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Momodou
Denmark
11829 Posts |
 Posted - 07 Sep 2007 : 19:14:32
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Foroyaa Editorial
Central Bank's Press Release on the Gambian Economy
Just like the Central Bank, Foroyaa is also following developments in The Gambian economy. We do not see the rosy picture they are trying to paint. It would not be fair to ignore the facts they have presented to us and invent our own. We will therefore use the facts they have provided to argue our point and then raise questions for the bank to investigate. We will focus on the banks and inflation.
The banks are the foundation for investment and economic output. If they are to promote economic growth there should be rise in domestic savings and credit to the productive base to boost output. According to the statistics provided by the Central Bank, savings are increasing, the buying and selling of money is increasing but credit is falling. This means that the banks are merchant banks rather than development banks. They are making money by exchange which can have very drastic effect on the exchange rates in relation to international currencies. This tend to drive away investment and increase the exportation of foreign exchange to foreign reserves as a protective means by relying on interest on bank deposits abroad to cushion any possible losses from rapid depreciation of the value of foreign money in relation to the dalasi.
The hoarding and transfer of foreign exchange would affect domestic credit and output and increase speculation in the currency market which can make the exchange rate situation very erratic.
Now one may ask: What is the investment situation of the banks in relation to savings?
According to the Central Bank, "total assets rose to D9.69 billion, or 17.3 percent from end of June 2006. gross loan and advances amounted to D7.29 billion but lower than D2.35 billion in June 2006, reflecting a tightening of credit conditions. Non-performing loans to gross loans was 13.0 percent in June 2007, higher than 12.63 percent in March 2007.
Deposit liabilities increased to D6.19 billion, or 14.6 per cent from a year ago reflecting rising income and vigorous savings mobilisation drive." Now, let us put this question to bankers. What does it mean for a bank to reduce credit in the face of increasing non performing loans and growth in deposit liabilities?" The answer cannot indeed be bright prospects for the banks and the economy. This is the point.
Secondly, an economy which is serving the people should enhance income of the poor and control inflation to enable them to purchase their necessities.
According to the Central Bank "(9) Available inflation data is yet to convincingly demonstrate a sustained moderation of inflationary pressures. End-period inflation, measured by the National Consumer Price Index, accelerated from 1.5 per cent in July 2006 to 6.3 per cent at end-July 2007. The average inflation rate was 3.2 per cent compared to 3.1 per cent a year ago. The main driver of inflation was food prices which rose to 9.7 per cent compare to 1.1 per cent in July 2006. Non-food prices rose by a modest 2.5 per cent from 2.1 per cent in July 2006. Core inflation, excluding prices of energy and utilities as well as volatile food items rose from 1.8 per cent in July 2006 to 6.4 per cent in July 2007.
(10) Looking ahead, the robust economic expansion is expected to be sustained in the near term supported by improving financial conditions. End-period inflation is forecast to decelerate to less than 5.0 per cent by end- December 2007. However, there are risks to the forecast particularly relating to volatile oil prices and rising global aggregate demand and their possible "knock on" effect on general prices."
The conclusion of the Central Bank needs no further clarification.
Inflationary trend to them cannot be accurately predicted. It depends on circumstances beyond their control.
We will keep track of the economy and report accurately.
Source: Foroyaa Newspaper Burning Issue
Issue No. 103/2007, 3 - 4 September 2007
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A clear conscience fears no accusation - proverb from Sierra Leone |
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toubab1020
12314 Posts |
Posted - 07 Sep 2007 : 19:21:36
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Momodou. 
I would find it very useful if you,or another brilliant Bantaba poster could translate this financial gobbdigook  (a slang English word meaning to talk a lot of words strung together in order to confuse ) into plain language that simple folk like me could understand.  |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
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Edited by - toubab1020 on 07 Sep 2007 19:23:37 |
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kobo
United Kingdom
7765 Posts |
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toubab1020
12314 Posts |
Posted - 07 Sep 2007 : 22:25:50
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KOBO
Thanks for those links,but I think that 7% growth is going to be hard to achieve! |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
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kobo
United Kingdom
7765 Posts |
Posted - 07 Sep 2007 : 22:44:07
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quote:
Originally posted by toubab1020
KOBO
Thanks for those links,but I think that 7% growth is going to be hard to achieve!
Its easy to analyse and simplify the technical details and you are going to understand it BETTER FROM REAL LIFE SITUATIONS (i.e inflation (Cost of living), salaries, bankruptcy of Public Enterprises (buy/sell Gamtel, exploitation of Public Institutions from Donations to State functions, festivals & Jammeh Foundation), less Dalasi to FOREX, , reduction of RESERVES FROM CENTRAL BANK, etc)!
