#Gambia – Authorities launch “Operation No Compromise,” set dalasi rate downwards by fiat & institute capital controls

By Rafiq Raji, Ph.D.

USD:GMD now set at 35-40 from prevailing market rate of 53-55. Foreign exchange > USD 10k not to be allowed out of The Gambia without presidential approval. Long-running dalasi pressure driven by decline in FX receipts (in recent times due to Ebola effects on tourism sector with receipts cut by >50% in 2014-15 season) and consequent balance of payment (BOP) impact estimated at 3.5% of 2015 GDP, extremely high public debt (100% of 2014 GDP, forecast to be 105.6% of 2015 GDP by IMF), with hitherto booming re-exports sector fuelling FX demand. Fiscal dominance of monetary policy continues to constrain the effectiveness of the Central Bank of The Gambia; albeit authorities expect improvements to emanate from new fiscal measures announced in the 2015 budget. In March, authorities requested for a Rapid Credit Facility from the IMF to manage its BOP problems. Delayed rains, which have caused a 15% crop loss, also add to strains on the economy, weighing the 2015 GDP outlook significantly to the downside. With FX reserves at record lows (3 months imports, 5 months in 2013), such forceful measures now in place – which proved ineffective in the past – are unlikely to moderate continuing pressures on the dalasi.

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