94.74 97.50 2.91
July 20.49 21.03 2.64 12.64 14.13 11.78 95.11 98.50 3.57
August 20.04 21.60 7.76 12.43 14.55 17.03 94.88 99.00 4.34
September 20.91 21.88 4.62 13.52 15.05 11.31 95.48 100.00 4.73
O cto ber 20.94 21.68 3.53 14.06 15.35 9.18 100.50 100.00 -0.49
N o vember 21.33 21.80 2.22 14.44 15.50 7.36 96.41 100.50 4.24
D ecember 21.09 22.40 6.19 14.89 15.55 4.45 95.50 106.50 11.52
2001 January 21.48 21.75 1.25 14.78 14.78 0.00 94.01 104.50 11.16
February 21.53 21.98 2.06 15.12 15.12 0.01 99.57 106.50 6.96
M arch 21.57 22.20 2.93 15.14 15.14 0.02 97.41 106.50 9.33
April 21.81 22.80 4.54 15.24 16.00 5.01 101.23 108.50 7.18
M ay 21.47 23.65 10.16 15.20 16.93 11.38 108.77 111.00 2.05
June 21.44 23.40 9.12 15.50 16.75 8.05 105.84 108.50 2.52
July 21.95 23.85 8.64 15.97 16.95 6.16 110.79 111.50 0.64
August 23.23 24.90 7.17 15.97 17.50 9.57 107.07 118.50 10.68
September 21.83 24.48 12.12 16.25 17.05 4.92 106.63 117.50 10.19
O cto ber 24.56 24.95 1.58 16.70 17.83 6.71 116.68 119.50 2.42
N o vember 24.54 24.95 1.69 16.75 17.78 6.15 120.11 117.50 -2.17
D ecember 25.01 25.55 2.17 16.93 18.13 7.05 120.89 120.50 -0.33
2002 January 25.15 25.65 1.99 17.30 18.45 6.62 115.25 120.50 4.55
February 25.46 27.05 6.25 17.69 19.08 7.83 122.84 126.50 2.98
M arch 25.81 27.20 5.39 17.82 19.23 7.89 120.36 126.50 5.10
April 26.51 27.23 2.71 18.72 19.15 2.25 125.97 125.95 -0.01
M ay 26.92 28.12 4.44 18.84 19.48 3.35 129.49 132.30 2.17
June 27.40 28.92 5.52 19.14 19.68 2.82 124.23 134.40 8.19
July 28.19 31.34 11.14 19.26 20.49 6.36 130.15 150.50 15.64
August 30.67 32.47 5.86 21.16 22.35 5.61 142.58 155.90 9.34
September 32.60 36.13 10.80 21.79 23.70 8.77 168.53 172.00 2.06
O cto ber 34.90 36.55 4.73 22.76 23.75 4.35 170.95 175.50 2.66
N o vember 35.23 37.05 5.16 23.21 23.75 2.31 170.21 179.50 5.46
D ecember 35.49 38.13 7.43 23.39 24.75 5.80 174.45 187.75 7.62
2003 January 37.79 39.15 3.60 24.29 24.65 1.50 186.79 191.50 2.52
February 38.69 40.20 3.91 24.63 27.00 9.61 193.40 204.00 5.48
M arch 40.00 42.35 5.88 26.00 27.75 6.71 205.24 221.00 7.68
April 41.06 42.93 4.54 26.75 27.78 3.84 201.43 224.50 11.46
M ay 42.40 45.13 6.44 27.19 28.10 3.36 229.81 239.50 4.22
June 44.79 … … 27.88 … … 218.94 … …
July 47.39 … … 29.52 … … 243.51 … …
August 48.77 … … 31.49 … … 255.48 … …
September 53.01 … … 33.43 … … 273.57 … …
O cto ber 50.98 … … 31.61 … … 233.13 … …
N o vember 51.29 … … 31.07 … … 242.17 … …
D ecember 51.91 … … 30.96 … … 220.19 … …

Source: T he G ambian authorities.

