Gambian currency, dalasi, depreciates

Banjul, Gambia (PANA) - The Gambian currency, the Dalasi, depreciated in June, 2012, by 4.7 percent, following the reduction in foreign exchange inflow into the country and the increased demand for hard currency, said nation's Central Bank Governor, Amadou Kolley.

Briefing  commercial bank managers and officials Saturday, Kolley said the Dalasi depreciated in nominal effective exchange rate terms by 4.7 percent in June 2012 compared to the depreciation of 5.3 percent in June 2011.

Against individual currencies, he said, the Dalasi depreciated by 9.8 percent and 6.1 percent against the US dollar and Pound Sterling respectively but appreciated by 3.3 percent against the Euro.

“According to the key financial soundness indicators, the banking industry remains sound with the average risk-weighted capital adequacy ratio (CAR) registering 26.0 percent in June 2012, higher than the minimum capital requirement of 10.0 percent.

"The liquidity ratio rose to 73.7 percent compared to the 68.1 percent in June 2011 and above the minimum requirement of 30 percent," he said at the Central Bank monetary policy committee briefing.

He further disclosed that the assets of the industry totalled D19.1 billion, representing an increase of 5.3 percent from June 2011, while Loans and advances, accounting for 27.4 percent of total assets, decreased to D5.2 billion or 0.6 percent from June 2011.

Kolley noted that the ratio of non-performing loans to gross loans declined to 9.8 percent in June 2012 compared to 12.7 percent in June, 2011 attributing it to robust loan recovery efforts and the tightening of credit standards by commercial banks.

He also stated that deposits liabilities increased to D12.5 billion or 5.2 percent from June 2011, adding that the loan to deposit ratio, an indicator of financial intermediation, fell from 45.4 percent in June 2011 to 41.8 percent in June 2012.

According to him, “As at the end of June 2012, the total outstanding domestic debt stock rose to D9.9 billion or 2.7 percent year-on-year. Outstanding Treasury bills, accounting for 72.9 percent of the debt stock, rose by 13.7 percent”.

Kolley further revealed that according to data on holdings of Treasury bills by sector, commercial banks held 81.4 percent of the stock, the non bank (16.7 percent) and Central bank of the Gambia (1.9 percent).

He said the yield on the 91-day, 182-day and 364-day bills rose slightly to 9.8 percent, 10.6 percent and 11.9 percent from 8.7 percent, 9.2 percent and 11.7 percent respectively in June 2011.

“The Gambia Bureau of Statistics revised GDP figures indicate a marked slowdown in the growth of the Gambian economy to 3.3 percent in 2011 compared to 5.5 percent in 2010 attributed primarily to contraction in the value-added of agriculture," Kolley indicated.

Real GDP growth is projected to contract by 1.7 percent in 2012, but to rebound to 9.7 percent in 2013 premised on improved agricultural output and continued rebound of the tourism sector, he said, adding that monetary developments were characterized by subdued growth of the key monetary aggregates.

However, he stated that money supply growth decelerated to 5.8 percent in the year to end-June 2012, significantly lower than the 14.9 percent in the year to end-June 2012, and significantly lower than the 14.9 percent a year ago and the target of 9.0 percent.

He pointed out that narrow money (M1), comprising currency outside banks and demand deposits, rose by only 3.4 percent compared to 13.9 percent a year earlier, adding  that  money, comprising savings and time deposits, grew by 7.9 percent relative to 13.0 percent in the preceding year.

The Central Bank governor said that reserve money, the bank’s operating target, increased by 4 percent, lower than the 8.1 percent a year ago and the target of 7.3 percent.

“Preliminary estimates of government fiscal operations in the first six months of 2012 showed an improved position compared to the same period last year," he said, adding that "Total revenue and grants amounted to D3.2 billion compared to D2.7 billion in the corresponding period in 2011.

"Domestic revenue, comprising tax and non-tax revenue rose to D2.5 billion, or 15.9 percent. Total expenditure and net lending also rose albeit at a slower pace of 13.0 percent to D3.6 billion”, he revealed.

Kolley said the overall budget balance (including grants) on commitment basis was in a deficit of D418.6 million, lower than the deficit of D469.50 million in the first half of 2011.  

He added that the basic primary balance surplus rose to D534.7 million, significantly higher than the D275.7 million in the first half of 2011.

The preliminary balance of payments estimates for the first quarter of 2012 indicated an overall surplus of US$15.11 million, lower than the surplus of US$34.0 million in the corresponding period in 2011.

According to Kolley, the current account, including official transfers, is estimated to narrow to a surplus of US$29.77 million from a surplus of US$45.55 million in the corresponding quarter of 2011, noting that In contrast, the capital and financial account recorded a deficit of US$19.92 million, higher than the deficit of US$11.55 million in the first quarter of 2011.

As at end-June 2012, gross official reserves amounted to US$184.58 million, equivalent to 5.1 months of import cover," he revealed, saying that the volume of transaction in the foreign exchange market, measured by aggregate sales and purchases of foreign currency, decreased to US$1.48 billion in the year to end-June 2012 from US$1.60 billion a year ago.

He also noted that the slowdown in global economic activity has led to a sizeable reduction in commodity prices, although they remain elevated.

He outlined “Global food prices have fallen slightly from their historic peak, but the UN Food and Agricultural Organization indicated that high and unpredictable prices are likely to continue.

"Average oil prices, the highest on the record in 2011, appeared to be heading to new records due to fears over supply disruptions. However, constrained by weak global demand, Brent Crude oil prices fell to as a low as $89 per barrel, well below the levels of almost $130 per barrel that prevailed earlier this year."

He stressed that consumer prices in the advanced and the emerging and developing economies is forecast to decelerate to 2.0 percent and 6.3 percent in 2012 from 2.7 percent and 7.2 percent respectively in 2011.

On the domestic front in the Gambia, the Governor said that headline inflation, measured by the National Consumer Price Index (NCPI), declined to 4.3 percent in June 2012 compared to 5.4 percent in June 2011, adding that average inflation rate (12 month moving average) decelerated to 4.1 percent, lower than the 5.7 percent a year earlier.
-0- PANA MSS/VAO 28July2012

28 july 2012 15:19:20

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