Buah Saidy, Governor of Central Bank of The Gambia says the rise in food prices is the main factor driving inflation in the country, noting that a skyrocketing rise spiked from 8.2 percent in March 2022 to 11.7 percent in April 2022.
The Central Bank Chief gave this outlook whiles presiding over the quarterly Monetary Policy Committee (MPC) meeting press conference in Banjul, where he said short term treasury bills and Sukuk Al Salam bills constitute 50 percent of the total domestic debt stock.
The MPC meeting press conference comes as inflation continues a steady rise in the country leading to a surge in food and energy prices.
The fiscal deep has culminated to a lack of bread in most shops in the country as bakers lay down their tools due to increasing flour prices.
Inflation is also causing a widening rift between taxi drivers and passengers over increasing fare prices.
“Inflationary pressures continue to persist with headline inflation accelerating from 8.2 percent in March, 2022 to 11.7 percent in April 2022. The significance rise in headline inflation is driven primarily by the surge in food inflation which picked up from 9.2 percent in March 2022 to 11.6 percent in April 2022,” CBG Governor disclosed.
He added: “Seasonal effects of Ramadan also contributed to the rise in prices of some food items. Non-Food inflation, on the other hand, moderated slightly to 7.3 percent from 7.5 percent during the same period.”
The CBG Chief said inflation will continue to accelerate in the short term due to rising global food production, upward adjustments in energy prices, structural challenges at The Gambia Ports and some exchange rate pass through, observing that in medium term, price pressures are expected to ease and inflation will return to its long term trend.
Dilating on the domestic debt status in the country that stood at over thirty six billion dalasi (D36million) as of last MPC, Governor Saidy revealed that domestic debt remains relatively stable at 37.2 percent of GDP in the first quarter of 2022.
“Short term treasury bills and Sukuk Al Salam bills constituted 50 percent at total domestic debt stock followed by thirty-year bond at 24 percent, three-year bond at 19 percent, five-year bond at 6 percent, while the seven-year bond accounted for only 1 percent at the total. Debt service as a percent at tax revenue declined to 2.7 percent in 2022 from 3.1 percent in 2021,” CBG Chief disclosed.
The Monetary Policy Committee however observed that prospects for the Gambian economy are positive with recovery starting in 2021 projected to be stronger in 2022 by improved domestic demand in tourism, steady private remittances inflows and public investment.
Among other things, the MPC also observed that given the limited fiscal spaces created by the pandemic debt vulnerabilities are expected to increase with limited policy rooms to manoeuvre.
The tightening of global financial conditions due to faster than expected monetary policy normalisation in advanced economies exerted depreciation and pressures on currencies, constraining financing conditions in developing economies.