1/ D alasis per C FAF 5,000.

 Table 41. The Gambia: Summary of Tax System as of December 31, 2003

(All amounts in dalasis)

Tax Nature of Tax Exemptions and Deductions Rates

1. Taxes on net income and profits

1.1 Taxes on companies and

corporations

1.11 Company tax Tax on companies having income accruing in, derived Income exempted includes the income or profits of (a) a 35 percent of net profits or 2 percent of turnover,
from, brought into, or received in The Gambia. local authority, district authority, government institution; whichever is higher. However, small companies
“Company” is defined as any company or corporation the Central Bank of The Gambia; (b) a registered incorporated and controlled in The Gambia after
incorporated or registered in The Gambia or elsewhere. cooperative society; (c) an ecclesiastical, charitable, or 1954 may benefit from relief as follows: (a) for
educational institution of a public character where such the year of assessment in which the company
Profit of a life insurance company is defined as income is not derived from a trade or business; (d) a body commences trading and the subsequent year at a
investment income less management expenses of persons (which excludes companies and partnerships) rate equal to the full rate of tax; (b) for the next
(including commission). Where premiums are received formed for the purpose of promoting social or sporting two assessment years at a rate equal to the
outside The Gambia, the profit is taken to be the same amenities not involving gain by the body or its members; full rate of tax; and (c) for
proportion of the company's total investment income as (e) a registered trade union insofar as such income is not the next two assessment years at a
The Gambia premiums bear to the total premiums, less derived from a trade or business; (f) the operation of ships rate equal to one third of the rate of tax.
The Gambia agency expenses and a fair proportion of or aircraft carried on by a nonresident person subject to an Such relief is subject to a reduction as follows:
- 97 -

the head office expenses. For other insurance equivalent exemption being granted by the country of his where the company's chargeable income exceeds
companies having profits arising partly outside The residence to persons resident in The Gambia; and (g) the D5,000 the amount of chargeable income
Gambia, the profit for tax purposes is based on the investment income of an approved pension or provident to be wholly or partly relieved from tax is
gross premiums, interest, and other income received or society fund. restricted to any balance of such D5,000
receivable in The Gambia (adjusted for premiums remaining after deducting one-half of the
returned, reinsurances, and unexpired risks). The actual Deductions allowed include (a) the written-down value amount by which such chargeable income exceeds
losses, agency expenses in The Gambia, and a fair (after deductions for depreciation) of plant, machinery, or D5,000. Relief is given only if the company (a) is
proportion of head office expenses are deductible. fixtures sold or discarded, less any sum realized by the sale engaged in a manufacturing activity approved by
of an asset (or its market value if greater). The excess of the the Minister of Finance and (b) is not
Companies exploiting a mine, oil well, or other sources sale price (or market value) over the written-down value is eligible for concessional treatment
of mineral deposits of an exhaustible nature are granted treated as income up to the excess of the original cost over under the Development Act.
a depletion allowance. Expenditure taken into account the written-down value; (b) expenditure on repair of
for this purpose includes expenditure on acquisition of premises, plant, machinery, or fixtures, and for the renewal, For companies in the following sectors: health,
the deposits, on exploitation, and on the construction of repair, or alterations of articles used in acquiring the education, agriculture, agrotech, fish processing,
works that will be of little or no value when the mineral income; (c) deduction of allowances in respect of capital aquaculture, hotels, inland tourism,
source is no longer worked; it does not include expenditure on, and depreciation by wear and tear of, plant, manufacturing, and development banking,
expenditure on the acquisition of any site, on machinery machinery, or fixtures arising from their use in a trade, commencing business in the years of assessment
or plant, on works for processing the raw products, or business, profession, vocation, or employment: (i) an initial 1998 and thereafter, the tax payable shall be as
on buildings for workers or for use as offices. Provision allowance of 20 percent follows: (i) two-thirds of the tax rate of 35 percent
is made for the first three years after commencement,
(ii) thereafter, one-third of the tax rate of
35 percent from the
 Tax Nature of Tax Exemptions and Deductions Rates

