“The deficit,” Governor Amadou Colley said, “was financed mainly from domestic sources in the amount of D2.2 billion (6.0 percent of GDP). External financing amounts to D578.8 million and repayments (D172.7 million). Bank financing which constitutes 71.1 percent, was made to the non-bank sector. Central Bank financing of government deficits (monetisation) constitutes 91.4 percent of total domestic financing in 2013. The consequences of financing the fiscal deficits through advances by the Central Bank limits the ability of monetary policy to have the desired impact. In doing so, it contributes to macro-economic instability by increasing depreciation and inflationary pressures and thus stifling growth.”
Presenting his institution’s annual financial report to the joint parliamentary committee alongside his financial director, Governor Colley said: “The Gambia’s domestic debt stock has picked up significantly in recent years raising concerns over sustainability. Issuance of short-term treasury bills has been increasing dramatically to finance government’s fiscal operations. As at the end of 2013, outstanding domestic debt, mainly short-term debt, totaled D13.5 billion (39 per cent of the GDP), an increase of 25.1 per cent from 2012. Treasury bills and Sukuk Al Salam, amounting for 81.0 per cent and 2.9 per cent of the debt, increased by 34.5 per cent and 13.6 per cent respectively. The net domestic debt ceiling for 2013 agreed under the ECF programme with IMF was breached.”
He informed PAC/PEC Members that interest rates on treasury bills and Sukuk Al-salam increased significantly adding that the yield on the 91- day Treasury bill and Sukuk Al Salam rose from 9.62 percent and 9.70 per cent in December 2012 to 15.58 per cent in December 2013.
But Governor Colley told lawmakers the bank is working with the Ministry of Finance and Economic Affair on ways to bring consistency between fiscal consolidation and medium term debt sustainability to create greater space for the government’s future infrastructure investment and social spending.
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