10 December 2012

Gambia: President's Office Directive Disrupts Foreign Exchange Market - Says IMF Urges Central Bank to Implement Exchange Rate Policy

An International Monetary Fund (IMF) staff David Dunn has called on the Central Bank of the Gambia to continue implementing the exchange rate policy for the country's foreign exchange market to return to full confidence. Mr. Dunn made these remarks last Friday at a Press briefing held at the Finance and Economic Affairs Ministry at the end of his visit to the Gambia.

The IMF mission was in the country from the 3 to the 7 December 2012 to assess the impact of the recent directive on exchange rate policy and operations of the foreign exchange market. "The recent directive by the office of the President on the exchange rate and shipments of U.S. dollar led to some disruptions in the foreign market and create uncertainty about the Gambia's exchange rate policy", he remarked. The mission he said welcomes the recent lifting of the restrictions imposed by the directive and the renewed commitment to a flexible market determined exchange rate policy. This, he added has helped the foreign exchange market to largely return to normal condition.

On the Economic situation in the country, Mr. Dunn who led the IMF mission stated that economic activity in The Gambia has picked up in recent months with the beginning of the harvest and tourism seasons. He said tourism continues to expand at a strong pace. He noted that based on preliminary indicators crop production is expected to increase by roughly 20 to 30 percent this year. The increase in crop production is weaker than it was previously estimated due to damage caused by prolonged heavy rains he said. The harvest marks a solid initial rebound from last year's severe crop failure He added. The IMF estimates that economic growth in the Gambia could reach about 2 to 3 percent in 2012 rising to 8 to 9 percent in 2013. These estimates will be revisited in the coming months with a broader analysis of economic development, said the IMF staff. Inflation is projected to remain relatively modest at around 5 percent annually. The mission looks forward to continued good progress by the Gambian authorities on implementing a sound macroeconomic policy framework. This according to him will facilitate concluding discussions under the first review of the Gambia's arrangement under the IMF's Extended Credit Facility. It will be important that the Central bank resumes its gradual accumulation of international reserves, which is key to maintain economic stability, remarked Mr. Dunn. He assured the government the IMF's technical support to strengthen and develop the foreign exchange market.

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