1.11 Company tax (continued) for an initial allowance of 25 percent of the capital of the total cost (after deducting any sum contributed by fourth to the sixth year after commencement, and
expenditure on the construction of works and another person), and (ii) an annual allowance of such sum (iii) after the sixth year the full tax rate of
20 percent for plant and machinery, and an annual as the Commissioner considers reasonable. Where the 35 percent shall be payable, (iv) companies in
allowance for any qualifying expenditure of 4 percent assets and the business, etc., do not have the same these sectors will not be subject to turnover tax.
or 15 percent determined according to a special ownership, the deduction may not reduce the written-down
formula. There is also a balancing allowance on the sale value to less than the market value of the assets at the end
by a going concern of any assets representing of the relevant period; (d) subject to certain limitations,
qualifying expenditure equal to the excess, if any, of the contributions by employers to pension and provident funds,
residual of the expenditure on those assets over the approved by the Commissioner; (e) a deduction of a
proceeds of their sale. Conversely, a balancing charge reasonable amount for the depreciation by wear and tear of
applies on the amount by which the proceeds exceed premises, buildings, structures, and works of a permanent
the residual. The full profits of a nonresident ship- nature used for commercial, industrial, or banking purposes
owner or charterer arising from the carriage of passen- (including property used for the occupation or welfare of
gers, mail, livestock, or goods shipped in The Gambia employees and property owned by property-dealing
are taxable there, except where the profits arise from companies); the amount allowable is limited to:
passengers, brought in solely for transshipment, or from (i) 4 percent of the capital cost for the period in which it
a casual call. Similar provisions apply to the profits of was incurred; and (ii) for subsequent years, an annual
air transport and cable and wireless telegraph allowance of 4 percent of the written-down value.
undertakings carried on by nonresidents. However, for property other than mills, factories, and
similar property, the erection of which commenced before
Starting in 1998, an accelerated capital allowance, to be January 2, 1953, the annual allowance is limited to
determined by the Commissioner, shall be granted for 2 percent of the written-down value; and (f) any loss on the
companies operating in the following sectors: health, sale, demolition, or permanent disuse of property, etc., for
education, agriculture, agrotech, fish processing, which a deduction as at (e) has been given. The allowance
aquaculture, new hotels, inland tourism, manufacturing, given is equal to the written-down value (calculated by
- 98 -

and development banking. reference to such deductions less the proceeds of sale or
any recoveries under an insurance policy. The excess of
any such proceeds or recoveries over the written-down
value is liable to capital gains tax (see below, 1.31).

1.2 Taxes on individuals Tax on income accruing in, derived from, brought into, Exemptions include (a) the official salaries and Either (a) Tax Rate
or received in The Gambia. Temporary residents who emoluments of the President (and his leave emoluments) Income range Percent
1.21 Individual income tax have no intention of establishing residence, and who or acting President and diplomatic staff; (b) certain lump
have not resided in The Gambia for a period equal in sums received by way of retirement or death gratuities 0 to D7,500 0
aggregate to six months in the year of assessment, are arising out of compensation schemes, and any sums D7,501 - 17,500 10
not taxed on income arising outside and received in The payable to public officers as a gratuity under any contract D17,501 - 27,500 15
Gambia. Income, wherever received, from any or service agreement; (c) lump sums withdrawn by D27,501 - 37,500 20
employment exercised in The Gambia is treated as individuals on retirement from any pension, provident, or D37,501 - 47,500 25
having been derived there. The income other than the other approved society or fund; (d) wound and disability Over D47,500 35
earned income of a married woman living with her pensions granted to members of Commonwealth forces;
husband is deemed to be the income of her husband. (e) pensions granted under certain legislation concerning Or (b)
The earned income of a married woman is assessed in
her hands separately.
 Tax Nature of Tax Exemptions and Deductions Rates

