Gambia Macro Economic Accounting Model Update 30 July 2010

8/9/2019 Gambia Macro Economic Accounting Model Update 30 July 2010

1/78

An Operational Consistent Macroeconomic Accounting Spreadsheet Model for Gambia-Tarun Das

AN OPERATIONAL CONSISTENT MACROECONOMIC ACCOUNTING

SPREADSHEET MODEL FOR THE GAMBIA - AN UPDATEANALYTICALFRAMEWORK, MODEL STRUCTURE AND SPECIFICATIONS,

DATA BASE, TEST AND CALIBRATION TECHNIQUES,

COMPUTER ALGORITHMSAND BASE LINE PROJECTIONS

TARUN DASMACROECONOMIC ADVISER1

July 2010

Institutional Support Project for Economic and Financial Governance (ISPEFG)Ministry of Finance (MOF)The Republic of Gambia

The Quadrangle, Banjul, the Gambia

1This paper provides an update of the original model developed in February 2009 and updated fromtime to time. The Model has been developed, under the overall guidance of the Honorable PermanentSecretary Mr. Serign Cham, by a research team comprising Tarun Das, Macroeconomic Adviser(ISPEFG), Momodou Taal, Acting Director and Ms. Ceesay Chilel, Economist in the Statistics andSpecial Studies Division, Ministry of Finance; with key inputs from the Central Bank of Gambia(CBG), the Gambian Bureau of Statistics (GBOS) and the Gambian Revenue Authority (GRA).

It is needless to point out that the views expressed in this Paper solely indicate the views of theResearch Team, which need not necessarily imply the views of the MOF, the other budgetaryagencies or the organizations they are associated with.

Any questions and feedback can be addressed to: Tarun Das ([email protected])

1
mailto:[email protected]:[email protected]


2/78


AN OPERATIONAL CONSISTENT MACROECONOMIC ACCOUNTINGSPREADSHEET MODEL FOR THE GAMBIA- AN UPDATE

ANALYTICALFRAMEWORK, MODEL STRUCTURE AND SPECIFICATIONS,DATA BASE, TEST AND CALIBRATION TECHNIQUES,


CONTENTS

Contents Pages

1. Analytical framework and model structure 3-8

2. Data base and basic presumptions for the projections 9-14

3. Projection methodology and test and calibration techniques 14-17

4. Summary results 18-26

5. Concluding observations 27-28

Selected references 29

Annex-1: Variables and identities used in the model- descriptions andunits for measurement 30-34

Annex-2: Basic data for the years 2000-2009, Regression Equationsand Projections for the years 2010-2014

35-76

2


3/78



ANALYTICALFRAMEWORK, MODEL STRUCTURE AND SPECIFICATIONS,DATA BASE, TEST AND CALIBRATION TECHNIQUES,


1. Analytical Framework and Model Structure

1.1Objectives and An Overview of the Model

The basic purpose of this exercise is to update an operational macroeconomic model for theGambia, initially developed, tested and calibrated in February 2009, in the consistentmacroeconomic accounting framework, depicting the underlying structure, trends andinterrelations among major macroeconomic variables. Another upgraded Gambian Macro-econometric Model is proposed to be built, tested, calibrated, projected and simulated onEViews7 Software, jointly by the Statistics and Special Studies Division (SSSD) of the

Ministry of Finance (MOF) and the Research Department of the Central Bank of Gambia(CBG), on the basis of more advanced econometric techniques. As compared with the proposed Macro-econometric Model, this is a spreadsheet model calibrated on ExcelSoftware on the basis of simple econometric relations. However, this model satisfies the basicstatistical and econometric tests for such models, and has the following advantages:

(1) The model is based on simple economic concepts viz. trend growth rates and elasticity ofa variable with respect to GDP at current market prices;

(2) It is a spreadsheet model and can be calibrated very easily on Excel Software;(3) The model satisfies the basic econometric tests and calibration techniques.(4) It performs usual projections and simulations for alternative scenarios.

