Macroeconomic performance and outlook
Following the 2016 political transition, GDP growth accelerated to 6.6% in 2018 driven by a recovery in agriculture, tourism, construction, and trade. It then fell to an estimated 5.4% in 2019 due to weak fiscal man- agement and delays in budget support disbursements. Inflation subsided owing to a stable exchange rate, which depreciated by only 3.2% since September 2018, strong food supply, and declining commodity prices. Gambia’s dependence on food and fuel imports wid- ened the current account deficit during 2015–18, but improvements in net services, private capital flows, and remittances from the diaspora mitigated the deficit in 2019. Fiscal consolidation helped to reduce fiscal deficit to 4.1% of GDP in 2019, financed through budget sup- port loans and grants and expensive domestic borrow- ing, crowding out private investment.
Debt remains unsustainable (81.8% of GDP in 2018), and debt service consumed more than 53% of reve- nues in 2016–18, leaving limited fiscal space to finance priority spending. The high public debt and limited fiscal space kept poverty stagnant (48.4% in 2010 and 48.7% in 2015) and unemployment high (35.2% in 2018).
Gambia faces major challenges in energy and infra- structure. And agriculture, despite its potential, has not contributed much to poverty reduction as 91% of the rural poor work in smallholder-based subsistence farming.
Tailwinds and headwinds
Real GDP growth is projected around 5.1% during 2020–21, led by agriculture, tourism, increased external financing for energy and roads, and trade boosted by the recent opening of the Trans-Gambia Bridge. As a small, highly open economy, Gambia could benefit from greater regional trade integration from the Africa Con- tinental Free Trade Area and the adoption of a future regional single currency (eco). Investments in modern- izing the Port of Banjul are crucial to generate revenues from transit trade and new business opportunities in transporting imported liquefied fuel products to the Sahelian hinterland. This has potential to create jobs and reduce youth unemployment, currently 41.5%.
Headwinds include institutional capacity shortcom- ings and slow progress on fiscal consolidation. These could reduce private sector confidence and disburse- ments of pledged development assistance and under- mine investment and growth. The large public debt burden and contingent liabilities, notably from state- owned enterprises, leave little room for private sector credit expansion. The authorities could explore restruc- turing part of the debt by seeking relief from bilateral and multilateral creditors.
Electricity demand is higher than capacity, with installed capacity at 99MW but only 55MW available. Electricity tariffs are high ($0.26/KWh compared with $0.16/KWh in Mali), and the cost of producing electric- ity remains vulnerable to oil price and foreign exchange shocks.
Global oil price increases would raise energy costs, undermine macroeconomic and price stability, and erode consumer purchasing power and welfare. An unusually short rainy season could cut rainfed agricul- tural production by 50% or more. A national review of skills and employability showed that few people receive skill training, mostly due to uneven distribution of tech- nical and vocational education training institutions. Pro- moting skill training programs is thus critical to enhancing employability.
Health sector preparedness
Despite the limited access to health services, the 2019 Global Health Security Index assessed the country’s health system as more prepared to manage infectious disease outbreaks, ranking it 117 among 195 countries globally, and 19 among 54 in Africa. A major strength of the health system is capacity for early detection and response to epidemics, but the capacity to treat the sick and protect health workers remains weak due to shortages of medical staff, equipment, and consumables for laboratories.
The government took preventive measures in February 2020, well before a single case was recorded. Since then it stepped up measures to strengthen economic resilience, provide support to the private sector; and assist vulnerable groups.
Health measures. Health sector spending was increased by GMD 0.5 billion (0.5% of GDP) under the Ministry of Health COVID–19 Pandemic Action Plan pre- pared with this support of development partners. This has helped enforce containment measures, strengthen health security and logistics across the country, and build laboratory capacity.
Macroeconomic measures. The government adjusted domestic fuel prices in line with global market prices, reallocated resources from non-priority spending, and froze energy subsidies, travel, and vehicle expenses. The central bank reduced its policy rate by 50 basis points in February 2020 to 12% and increased the standing deposit facility rate by the same margin to 3% to boost liquidity and support private sector growth.
Social measures. The government is helping the most vulnerable by providing food aid (a bag of rice, a bag of sugar, and 10 liters of cooking oil). It also took supportive steps to protect jobs in key sectors, such as coverage of salaries of workers in the tourism sector for three months (April–June 2020) through social security. Extensions for VAT tax returns for businesses were also granted.
In 2018, the public Debt to GDP is 85% .The stock of external debt as a percentage of total debt is 55 % and remaining 45 % account for the domestic debt.The Government was able to introduce longer dated instruments (i.e. 3-Year and 5-Year Bonds) in the domestic debt market and successfully separated domestic debt instruments from monetary policy instruments.
One of the debt management objectif is to borrow at minimum cost, subject to a prudent degree of risk. The The Strategy broadly aims to restructure the domestic debt and the desire to reduce cost of borrowing specifically by:
- maximizing external concessional financing in order to reduce borrowing cost;
- continuing the issuance of the 3-and 5-year bonds to develop and deepen the domestic debt market and reduce refinancing risk.
