Despite Inflationary Pressures from Rising Oil Prices

The  near  term outlook for the Gambian economy is said to be favorable as macro-economic fundamentals remain strong and the supposed appreciation of the dalasi expected to contain inflationary pressures.

However, the forecast is not without risks, particularly in relation to the marked increase in oil and food prices, a statement by the Monetary Policy Committee of the Central Bank indicates.

At a press conference convened by the Monetary Policy Committee of the Central Bank, Mr. Momodou Bamba Saho, Governor of the Central Bank of The Gambia who also doubles as the Chairman of the committee, told journalists that as at end December 2007, the dalasi appreciated in nominal terms by 19.60 per cent, 9.30 per cent and 17.5 per cent against the Dollar, Euro and Pound Sterling respectively from the corresponding period in 2006.

Looking ahead, the Central Bank Governor went on, the dalasi is forecast to remain stable in the medium term, premised on continued implementation of prudent monetary and fiscal policies, increased foreign currency inflows and the likelihood of reduced demand for foreign exchange by government in light of the HIPC and MDRI debt relief.

“Taking the above-mentioned factors into consideration, including the risks, to the inflation outlook, the Monetary Policy Committee has decided to maintain the rediscount rate, the policy rate, at 15.0 per cent. The committee would continue to monitor changes in economic conditions and respond appropriately in order to discharge its mandate to maintain price stability,” he added.

According to Mr. Saho, recent growth performance indicates that the Gambian economy proved remarkably resilient over the past thee years and that the GDP in 2007 has been estimated at 6.7 per cent, supported as it is by 11.3 per cent increase in the value-added of the services sector.

“Inflationary pressures rose in many countries, driven by rising food and energy prices increasing the risk of imported inflation in The Gambia,” he concluded.