First of all, time series data on major macroeconomic variables for the period 2000-2009have been collected and processed on Excel Workfiles. The descriptions and units ofvariables are presented in Annex-1. The time series data for the years 2000-2009 along withstandard descriptive statistics are given in the Annex-2 of this Report. Then, we have carriedout the KPSS Unit Root tests on EViews7 for all the variables used in our model andobserved that most of the variables are trend stationary within 5 percent level of significance.Therefore, the standard least squares method can be used to fit the regression lines. Then wetest the Granger causality test and observe that the GDP at current market prices grangercauses most of the macroeconomic variables in the government finance, balance of payments,and monetary and financial blocks. Therefore, we can use GDP elasticity for forecasting a

variable provided we get a good fit relating a variable to GDP at current market prices.

Brief Description of the Methodology

Derailed methodology for tests and calibration is discussed in section 3. Here we present abrief introduction to the methodology. First of all, sectoral components of GDP are projectedon the basis of secular growth rates observed in the past. Then, GDP at current market pricesis taken as the leading factor to project major macroeconomic variables in various sub-models, and we estimate the elasticity of a variable with respect to GDP by fitting log-linearfunctions log (Yt) = + log (GDPMPt). We observe that both the exponential time trends andlog-linear functions provide very good fits as judged by R2.The results are indicated in theAnnex-2 of this Report.

3


4/78


1.2 Analytical Framework and Model Structure

The same analytical framework as described in the Inception Report for the Macro Economic

Model prepared in January 2009 is used for this Macroeconomic Accounting Spreadsheet

Model. The analytical framework is consistent with the basic concepts and interrelations

under the UN System of National Accounts (UN-SNA), and the IMF Government Finance

Statistics (GFS), Balance of Payments (BOP) Statistics and the Monetary-Financial Statistics

(MFS). Thus, the model consists of five inter-related accounts as indicated below:

(i) Real Sector (National Accounts)(ii) Government Sector (Fiscal Account)(iii) External Sector (Balance of Payments Account)(iv) Monetary Sector (Monetary and Financial Account), and(v) External Debt.

The basic structures of these sub-models and their interrelations are depicted in the form of aflow diagram in Box-1.1. The linkages between key aggregates of the national accounts andthe balance of payments flows and government finance statistics can be summarizedalgebraically within a savings/investment framework. Let us use the following symbols,

National Accounts System (NAS)

GDPFC = Real GDP at constant FC = GDPSectorGDPSector = Sector (Agriculture, industry, services) GDP at FCC = private consumption expenditureG = government consumption expenditureI = gross domestic investmentS = gross savingX = exports of goods and (non-factor) servicesM = imports of goods and (non-factor) servicesNFY = net factor income from abroadGDP = gross domestic productGNP = gross national product = GDP + NFYGNDY = gross national disposable income + Net Transfer

On the supply side, overall GDP equals the sum of sectoral value added for different sectorssuch as agriculture, industry and services. In our model, Agriculture has four sub-sectors viz.(a) crops, (b) livestock, (c) forestry and (d) fishing. Industry has also four sub-sectors viz. (a)mining and quarrying, (b) manufacturing, (c) construction and (d) public utilities (comprisingelectricity, gas and water supply). Service has nine sub-sectors viz. (a) wholesale and retailtrade; (b) hotels and restaurants; (c) transport and communications; (d) financial services; (e)real estate and business and professional services; (f) public administration, (g) health, (h)education, and (i) religious, personal and community services. GDP for these sub-sectors are

projected at constant factor cost, constant basic price, constant and current market prices.

The demand side of GDP comprising government consumption, private consumption,investment and inventories, and exports less imports, is not projected in the model due to lack

of data for the modeling period. However, these items can be derived from the model under

4


5/78


certain assumptions. Gross National Income (GNI) equals GDP plus Net Factor Income fromabroad, while Gross National Disposable Income equals GNI plus Net Transfer.

