Gambia

Country Summary

Macroeconomic performance

As confidence resumes following the sharp slowdown in 2016, economic recovery is gaining traction. Real GDP growth was an estimated 5.4% in 2018, up from 3.5% in 2017, driven largely by services—tourism and trade and financial services and insurance—which expanded by 10% in 2018, coupled with robust growth in transport, construction, and telecommunications. In tourism, the number of arrivals was expected to reach 225,000 in 2018 after surpassing its pre-Ebola peak of 171,000 in 2017.

The fiscal deficit narrowed to 3.9% of GDP in 2018 from 7.9% in 2017, thanks to increased fiscal discipline and international community support. However, the debt-to-GDP ratio stood at about 130% of GDP in 2017, and the country has been classified as being in debt distress. Inflation decreased to an estimated 6.2% in 2018 from 8% in 2017. Gross international reserves increased to 3.1 months in 2018 from 2.9 months in 2017, helped by increased financial assistance from development partners

The current account deficit remains large—an estimated 19% of GDP in 2018, down slightly from 2017. For the first half of 2018, total imports rose by 9.2% compared with the first half of 2017, while total exports increased by 8.5% to $54.9 million. The export basket contains mainly primary commodities, including groundnuts (55.6%), fish and fishery products (21.6%), and cashew nuts (10.6%). Short-term economic prospects are expected to steadily improve over the medium term. Real GDP is projected to grow by 5.4% in 2019 and by 5.2% in 2020.

Tailwinds and headwinds

Insecurity and political instability pose risks in 2019 with the withdrawal of the Economic Community of West African States mission and possible contention over the three-year presidential term limit. In addition, high public debt will continue to crowd out government spending in key socioeconomic sectors such as health, education, and infrastructure development unless the government restructures its debt.

Other headwinds likely to affect the economic outlook include a resurgence of political instability, the large increase in public spending, delays in implementing structural reforms, and adverse weather that could weaken rain-fed agriculture.

The budget deficit remains a challenge for policymakers, and fiscal consolidation is a key pillar in the National Development Plan 2018–21, which garnered $1.7 billion in commitments from donors at a May 2018 conference in Brussels. Disciplined implementation of the reform agenda for state-owned enterprises, lower domestic borrowing, and greater commitment to administrative austerity measures could help reduce the deficit. Overall, policies must focus on enhancing efficiency in service delivery using limited government resources.

Addressing energy and water shortages remains a vital policy priority. Access to electricity is 47% nationally but only 13% in outlying provinces. Only 60 MW of the 106 MW of total installed capacity are available, with transmission and distribution network losses reaching 26% in 2016. Unreliable electricity supply also affects availability of water in Greater Banjul, compounding the problem of limited access to piped water.

Source: African Economic Outlook 2019

Fixed Income

Summary

 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.

Issuance strategy 

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

Yield curve calculation models

Not applicable

Interpolation methods

Not applicable

 Yield curve managed by

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Display platform

Not applicable

Challenges in building an efficient yield curve

 

 

Guide to Buying Bonds

Procedures for market participation

Auctions

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: omo@cbg.gm.  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.

Bidding

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: omo@cbg.gm ) 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
  • amounts;
  • 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.

Settlement cycle

Clearing and settlement of T-bills and Treasury bonds are made on the basis of T+1.

Secondary market

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.
 

Taxation

Residents and non-residents are subject to withholding. Treasury bonds are not taxable. However, a 3% commission applies for their rediscount before maturity.

Rating

Rating Agency Current rating Outlook
Moody’s No rating No outlook
Fitch No rating No outlook
Standard and Poor’s No rating No outlook

Primary Dealers

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.

Market restrictions

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. 

Capital controls

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.

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