By Tabora Bojang
The governor of the Central Bank of The Gambia, Buah Saidy, has disclosed that the government’s overall budget deficit widened to D18.5 billion (12.9 per cent of the GDP) in 2023.
This represents an increase of D3billion from D15.3 billion (12.5 per cent of the GDP) a year ago.
The governor also reported that the government’s fiscal operations indicated that the overall deficit including grants narrowed from D6.9 billion in 2022 to D4.4 billion in 2023.
Total revenue and grants in 2023 amounted to D31.9 billion, an increase of 39.4 per cent compared to the year before.
He also reported that the government’s total expenditure and net lending between 2022 and 2023 increased by 21.8 per cent to stand at D36.3 billion accounting for 25.3 per cent of the GDP from D29.8 billion. “This is driven by the increase in development expenditures largely financed externally,” the governor added.
Domestic debt
According to the CBG, the government’s domestic debt rose by 8.4 percent to D41.3 billion accounting for 29 per cent of GDP. This represents an increase of D3 billion from D38.1 billion reported in 2022.
Saidy told journalists at a press conference on Tuesday that the increase in government’s domestic borrowing was informed by the increased issuance of treasury bills and medium-term government bonds to settle maturities and budget financing.
“As a result, short term debt accounted for 58.5 per cent of the total domestic debt stock, while medium to long term debt constituted 41.5 per cent, indicating substantial refinancing risks, as over half of the debt stock matures in less than one year,” the governor warned.
Inflation
The CBG also reported that inflation has declined for the second consecutive month. According to the governor, headline inflation has declined in January 2024 from 17.3 per cent to 16.2 per cent.
Food inflation on the other hand decreased to 21 per cent in December 2023 from 23.8 per cent. The bank further reported that the decline in inflation is mainly attributed to decreases in food components of the consumer price index basket as food prices ease globally in addition to a good cropping system.
The CBG governor also explained that the decline in food inflation was owing to deceleration in the prices of bread and cereals, meat and vegetables.
Meanwhile, the bank also reported a decline in non-food inflation from 11.3 per cent to 10.7 per cent owing to a decrease in prices of textiles, energy and transportation.
Despite these developments, the committee maintains a tighter monetary policy to sustain a decline of inflation. Accordingly, the MPR is maintained at 17 per cent, required reserve ratio at 13 percent, interest rate on standing deposit facility at 3 per cent and interest rate on standing lending facility at 18 per cent.
Depreciation of dalasi
The CBG also reported that the Gambian currency continues to be stable but depreciating only modestly year-on-year against major international currencies in 2023.
The dalasi depreciated against the US dollar by 3.8 per cent, Euro by 10.8 per cent, pounds sterling by 12.7 per cent and CFA by 14.2 per cent.
The governor further disclosed that the bank’s international reserves amount to US$475.3 million in January 2024.
Private sector lending dropped
According to the CBG, private sector credit growth is slow, as businesses and individuals curb borrowing from banks and financial institutions.
The CBG added that this is partly due to the rising interest rates as the bank tightens monetary policy to tame inflation.
“As of December 2023, credit to the private sector growth moderated to 12.2 per cent lower than the 25.4 per cent recorded in December 2022.”