Balance of Payments (BOP)

CAB = current account balance in the balance of payments = TB + SB + FIB + NCTRT = reserve asset transactionsTB = Merchandise trade balance = Merchandise Exports Merchandise ImportsSB = Non-factor service balance (travel, tourism, financial, business, ICT etc.)FIB = Factor income balance (interest, dividends, wages, rent, royalties etc.)NCT = Net current transfer (official grants, private grants, remittances)NKT = net capital transfersNPNNA = net purchases of non-produced, non-financial assetsNFI = net foreign investment or net lending/ net borrowing vis--vis the rest of the worldNKA = net capital and financial account (i.e., all capital and financial transactions excludingreserve assets)

Government Finance Statistics (GFS)

Receipts= Revenue plus Grants = R+GRR= Revenue = T + NTT = Tax revenueNT = Non-tax revenueGR= GrantsGEXP = Government expenditure and net lending = G + GKG = government consumption expenditureGK= Government capital expenditure and net lending = GCE + NDGCE = Government capital expenditure

ND = Net lendingGFD = Gross Fiscal Deficit = (R+GR) GEXPBasic Balance= Revenue less (GEXP excluding externally financed capital expenditure)Basic Primary Balance = Basic Balance plus Interest Payments

Monetary-Financial Statistics (MFS)

MD = Demand for money =NFA+CRG + CRPE+CRP + OIMS = Supply of money = Currency + Quasi Money = CN+(DD + TD)M1= Quasi money = DD+TDNFA =Net foreign assetsCRG = Credits to the government

CRPE= Credits to the public enterprisesCRP = Credits to the private sectorOI = Other itemsDD = Demand depositsTD = Time depositsCN = Currency and notes in circulation

Prices, Interest Rates and Exchange Rates

CPI = Consumer Price IndexGDPDF = GDP DeflatorYield= Yield of Treasury Bills

INT = Rate of interestER= Exchange rate of the Gambian Dalasi per US dollar

5


6/78


The Macroeconomic Balance Equations stand as follow:

GDP = C + G + I +XM (1)(XM= balance on goods and services in the balance of payments)GNP = GDP + NFY (2)CAB = X M + NFY+NCT (3)GNDY = C + G + I + CAB (4)GNDY = C + G + S (5)

Equating (4) and (5) we get:S I = CAB i.e. saving-investment gap (resource gap) equals CAB (6)S I + (NKT NPNNA) = CAB + (NKTNPNNA) = NFI (7)(NKTNPNNA) = balance on the capital account of the balance of payments.

Interrelationship between the internal and external sectors of an economy can be seen ingreater detail by distinguishing between private and public sectors. Private saving and

investment (Sp and Ip) and government saving and investment (Sg and Ig) are identified as:

SI = Sp+SgIpIg (8)

Use of the definition of the externalcurrent account from equation (1) then gives:CAB = (SpIp) + (SgIg) = SI (9)

Equation (9) shows that the private savings-investment balance plus the government fiscal balance equals the current account balance. It also implies that, if government sectordissaving is not offset by net saving of the private sector, the current account will be indeficit. More specifically, the equation shows that the budgetary position of the government

(Sg-Ig) may be an important factor influencing the current account balance.

Government deficit is financed by borrowing from the domestic sector, borrowing from theexternal sector and borrowing from the central bank. All these factors have influences on thedomestic capital and financial markets and also on the balance of payments.

Economists generally agree that a persistent fiscal deficit may ultimately spill over thecurrent account deficit in the balance of payments. On the converse, a sustained currentaccount deficit may reflect persistent government spending in excess of receipts, and suchexcess spending may suggest that fiscal tightening is the appropriate policy action to tackle

both fiscal and balance of payments problems.

