The Monetary Policy Committee (MPC) of the Central Bank of The Gambia (CBC), convened on November 25 and 26, 2024, to review the current domestic and global economic conditions and near-term outlook.
After the review, the Committee decided to maintain the Monetary Policy Rate at 17 percent and increased the Standing Deposit Facility Rate by I .0 percentage point to 4.0 percent.
The MPC based its decision on key developments that are summarised below:
Inflation
Inflationary pressures persist despite signs of improvement, with headline inflation edging up slightly to 10.0 percent in October 2024, from 9.7 percent in July, reflecting global commodity price fluctuations and domestic cost pressures. Meanwhile food inflation eased to 12.8 percent, driven by moderation of key items in the food basket. Conversely, non-food inflation rose to 6.6 percent due to higher energy costs, and although near-term risks remain, the moderating inflation expectations is expected to support the disinflation process with headline inflation projected to return to single digits by early 2025.
Economic Performance
Economic activity remains robust, with the Central Bank’s Composite Index of Economic Activity (CIEA) indicating a 4.9 percent growth in the first nine months of 2024. This was underpinned by strong domestic demand, including robust private and public consumption & investment.
In addition, recent business sentiment survey results show improved business conditions in the third quarter of 2024 with optimism for higher economic expansion in the near term. Against this backdrop, CBC staff forecast economic growth at 5.7 percent in 2024, consistent with August 2024 forecast.
However, significant risks continue to cloud the outlook, including geopolitical tensions, trade fragmentation, commodity price volatility, and climate related challenges.
Foreign Exchange Market
The foreign exchange market remained stable with improved liquidity conditions with private remittance inflows continuing to be the main source of foreign currency supply in addition to tourism and budget support. Nevertheless, the Dalasi slightly depreciated by 0.3 percent against the US dollar, 3.1 percent against the Euro, 3.3 percent against the British Pound and 1.2 percent against the CFA. The Central Bank continues to hold comfortable levels of international reserves sufficient to finance over 4.6 months of imports.
Fiscal Policy
Government fiscal position remains tight, despite improved revenue performance during the period. For the first nine months of 2024, the budget deficit, excluding grants, was 8.9 percent of GDP and 4.8 percent of GDP respectively. Domestic debt increased by 6.1 percent to D43.8 billion (25 percent of GDP) in September 2024, with short-term securities making up 47.9 percent of the total debt stock.
Monetary Policy Rates
1. Monetary Policy Rate (MPR) : 17.0 %
2. Commercial Bank’s Reserve Requirement: 13.0 %
3. Standing Lending Facility Rate: 18.0 %
4. Standing Deposit Facility Rate: 4.0 %
Source: Media and Communication Unit- CBG