Income includes (a) gains or profits from any trade, widows and orphans; (f) the income of bona fide students 3 percent of turnover or gross receipts, whichever
profession, or vocation; (b) gains or profits from any in full-time attendance at a school, training center, etc.; is the higher.
employment including allowances paid in money other (g) certain emoluments payable to noncitizens under an
than reimbursements for expenditure actually incurred, agreement with another government, organization, etc., Standard allowance: D7,500.
but excluding (i) the value of any quarters or residence for technical assistance; etc.; and (h) income from
if the employee earns less than D625 a month or is employment, trade, business, or profession exercised
employed by a government or quasi-government outside The Gambia and received therein.
corporation, etc., or approved non-profit-making
institution, and (ii) the value of any passage from or to A standard deduction of D7,500 is allowed to every
The Gambia provided by the employer and the amount taxpayer, starting January 1993.
of any reimbursement of expenses actually incurred;
(c) dividends, interest, or discounts—the income of a
shareholder in a company controlled by not more than
five persons may be deemed to include undistributed
income of the company; (d) pensions, charges, or
annuities; (e) rents, royalties, premiums, and any other
profits arising from property, but excluding the annual
value of owner-occupied property; and (f) income
arising outside The Gambia and brought therein, except
accumulated and taxed profits abroad.

1.21 Individual income tax For residential properties, a withholding tax of

- 99 -

(continued) 10 percent of gross rents is applied.

"Assessable income" is income from all sources,

excluding exempt income and after permitted
deductions; "total income" is assessable income less
any offset for losses; and "chargeable income" is total
income less allowances for individuals.

The amount of a loss incurred by the taxpayer in the

year of assessment in any trade, business, profession, or
vocation is deductible from assessable income in
determining total income, providing it is claimed within
12 months after the end of the year of assessment.
There is provision for the carry-forward of any loss not
allowed against assessable income up to a maximum of
six years, but only by the person who incurred the loss,
and for the same business.
 Tax Nature of Tax Exemptions and Deductions Rates

Tax is levied for the year of assessment ending on The tax rate chargeable on the
December 31 upon the income of the same calendar income of companies for the year of assessment
year, or the accounting year ended in the preceding within which the due date for payment of the
year. There are special provisions for allocating the interest falls (35 percent). The rate
income in respect of the commencement and cessation paid or payable by the company on the assessed
of a business, employment, etc. Partners are required to income of the year of assessment within which the
make a joint return in respect of their partnership dividend is declared payable (35 percent).
income, but they are liable to tax only in their separate,
individual capacities.

1.22 Withholding at source (a) Monthly deductions from public emoluments,

subject to adjustment when the liability is finally
determined. Any other employer is obliged to collect
the tax payable by an employee in monthly
installments, as prescribed by the Commissioner;
(b) persons paying mortgage or debenture interest,
deductible in ascertaining their income to nonresidents;
(c) companies resident in The Gambia on dividends
paid to shareholders (the tax so deducted can be
credited against the shareholder's tax liability); (d) the
Commissioner may, if necessary, appoint any person as
the agent of a taxpayer for the purposes of the act and
require him to pay any tax due from any money,
including remuneration or pensions, payable from him
to the taxpayer. Pensions are no longer taxable.
- 100 -

1.31 Capital gains tax Tax on net capital gains arising from transfer of capital Capital losses can be offset against capital gains in the Gains of D5,000 and below are exempt. Rates of
assets (namely, premises, buildings, or land, structures same year of assessment. Gains on transfer of land used for tax: companies, 25 percent of net gains or
or works, and permanent fixtures) or on the selling agricultural purposes and property being used for 10 percent of selling price; individuals, 15 percent
price of transferred capital assets, whichever is higher. residential purposes are not chargeable if owner occupied of net gains or 5 percent of selling
Transfers include sale, exchange, or extinction of the house/land for two years before sale and reinvested price.
interest or compulsory acquisition of capital assets. profits within three years of sale.
Gains include those arising from transfer of assets
under a gift or will and distribution of assets or
dissolution of business.