Later |
Edited by - kobo on 07 Sep 2007 22:46:13 |
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toubab1020
12314 Posts |
Posted - 07 Sep 2007 : 23:59:14
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| As I said 7% no. |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
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ylowe
USA
217 Posts |
Posted - 08 Sep 2007 : 20:58:46
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| The central needs to act quick and increase the money supply inorder to control the appreciation of the dalasis. Ramadan is almost here and the gambians in abroad are going to be sending alot of foreign exchange to the gambian economy which will further appreciate the dalasi and prices are not going down. There is something funny going on here and lets hope the probelm has something to do with time lags when does it really affects prices. Like uncle Kondorong said the dalasi is overvalued at present which is not good for us. |
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kobo
United Kingdom
7765 Posts |
Posted - 08 Sep 2007 : 23:51:16
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ylowe MONEY SUPPLY!How Print more Dalasi notes from Kanilai mint press |
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kobo
United Kingdom
7765 Posts |
Posted - 08 Sep 2007 : 23:59:22
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quote:
Originally posted by toubab1020
As I said 7% no.
TOUBAB! Interesting breakdowns and summary from Gambianow.com's Gambia News on the 7% under http://www.gambianow.com/news/Business/Gambia_News_Gambia_growth_seen_7_pct_in_2007_-cbank.html
Telecoms has contributed towards the 7% growth as we are told from Central Bank report and contradicts justification for sale of Gamtel /Gamtel.
I paste quotes below by Karamba from Topic: Dalasi Appreciates to remind us what professionals and technicians consider 'window dressing'.
quote:
Originally posted by Karamba
The bottom line is that our Gambian Dalasi cannot grow on tree tops. We need better commitment than cooking facts and figures for political glory.
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Edited by - kobo on 09 Sep 2007 00:15:52 |
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toubab1020
12314 Posts |
Posted - 09 Sep 2007 : 01:15:31
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Kobo,
I have had a good search around and I cannot find any other aurthoritive source that puts any % figure at all on Gambian Economic growth besides the Central Bank.All I know is that the average Gambian is worse off now with the increase in prices that are taking place. |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
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kobo
United Kingdom
7765 Posts |
Posted - 09 Sep 2007 : 02:29:00
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quote:
Originally posted by toubab1020
Kobo,
I have had a good search around and I cannot find any other aurthoritive source that puts any % figure at all on Gambian Economic growth besides the Central Bank.All I know is that the average Gambian is worse off now with the increase in prices that are taking place.
Central Bank maintain financial records but Department of Statistics also compile information about the economy. Try the Statistics Department's records. |
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ylowe
USA
217 Posts |
Posted - 09 Sep 2007 : 08:01:05
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Culled from the thegambiajournal.com
IMF Report On First PRGF Review By The Gambia Journal
Sep 9, 2007, 18:55
The International Monetary Fund, IMF, on Friday 7th September, published yet another document on its relations with the government of The Gambia, a report on its first review of the Poverty Reduction and Growth Facility, PRGF. A couple of days earlier the Fund had published a package containing a Letter of Intent signed by Secretary of State for Finance and Economic Affairs, Musa Bala Gaye and Central Bank governor Bamba Saho. On the 27th February this year the IMF approved a PRGF for The Gambia. Between June 8th and 23rd a mission team comprised of Messrs. Tsikata, Srour, Sriram , Marsh (PDR), and Segura (Resident Representative). Some staff from the World Bank also participated in the discussions on this first review.. The mission team met with Mr. Bala-Gaye Mr. Jatta former Governor, Central Bank of The Gambia, other senior government officials, members of the national assembly, and representatives of the business, civil society, and donor communities. It is interesting to note that no mention was made of the recent controversial transfers of national assets or their management to a Lebanese businessman. The Gambia Journal here reprints an executive Summary of the mission’s report.
EXECUTIVE SUMMARY
The Gambia has enjoyed robust growth and relatively low inflation over the last few years. Real GDP growth averaged 6.2 percent during 2004–06, and is expected to reach 7 percent in 2007. Consumer inflation has been on the rise in the first half of 2007 but is
expected to be contained at an average rate of 5 percent for the year as a whole.
Overall performance under the program has been strong. All but one of the quantitative performance criteria and indicative targets were met. Fiscal performance has been impressive, reflecting higher-than-projected revenues and strengthened expenditure control.However, two (out of eight) structural performance criteria were not observed.
The medium-term macroeconomic framework underlying the program has been modified slightly. Larger surpluses on the fiscal basic balance are programmed to allow for the clearance of recently discovered domestic expenditure arrears. At the same time,increased availability of external financing allows for a more gradual adjustment in the
external current account.
Maintaining fiscal discipline remains key to lowering domestic public debt and protecting poverty-reducing expenditures. Fiscal adjustment is designed to lower domestic interest rates in order to stimulate private investment and growth. The Integrated Financial Management Information System introduced in January 2007 has been instrumental in keeping expenditures in line with appropriations, and for monitoring PRSP-related expenditures.
The current monetary policy stance is broadly appropriate. The central bank increased its rediscount rate from 14 percent to 15 percent in late-June, in response to evidence of rising inflation. However, a favorable outlook for inflation suggests that there may be no need for further tightening in the second half of the year.
