1 April 2014

Gambia: A Five Day Regional Course On Monetary Operations and Liquidity Management Kicks Off

Samba Bah and Sarjo C. Singhateh The West African Institute for Financial and Economic Management (WAIFEM) yesterday, Monday, 31 March, 2014 commenced a 5 day Regional Course on Monetary Operations and Liquidity Management at the Paradise Suites Hotel. Participants were drawn from staff of central banks, ministries of finance and economic planning and other public sector bodies with the core economic management responsibilities in the five Anglophone countries of West Africa, namely, Ghana, Liberia, Nigeria and Sierra Leone and The Gambia,.

In his keynote address, Mr. Amadou Colley, the Governor of the Central Bank of The Gambia (CBG), welcomed the participants and expressed delight for their participation in the training.

The CBG Governor said an efficient and effective framework for management of liquidity is at the very heart of the conduct of monetary policy, adding that generally, central banks implement monetary policy through the control of the level of liquidity that is consistent with a non-inflationary output growth.

"In other words, liquidity management entails the management of Central Bank's balance sheet through monetary operations to steer monetary and liquidity conditions towards the attainment of the target for inflation," said Governor Colley.

He said this is critical because the higher volatility in monetary or liquidity conditions, the higher the costs of liquidity management and hence the achievement of the objectives of monetary policy. According to the CBG Governor, the liquidity management by central banks can have short and long-term implications, depending on the nature of operations, while short-term effects are felt in financial markets, the long-term implications are especially relevant for the real sector which is impacted with long and variable lags.

He said liquidity management in most of the countries in the Sub-region is even made more difficult as a result of structural and persistent excess liquidity which is the excess of the quantity of reserves kept with the central bank by deposit money banks plus vault cash over the required level.

The CBG Governor said when there is excess liquidity in the economy, the transmission mechanism of monetary policy, which runs from tightening of liquidity conditions to changes in interest rates and then to economic activity is altered and possibly interrupted.

Governor Colley concluded by expressing optimism that they could continue to count on WAIFEM for building the capacity of technical staff in these critical areas of macroeconomic management, and assured the gathering that a team of exports has been assembled to facilitate the course and he urged the participants to seize the opportunity.

In his welcoming remarks, Prof Akpan H. Ekpo, the Director General of WAIFEM, said his institute was established as a collaborative sub-regional capacity building organization in July 1996 by the central banks of the five Anglophone countries in West Africa and that its mission is to develop expertise on a sustainable basis in the fields of Macroeconomics, Debt and Financial Management.

He further disclosed that the Institute also has the mandate to conduct research and consultancy in the area of macroeconomic policy management and promotion of best practices, adding that so far the Institute has successfully executed 475 courses since its inception, and these have benefited more than 13,200 participants from the sub-region and beyond.

He said WAIFEM has also established collaborative arrangements with world class training organisations and capacity building institutions to ensure best practices in the delivery of its programmes and as a Centre of Excellence in capacity building.

He disclosed that WAIFEM has recently extended its expertise to the private sector by establishing the Business Development Unit (BDU) which targets the private sector in the sub-region.

He also said that some of the programmes of the Unit may also benefit the central banks and relevant public institutions.

On the aims of the course, Prof Ekpo said it is firstly to upgrade the knowledge and skills of participants in liquidity forecasting techniques and money market secondary operations for managing system-wide liquidity in line with the targets of monetary policy. The second pillar of the course, he added, is to introduce participants to fiscal liquidity forecasting techniques and short-term determination of the public sector borrowing requirement to engender better cash management and avoid excessive borrowing.

The WAIFEM Director General said the course covers principal features of the main macroeconomic sectors, namely; fiscal policy and central bank liquidity management, monetary and fiscal coordination, liquidity forecasting techniques, cash planning, forecasting government cash flows, forecasting foreign exchange flows and interbank market liquidity, and case studies from the various countries.

He also expressed confidence that the discussions in this course would enhance their capacities as economists and policy makers to analyze emerging economic challenges, diagnose imbalances in the economy and make good forecasts that would enable them to recommend appropriate policies.

Prof Ekpo concluded by urging the participants to relate professionally with the resource persons and fellow participants.

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