By Tabora Bojang
The governor of the Central Bank of The Gambia has urged commercial banks to translate the D700 million released to them by the bank into funding some development projects of the government.
Governor Buah Saidy said this is necessitated by a severe contraction of D2.1 billion in government revenue and grants amid the Covid-19 pandemic.
In his address at the quarterly monetary policy committee press briefing in Banjul yesterday, Saidy said: “Government has certain programmes and projects that will require support and collaboration from the financial sector (banks) in particular to finance those development projects, given the fact the CBG has intervened to decrease the reserve requirement of commercial banks and make the sum available to them. This is a lot of money that could finance the needed adjustments at the ports, and other government activities that need financing especially in terms of digitalising the Gambian economy.”
He reported that the preliminary estimates of government’s fiscal operations for the first three months of 2021 pointed a worsened fiscal position as the overall budget deficit in 2021 increased to D2.1 billion representing 2.1 percent of the GDP compared to D1.3 billion in 2020.
“We all know because of the pandemic revenue and grants took a hit as imports declined and donor support reduced significantly since most of our donor partners are also confronted with the effects of the pandemic. As a result, the government has no choice but to reduce recurrent expenditure and increase spending on health and social support to the Gambian citizens.”
Banking sector developments
He disclosed that the banking sector remains well-capitalised, highly profitable and liquid with a total asset of D61.23 billion. The governor added that the Covid-19 pandemic has seen CBG intervening to provide relief for the commercial banks by lowering the required reserve at 13 per cent, reducing policy rate at 10 per cent and the interest rate on standing deposit facility at 3.0 per cent.
Covid-19 grant support to government
Asked how much grant support was received by the government from donor partners since the confirmation of the first case of Covid-19 in March 2020, Governor Saidy said he did not readily have the figures and referred us to the Ministry of Finance.
“Central Bank do not manage government resources. We are bankers to the government and commercial banks. So these grants will come through the government and what we collect is the foreign currency component. The dalasi component is deposited at the treasury accounts. Sometimes these funds come and you cannot differentiate what is grant and soft loans. When I was at the ministry as PS we had a D1 billion soft loan from the IMF which was pumped into the economy to help vulnerable people. We also had support from the World Bank, the European Union, Islamic Development Bank and some Arab institutions and other bilateral traditional donors to The Gambia” Saidy added