The governor of the Central Bank of The Gambia (CBG), Thursday revealed that as at end of December 2011, the total outstanding domestic debt stock grew to D9.4 billion (28.0% of GDP) from D8.7 billion in December 2010, an increase of 8.6%.
Amadou Colley made this revelation while presenting the CBG Annual Activity Report and Audited Financial Statement for the year ended 2011 to the Joint Session of the Public Accounts and Public Enterprises Committees (PAC/PEC) of the National Assembly.
He explained that the increase was mainly driven by Treasury Bills, which accounted for 75% of the total outstanding domestic debt. "This is contrary to the government debt management strategy of restructuring the domestic debt from short-term to medium to long-term securities," he stated, noting that the commercial banks held the bulk of Treasury bills accounting for 83.52% of the stock, compared to 79.24% a year ago, while the non-bank holdings accounted for 14.92%, compared to 26.76% inDecember 2010.
"The increase in commercial bank holdings of Treasury Bills could largely attribute to Social Security and Housing Finance Cooperation (SSHFC), a major non-bank public investor's failure to re-invest their matured bills during the period under review. SSHFC's holding of Treasury bills, as a percentage of the stock of debt, declined to 1.43% in 2011 from 6.18% in 2010," Colley added.
Revenue and grants
He told the Committee that the total revenue and grants for 2011 amounted to D5.2 billion (16.1% GDP) compared to D5.0 billion (17%) of GDP) in 2010, noting that domestic revenue rose by 6.9% to D4.2 billion. "About D3.7 billion was collected from taxes, of which D1.8 billion (47.8%) came from international trade taxes. This was supported by an increase in the sales tax on imports of 5.1% which slightly offset the decline in duty on oil and non-oil products of 3.7%," he said.
He continued: "Domestic taxes on goods and services at D732.9 million constituted 19.7% of tax revenue while personal and corporate taxes contributed 16.7% and 13.6% respectively to total tax receipts. Non-tax revenue collections grew by D34.4 million from 2010 to D499.6 million in 2011."
According to him, the grants received stood at D1.0 billion (3.1% of GDP0, D44.7 million below the previous year's figure and represents just over 50% of what has been projected for the year.
Expenditure and net lending
"Total expenditure and net lending in 2011 was estimated at D6.1 billion (18.8% of GDP), growing by just over one and a half per cent relative in 2010. Total current spending for the year amounted to D4.4 billion (13.6% of GDP), an increase of D520 million from last year's level," Colley said.
He explained that 'other charges' constituted the largest component of current budget amounting to D1.9 billion, adding that payments for goods and services grew by 15.1% to D1.3 billion. "The wage bill for the year was D1.7 billion or 38.1% of current budget. This is equivalent to 45.2% of the annual tax revenue and recorded an increase of D162 million over the 2010 bill," he told the Committee.
The CBG governor also revealed that interest payments constituted 18.4% of current budget amounting to D811.3 million, of which domestic interest payments absorbed D638.6 million while external interest payments amounted to D172.7 million.
He said the current efforts of spending cut backs have been against public investments which contracted by D452.7 million (20.8% from 2010 to D1.7 billion in 2011), adding that more than half (59.2%) of investments were financed from grants while 23% were external-loan financed. "Government local fund funded just 17.8% (D307.8 million) of the annual public investment expenditure," he noted.
Development in the domestic economy
"Economic activity in The Gambia remains strong despite the global economic crisis. Real GDP growth was 3.3% in 2011 compared to 5.5% in 2010. Agricultural output grew at a slower pace of 4% compared to 12.1% in 2010 reflecting the protracted and inadequate rains that affected crop production," the CBG governor said.
Development in the global economy
He went on: "Growth in the global economy has been steadily declining despite moderate recovery in some advanced economies and strong performance in emerging and developing economies, consistent with earlier forecast s of a possible faltering of global recovery in 2011." According to him, the rate of growth of global output, which recovered from -0.7% in 2009 to 5.2% in 2010, decelerated to 3.8% in 2011.
He added: "Global economic growth is being stalled by a heightening of global economic uncertainties caused by escalation in sovereign default risks in the Euro area, the shock of the Japanese earthquake and tsunami, the effects of the unrest in the Middle East and North Africa, coupled with disorderly roll-back of fiscal stimulus programmes which were begun in 2009/10 as a result of concerns regarding fiscal sustainability across many OECD economies, especially in Europe."
Governor Colley told the Committee that sustaining price stability has been the prime focus of the monetary policy in The Gambia over the years, noting that in 2011, the objective was to contain inflation below. "It should be noted that in 2011, monetary policy was conducted in a highly challenging global economic environment, including larger-than expected rise in 6.0%," he added.
Net Foreign Asset
"The net foreign assets of the banking system rose to 4.5 billion in 2011 relative to the corresponding period last year. The net foreign assets of both the Central Bank and commercial banks increased," Colley explained.
He said the net foreign assets of the Central Bank rose to D3.1 billion in 2011 compared to a contraction of 17.5% a year earlier, adding that Gross official reserves increased to D5.5 billion while foreign liabilities increased to D2.4 billion.
Net Domestic Assets
The net domestic assets of the banking system, Colley said, rose to D10.2 billion (10.1%) in 2011 relative to 19% a year earlier. "Domestic credit grew to 11.4 billion (13.3%), compared to the growth of 34.6% in 2010."
"Consumer price inflation decelerated to 4.4% in 2011 relative to 5.8% in 2010 on account of lower global food prices and less government resources to central bank financing of the fiscal deficit," the CBG governor said, adding that an average inflation (12-month moving average) also declined, albeit slightly to 4.8% in 2011 from 5% in 2010, helped by the tight monetary policy.
Colley told the Committee that the Gross International Reserves of the Bank at the end of 2011 stood at US$182.5 million, equivalent to five months of imports of goods and services, noting that net international reserves were US$135.20 million, showing a build-up of US$15.4 million for the year.
Foreign exchange market
"Developments in the domestic foreign exchange market in the year to end December 2011 showed that activity volumes, measured by aggregate sales and purchases of foreign currency, moderated to US$1.43 billion from US$1.67 billion in 2010," Colley said, adding that the dalasi was relatively stable in the first quarter of 2011.
Development in banks & non-banks financial institutions
Colley further informed the Committee that the year 2011 witnessed major developments in the payments system as evidenced by the introduction of new processes of clearing cheques and other payment instruments. He said the CBG in collaboration with the West African Monetary Zone (WAMZ) completed the development of a new payment system for The Gambia.
Commenting on the banking sector, he said that the financial sector in The Gambia continues to flourish thanks to the expansion of the banking sector with 13 commercial banks.
According to Colley, the insurance industry currently comprises 11 insurers, seven brokers and 13 agents. He added: "Nine of the insurance companies including a Takaful/Islamic operator underwrite general business (non-life business) only, one is a composite insurer (i.e underwriting both life and non-life business) and one is a wholly life insurer."
He said that the total assets of the industry grew by 3.7% to stand at D484.12 million from D466.65 million in 2010, noting that current assets stood at D246.98 million and accounted for 51% of the local assets.
The staff component at the bank, he said, is 267 as at 31st December 2011 of which 168 are male and 99 are female, corresponding to 63% and 37% respectively.
Samba JB Tambura, assistant compliance officer at the Gambia Public Procurement Authority said the CBG was rated substantially compliant to the Gambia Public Procurement Authority (GPPA) regulations.
The Committee then raised concerns, comments, questions, recommendation and suggestions before adopting the 2011 report.