2. Payroll tax Fixed annual levy on expatriates in executive, Expatriates in the public service, international Reduced to D20,000 per person from
managerial, and supervisory grades in commerce and organizations, and charitable institutions are D30, 000, effective January 2001; further reduced
industry. exempt. to D10,000 per person from January
2002.
 Tax Nature of Tax Exemptions and Deductions Rates

3. Taxes on goods and services Tax on turnover of parastatals and other government 2 percent for audited accounts or 3 percent
institutions in surplus positions and which are exempted for noncomplying companies.
3.1 Turnover tax by legislation from payments of taxes on profits.

3.2 Sales tax Tax imposed on the sale price of all goods (a) Educational, technical, cultural, and religious 10 percent for imports.
manufactured or imported and on services such as hotel institutions; (b) food and drinks not imported or industrially 15 percent for domestic manufacturing and
accommodations, telecommunications, insurance, air processed; (c) feeds for animals; (d) semi finished products services, except for
services, restaurants and bars, cinematographs, night to produce (b) and (c); (e) medicines; (f) production 18 percent for telecommunication services
clubs and casinos, and gambling houses. equipment, excluding office equipment, motor vehicles, (GAMTEL and others).
and electric generators; (g) butane gas and gas cookers;
(h) school textbooks; (i) imported day-old chicks; and
(j) packaging and freight for exports.

3.3 Selective taxes on activities

3.31 Business and professional

licenses

3.31.1 Business registration Business registration fee. Annual fees are set at D1,000 for externally
tax registered firms with local branches, D500
for local companies and partnerships, and D250
for other local businesses. Nonincorporated
shopkeepers at the wholesale level are assessed an
annual fee of D500, while retail shopkeepers
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with a turnover of more than D10,000 per year are

assessed a fee of D200; those with turnover below
D10,000 are assessed a fee of D150.

3.31.2 Professional tax Tax on professionals working in the country. This tax is D10,000 per annum.
tied to the issue of an annual license that is renewable Currently not applicable.
and levied on doctors, lawyers, accountants, and
surveyors.

3.32 Motor vehicle taxes

3.32.1 Motor vehicle License fee on the gross weight of commercial goods Commercial goods vehicles: D137.85 per year on
licenses vehicles, the carrying capacity of commercial passenger trucks not exceeding 100 cwt. gross weight to
vehicles, and the net weight of private vehicles. D278.58 per year on trucks in the 100-120 cwt.
weight bracket, with D11.98 per 5 cwt. additional
on trucks over 120 cwt. and D25 additional on
vehicles over 125 cwt.
Trailers: D19.97 per cwt.
Commercial passenger vehicles: D149.83 per year
for three-passenger vehicles to
 Tax Nature of Tax Exemptions and Deductions Rates

D433.35 per year for buses carrying more than 24

passengers.
Private vehicles: D96.85 per year on cars
not exceeding 20 cwt. to D168.75 per year on cars
in the 40-50 cwt. weight bracket.
Motor scooters: D40.97 per year.
Motorcycles: D48.96 per year.
There are also corresponding half-
yearly or December-only rates.

3.32.2 Road tax Additional to vehicle licenses. Motorcycles D20 per year; private motor vehicles
D70 per year; commercial taxis, D150 per year;
and commercial trucks and buses D1,050 per year.

