Editorial THE MINISTRY OF FINANCE NEED TO DO A MID TERM REVIEW OF THE STATE OF THE ECONOMY Published on Tuesday, 10 September 2013 19:52 | Written by Ousman Njie Foroyaa has been following the developments in the foreign exchange sector of the National economy with the closure and re-registration of Forex Bureaux and the numerous interventions of the Office of the President to fix the exchange rate of the dalasi vis-a-vis the dollar as well as the arrest of small business operators for late declaration of income to the tax authorities. We have indicated that many families depend on remittances which are above the billion dalasi mark per annum. We argued that the growth in Forex Bureaux is a direct response for the demand for ways and means of sending money home. Hence their closure would only restrict the flow of foreign exchange into the country; more scarcity of foreign exchange, the consequence of which would be the depreciation of the dalasi.
We had observed that the Gambian economy has been benefiting from a trickling down effect of a transit trade in currencies and commodities that has put the volume of foreign exchange transactions beyond the billion dollar mark which is far above the export earnings of the country. We have emphasised that the small scale businesses are profit starved and do not have the Capital to expand investment. Hence any encroachment by the state would lead to their closure or even relocation in neighbouring countries.
We emphasised that the CFA has been the main currency in use in conducting Gambia’s re-export trade thus the reason for its high demand and appreciation. We argued that Gambia used to benefit from foreign exchange transfers by NGOs and donors which could scale down if the human rights situation in the country and governance environment fails to improve. It is now time for the Ministry of Finance to give proper reading to the comments from the monetary Committee of the Central Bank which met on Thursday 29th August 2013 which stated among other things that inflation rose from 4.4 percent in July 2012 to 5.9 percent in July 2013 partly reflecting the depreciation of the dalasi and the increase in global oil prices. It observed that the dalasi is under pressure and poses upside risk to inflation in the short term.
Furthermore, despite the strong arm measures for tax collection, the Committee acknowledged that the larger than the budgeted fiscal deficit has affected progress towards fiscal consolidation and contributed to the widening of the current account deficit. Hence it observes that fiscal adjustment is essential to achieve debt sustainability and eventually reduce the domestic debt burden. We now await a policy response from the Ministry of Finance. Is it forthcoming? The future will tell.
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
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Posted - 11 Sep 2013 : 13:14:27