The authorities should rely on grants and, as a second best, on highly concessional loans for the external financing of their development programs. Preliminary results of a debt sustainability analysis (DSA) discussed with the authorities suggest that The Gambia will remain at a high risk of debt distress even after receiving HIPC and MDRI relief.
The Gambia appears to have satisfied all but one of the HIPC completion point conditions. The authorities hope to reach completion point before the end of 2007
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toubab1020
12314 Posts |
Posted - 09 Sep 2007 : 21:39:08
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[quote]Originally posted by ylowe
Culled from the thegambiajournal.com
Thanks for that Ylowe,useful,
EXECUTIVE SUMMARY
The Gambia has enjoyed robust growth and relatively low inflation over the last few years. Real GDP growth averaged 6.2 percent during 2004–06, and is expected to reach 7 percent in 2007. Consumer inflation has been on the rise in the first half of 2007 but is
expected to be contained at an average rate of 5 percent for the year as a whole.
OK, 7% - 5% = 2% in real terms ie. growth minus inflation,or is that wrong
The authorities should rely on grants and, as a second best, on highly concessional loans for the external financing of their development programs. Preliminary results of a debt sustainability analysis (DSA) discussed with the authorities suggest that The Gambia will remain at a high risk of debt distress even after receiving HIPC and MDRI relief.
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"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
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kobo
United Kingdom
7765 Posts |
Posted - 09 Sep 2007 : 23:15:24
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quote:
Originally posted by toubab1020
[quote]Originally posted by ylowe
Culled from the thegambiajournal.com
Thanks for that Ylowe,useful,
EXECUTIVE SUMMARY
The Gambia has enjoyed robust growth and relatively low inflation over the last few years. Real GDP growth averaged 6.2 percent during 2004–06, and is expected to reach 7 percent in 2007. Consumer inflation has been on the rise in the first half of 2007 but is
expected to be contained at an average rate of 5 percent for the year as a whole.
OK, 7% - 5% = 2% in real terms ie. growth minus inflation,or is that wrong
The authorities should rely on grants and, as a second best, on highly concessional loans for the external financing of their development programs. Preliminary results of a debt sustainability analysis (DSA) discussed with the authorities suggest that The Gambia will remain at a high risk of debt distress even after receiving HIPC and MDRI relief.
Thats brilliant SUM" OK, 7% - 5% = 2% in real terms ie. growth minus inflation,or is that wrong
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No I don't think its WRONG! You made it straightforward and SIMPLE ARITHMETHIC but its really technical and a bit complicated, isn't it?
Therefore 7% is just FACE VALUE (BOOK VALUE) and NET = REAL TERMS. Any further analysis from our economists
Thanks! |
Edited by - kobo on 09 Sep 2007 23:18:23 |
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toubab1020
12314 Posts |
Posted - 09 Sep 2007 : 23:22:58
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| KOBO,I think its simple but am I right?,or is the correct answer really 7%,can some one who knows how these figures are arrived at enlighten me in a SIMPLE way please. |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
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ylowe
USA
217 Posts |
Posted - 10 Sep 2007 : 01:32:56
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quote:
Originally posted by toubab1020
[quote]Originally posted by ylowe
Culled from the thegambiajournal.com
Thanks for that Ylowe,useful,
EXECUTIVE SUMMARY
The Gambia has enjoyed robust growth and relatively low inflation over the last few years. Real GDP growth averaged 6.2 percent during 2004–06, and is expected to reach 7 percent in 2007. Consumer inflation has been on the rise in the first half of 2007 but is
expected to be contained at an average rate of 5 percent for the year as a whole.
OK, 7% - 5% = 2% in real terms ie. growth minus inflation,or is that wrong
The authorities should rely on grants and, as a second best, on highly concessional loans for the external financing of their development programs. Preliminary results of a debt sustainability analysis (DSA) discussed with the authorities suggest that The Gambia will remain at a high risk of debt distress even after receiving HIPC and MDRI relief.
2. Nominal GDP Growth vs. Real GDP Growth
GDP, or Gross Domestic Product is the value of all the goods and services produced in a country. The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year. An example:
Suppose in the year 2000, the economy of a country produced $100 billion worth of goods and services based on year 2000 prices. Since we're using 2000 as a basis year, the nominal and real GDP are the same. In the year 2001, the economy produced $110B worth of goods and services based on year 2001 prices. Those same goods and services are instead valued at $105B if year 2000 prices are used. Then:
Year 2000 Nominal GDP = $100B, Real GDP = $100B
Year 2001 Nominal GDP = $110B, Real GDP = $105B
Nominal GDP Growth Rate = 10%
Real GDP Growth Rate = 5%
Once again, if inflation is positive, then the Nominal GDP and Nominal GDP Growth Rate will be less than their nominal counterparts. The difference between Nominal GDP and Real GDP is used to measure inflation in a statistic called The GDP Deflator.
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