- extending the maturity of domestic debt by substituting a greater proportion of the short-term debt with longer-term treasury bonds thereby minimizing refinancing risks of the portfolio
The Strategy envisages an increased issuance of medium-term bonds (especially 3 and 5- year bonds) in the domestic bond market over the strategy period. It also assumes the issuances of these bond will extend the yield curve. Through this, the Strategy seeks to diversify the instrument base and provide suitable options with which institutions like the pension and insurance companies can match their assets to their liabilities.
Yield curve calculation models
Yield curve managed by
Challenges in building an efficient yield curve
Guide to Buying Bonds
Procedures for market participation
Most auctions of Bonds are in the form of either fixed price (yield) or variable price type, where the variable price (yield) method can either be multiple or uniform price system. Any differences applicable to a particular auction will be
as set out in the relevant Prospectus. The CBG shall publish a Prospectus, inviting bids for the Bonds to be issued, in
advance of the auction. Prescribed applications forms will be posted on MoFEA and CBG websites and will be attached to the Prospectus and Guidelines.Each application to the CBG for the purchase of Bonds shall be deposited in the tender box at the Banking Department, CBG, in person and should not be handed over to CBG officials. Bids can also be emailed using completed and scanned application to an anonymous Central Bank email which is: email@example.com. The opening and closing of bids shall be stated in the prospectus. The CBG reserves the right to accept or reject or refuse to recognize any or all bids or tenders. The CBG also reserves the right to award more or less Bonds than the amount of Bonds specified in any Prospectus or notice. The CBG further reserves the right to waive any provision or provisions of this Guideline, any Prospectus, notice or application form for any or all bidders up until the time a bid is accepted and the price settled. Decisions of the CBG shall be final.
Each bid must be for one amount and at a stated price or interest rate (yield) expressed as a percentage to no more than 3 decimal points, for the debut issue. This procedure may change in subsequent issues. In which case either the Dutch (multiple price) or English (single price) auction system would be used . The minimum bid amount shall be GMD 5.0 million in multiple of GMD50,000.00. In the event that CBG revert to either adopting Uniform or Multiple price auctioning system, in making a competitive bid, each bidder represents and undertakes that it has not discussed its bid, or the bid of anyone else, with any other person nor, in any other way whatsoever, has it disclosed its bid to any other person, or had anyone’s bid disclosed to it, nor has it colluded or sought to collude with any other person as to its own bid or that of any other person or the pricing of the auction generally.
Notification of results
The general results of any auction shall be available from 3.00pm on the auction day and in any event the Primary Dealer and other bidders shall be notified (whether by telephone or by emailing through the following address: firstname.lastname@example.org ) of their allotments by no later than the end of the first Business Day following the auction.The CBG will publish a report and analysis of each auction in a press notice on its web site (www.cbg.gm) by close of business on the auction day. Where appropriate, such reports and analyses will include:
- The highest, weighted average and lowest accepted prices or rates The gross redemption yields equivalent to those prices or rates;
- The total value of accepted bids, amounts offered and over or under-subscribed
- and The ratio of the total value of bids received to the amount on offer, including bids rejected in whole or in part on account of price or rate.
Payment and settlement
Payment must be made by direct debit through the RTGS. Primary dealers must ensure that they have enough funds in their accounts at the date of the settlement to cover purchases of Bonds made on their own behalf and on behalf of their clients.On the Issue Date, the CBG shall debit the CBG Cash Account of the successfulbidder by the amount the bidder is required to pay for the New Bonds.The holdings of each Bondholder shall be recorded by electronic book entry at CBG.
Clearing and settlement of T-bills and Treasury bonds are made on the basis of T+1.
Bondholders may trade in Existing Bonds with one another as well as with the general public. As a guideline, the CBG expects settlement of trades on the secondary market to take place on the same day as the date of the contract of sale.
Residents and non-residents are subject to withholding. Treasury bonds are not taxable. However, a 3% commission applies for their rediscount before maturity.
|Rating Agency||Current rating||Outlook|
|Moody’s||No rating||No outlook|
|Fitch||No rating||No outlook|
|Standard and Poor’s||No rating||No outlook|
The 4th of April 2006, the Central Bank of The Gambia has established a Primary Dealer System (PDS) for government securities.
Primary dealers up to date:
- First International Bank Ltd,
- Guaranty Trust Bank Ltd,
- Bank for International Trade Ltd,
- International Commercial Bank Ltd,
- Standard Chartered Bank Ltd,
- Trust Bank Ltd.
Openness to international investors
There are no limits on foreign participation on the domestic debt market. There is no mandatory screening of foreign investment, but it could be done if there is suspicion of money laundering or terrorism financing.
There is no limit on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains.
Restrictions on FX and profit repatriation
There are no restrictions on the conversion of funds into foreign currency. There is no restriction on the repatriation of profits and dividends if it is done through the banking system. Most commercial banks in The Gambia now operate foreign currency denominated accounts, which were introduced by the Central Bank of The Gambia in 2001 to further facilitate international trade and foreign direct investment.
Documents & Resources
Documents - Ministry of Finance
- Budget Speech 2012 (740 kB)
- Medium Term Debt Strategy 2011-2014 (1.03 MB)
- Medium-Term-Debt-Management-Strategy-MTDS-for-the-2019-2022.pdf (869 kB)
- THE-GAMBIA-DEBT-SUSTAINABILITY-ANALYSIS-2019.pdf (1.32 MB)