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Central Bank says inflation has increased beyond expectations

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By Tabora Bojang

The governor of the Central Bank of The Gambia Buah Saidy has disclosed that inflationary pressures continue to persist in the country and have become more broad based than previously anticipated with food inflation increasing from 17.5 percent in January to 22.1 percent in April 2023.

Speaking at the Monetary Policy Committee meeting yesterday, Governor Saidy stated that inflationary pressures are projected to persist as domestic and imported cost factors creep into consumer prices.

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“Price indices of all items in the food basket increased except for meat, oils, bread and cereals. Non-food inflation also accelerated to 12.3 percent from 8.9 percent over the same period in 2022. And the notable increase in non-food inflation can primarily be attributed to the rise in hospitality and electricity prices,” Governor Saidy reported.

He disclosed that headline inflation also accelerated to 17.4 percent in April 2023 compared to 13.7 percent in December 2022.

The governor pointed out that in consideration of the negativity in real interest rates, there is still room for further policy action to tame the inflationary pressures going forward.

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“This price increase will stay with us for a while but after sometime it will decelerate because of the policy actions we are taking. We are sending strong signals that we are serious about combating inflation in order to preserve the income and wealth of Gambians so that our standard of living is not reduced,” Governor Saidy pledged.

Domestic debt 

According to the governor, the stock of domestic debt increased slightly by 1.7 percent, from D38.1 billion in 2022 to D38.8 billion in April 2023.  This represents a decline in the debt to GDP ratio from 31.5 percent in 2022 to 27.6 percent in April 2023. He said treasury bills and Sukuk Al Salaam bills increased to D19.2 billion and accounted for 49.5 percent of outstanding domestic debt stock.

The governor said the increase in domestic debt is due to government increasing borrowing to cover operations.

Yields on government securities

According to the governor, yields on government securities have risen further following a number of policy rate hikes.

The weighted average interest rate on treasury bills increased from 4.8 percent in December 2022 to 11.9 percent in April 2023.

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