3.32.3 Driving license D20 per year.

4. Taxes on international trade and

transactions

4.1 Import duties Tax on value of imported goods to be declared on General exemptions include goods in transit; goods for use For all goods, there is one unified tariff rate
customs entries. Normally for goods imported under a as aircraft's or ship's stores; advertising material having no irrespective of country of origin, ranging from
4.11 Customs duties contract of sale negotiated in fully open market commercial value as such; mosquito-proof gauze and 0 percent to 18 percent. Generally, luxury goods
conditions, the value is represented by the price made netting; personal effects; certain goods imported by, or on are charged an excise tax, in addition to the
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under that contract, adjusted as necessary to a c.i.f. behalf of, the government, privileged persons (within maximum duty rate. These commodities include
basis. Items are identified by the Harmonized prescribed limits), and institutions; and certain goods liquor, cigarettes, and vehicles. Effective January
Commodity Description and Coding System identify (building materials, plant, and machinery) purchased by the 2003, excise taxes (revenue tax) are charged at
items. holders of development certificates during their tax holiday D50/kg net for cigarettes, D25/liter for beer,
period. D50/liter for wine spirit, D5/liter for mineral
If there is no invoice, the value is the price that the water, soft drinks, and canned fruit, and 5 percent
goods would fetch on sale in the open market in The of the c.i.f. value for vehicles. As per end-2003,
Gambia, including freight, insurance, commission, and these taxes are not levied on domestic goods.
all other costs up to the port or place of importation.
An environmental tax is charged on non-
A levy of sales tax on the total earnings of lawyers was manufactured tobacco at D13.02/kg, and at
introduced effective August 1998. D1,000 for used motor vehicles.
 Tax Nature of Tax Exemptions and Deductions Rates

Duties on fuel are calculated according to a

formula agreed with the oil companies based on
specific duty rates.

The National Water and Electricity Company

pays 18 percent of the normal duty rate on imports
of petroleum products.

Customs processing fees are charged at 1.55

percent of c.i.f. and ECOWAS duty at 0.50
percent of c.i.f.

5. Other taxes

5.1 Stamp duties Instruments Persons Liable General exemptions include (a) instruments effecting the Rates of duty are specific and vary according to
Subject to Duty payment of money to or for acknowledging any such the nature of the instrument, the matter to which it
payment to, or receipt by, or on behalf of, the government; relates, and the value thereof.
agreements partial thereto (b) instruments for the conveyance of any property or any
interest therein to the government; (c) instruments whereby
awards person making any contract is made by the government or on its behalf
or executing with another person; (d) contracts or instruments made or
the award executed by any responsible officer of the government
under the authority of any act; (e) instruments of which the
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bills of exchange drawer or duty would be payable by any consular officer arising out
acceptor of his official functions, subject to reciprocity by the
government he represents; and (f) instruments for the
conveyances transferee
acquisition of land by any foreign state for the purpose of a
insurance policies issuer consular office, subject to reciprocity.

leases lessee or Certain other exemptions are provided within the categories Stamp duty on tenancy agreement was reduced
tenant of instruments generally liable to duty. from 40 percent to 20 percent, effective
January 2001.
mortgages mortgagees

Development Act, 1988 Tax Incentives

The Development Act is presently suspended Any person engaged in a development project (in
and is being reviewed. manufacturing industry; agriculture, livestock, fishing,
and forestry; mining and quarrying; and tourism) may
apply for a Development Certificate, which specifies,
inter alia, the factory construction (or alteration,
extension, etc.) date, the production date, the tax credits
to be granted, and their duration. The provision of tax
credits is limited to companies that either export at least
one-half their output or of which 70 percent or more of
their total current inputs originate from
 Tax Nature of Tax Exemptions and Deductions Rates

The Gambia. All development certificate holders are

eligible for (a) a tax credit certificate equivalent to
10 percent of local content used in the capital and
construction phase, and in the first five

Development Act, 1998 (continued) fiscal years following production; (b) an offset against
taxation equivalent to double the cost of training
provided to management and employees in skills
relating to the operations of the enterprise; and
(c) accelerated depreciation at twice the normal rate for
infrastructure supplied that is also available to other
users.

In accordance with the terms of the Development

Certificate, a tax credit certificate is granted for a period
of no more than two years for (a) the total or partial
exemption of customs duties on the following items:
(i) the approved capital equipment, plant, building
material, machinery, and appliances to be used in
establishing the project; and (ii) the approved quantity
of semi finished products, spare parts, and other
supplies to be used in the production operations; and
(b) the total or partial exemption from payment of
company tax or turnover tax.

The tax credit certificate shall indicate the amount of

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money the Government should forgo, and the holder of

a Development Certificate may, at the end of the tax
holiday period, set off unused tax credits against future
tax or customs duty liabilities.

The Development Certificate does not confer any

special status with respect to the income tax.