By Tabora Bojang
The Governor of the Central Bank of The Gambia, Buah Saidy, has yesterday disclosed that customer deposits remain a steady and main source of funding for commercial banks in the country, adding that deposits rose by 11.1 percent year on year to D58.9 billion as of end of March this year.
Governor Saidy was speaking yesterday at a press conference called to disseminate information on the latest Monetary Policy Meeting.
He further reported that the “capital and reserves of banks has increased by 30.9 percent to stand at D10.6 billion, representing a 19.4 percent rise in retained earnings from a year ago and a wide liquidity ratio of 78.3 percent in March this year compared to 70.9 percent reported in March last year.”
But the governor noted that the inability of borrowers to pay back their loans to the banks increased in the reporting quarter to 8.7 percent, from 3.3 percent reported in December 2023.
“Although credit concentration risks remain, the stress test results indicated that overall market risks are low and the banking industry remains resilient,” he said.
According to him, the average interest rates prevailing in the market declined from 7.4 percent in April 2023 to 4.9 percent in 2024, following the three-month treasury bills rate.
Commercial banks are often accused of charging relatively high interest rates and collateral which prompt customers against borrowing loans but
according to the governor, the supply of credit to the private sector picked up to 19.3 percent in March 2024 from a growth of 12.2 percent registered in the previous quarter.
However, this is still lower than the 27.6 percent recorded in March 2023 reflecting the tight monetary and financial conditions.
Diaspora remittances
Meanwhile, money sent home by Gambians abroad remains the largest source of foreign currency supply reaching a total inflow of $203.7 million between January and May 2024, representing a 12.4 percent increase from the previous year.
Dalasi vs major currencies
Governor Saidy reported that the exchange rate of the dalasi continues to be relatively stable, depreciating against the dollar by 6.9 percent, the euro by 5.9 percent, the pound by 7.5 percent, and CFA by 5.1 percent.
Inflation
The governor reported that headline inflation decelerated for the third consecutive month to 11.0 percent in April 2024 from 14.9 percent in March 2024, driven by moderated global commodity prices and domestic policy actions.
The decline, he said, is broad based with a fall in both food and nonfood inflation. “Looking ahead, if there are no sudden surprises, especially in the global commodity prices, inflation is expected to decelerate to single digits by the end of 2024,” Governor Saidy said.
Policy decisions
The MPC concluded that the monetary policy should be maintained to ensure inflation returns to its desired target.
Currently the monetary policy rate is maintained at 17.0 percent, required reserve ratio of commercial banks at 13.0 percent, interest rate on standing deposit facility at 3.0 percent with the interest rate on the standing lending facility remaining at 18.0 percent.