We also know thatCAB = NKA+RT = SI (10)Equation (10) shows that the current account balance is necessarily equal (with sign reversed)to the net capital and financial account balance plus reserve asset transactions. Thisrelationship shows that the net provision, as measured by the current account balance, ofresources to or from the rest of the world mustby definitionbe matched by a change innet claims on the rest of the world.It may be useful to rewrite CAB as:SI = CAB = TB+SB+FIB+NCT = NKA+RT, where (11)

Where TB, SB, FIB and NCT stand for trade balance, services balance, factor incomesbalance and transfer balance respectively.

6


7/78


Box-1.1: Basic Structures of Macroeconomic Sub-models and Inter-linkages

7

REAL SECTORNational Accounts

GDP at current market prices Private consumption General govt. consumption

General govt. investment Private investment Exports of goods and

Non-factor services Imports of goods and

Non-factor services

CENTRAL GOVERNMENT

Revenues Taxes and non-taxes GrantsExpenditures Current CapitalOverall balanceFinancing

Domestic financing (net) Banking system Nonbanking sector External financing (net)

Balance of PaymentsCURRENT ACCOUNT Exports of goods andNon-factor services

Imports of goods andNon-factor services Factor services (net) Transfers (net)

Official Private

MONETARY SECTORMonetary Authorities Net Foreign AssetsNet domestic assets: Net credit to centralgovt.

Credit to banks Other items (net) Reserve money

CAPITAL ACCOUNT

Direct investment

Medium/long-term

capital (net)

Short-term capital (net)

Overall balanceChange in net foreign

assets

Deposit Money BanksBanks' reserves Net Foreign Assets

Net domestic assets: Net credit to central

govt. Credit to private sector Other items (net)

Liabilities to monetaryauthorities

Private sector deposits


8/78


1.3Inter-Sectoral Financial Transactions Matrix

In a paper entitled Balances, Imbalances and Fiscal Targets- a New Cambridge Model

Wynne Godley and Alex Izurietaof theCambridge Endowment for Research in Finance(CERF), University of Cambridge used a simplified accounting matrix to illustrate theinterrelations of financial transactions among various sectors of the economy. Theyargued that macroeconomic analysis would be easier if the main income and expenditureflows comprising the GDP are arranged in a double entry format as in Table-1.1. Thetwo-way table indicates clearly the transactions among any two economic agents viz.

producers, consumers, government, and rest of the world. The matrix shows how the gapbetween receipts and outlays of any sector implies an equivalent rise or fall in its netacquizition of financial assets.

Table-1.1: A Simplified Macro Transactions Matrix

Income/Expenditure

Production Government

Rest of theWorld

Total

1.Pvt. Exp -C +C 0

2.Gov. Exp +G -G 0

3.Exports +X -X 0

4.Imports -M +M 0

5.GDP +Y -Y 0

6.Taxes,

Fact. Pay.

-TP +T -TF 0

7.Financial

Balances

+NAFA= Y-C-TP

0 +PSNB=T-G

-BP=M-X-TF

0

In this matrix the national income identity is shown, running vertically down in column 2,as the appropriation account of a postulated production sector. It says that gross domestic

product, Y, is equal to private expenditure, C plus government expenditure, G, plusexports, X, less imports, M. Every item in the GDP identity has a counterpart with theopposite sign in some other column. Taxes less transfers, T, are received or paid by the

government; net property income, taxes and tranfers, TFand TP, are paid by respectivelythe external and private sectors. The total in line 7 shows that public borrowing, PSNB,equals the private net acquisition of financial assets, NAFA, (that is saving lessinvestment, or net saving) minus the balance of payments surplus,BPor plus the deficit.

Wynne Godley and Alex Izurieta illustrated the analysis with the help of UK and USAdata. One important conclusion of the analysis is that the financial balances (relative toincome flows) must stay within certain limits for maintaining the sustainability of publicdebt over time. This in turn implies that that a strict monitoring of these basic balances isessential for formulation of effective macro stabilization policies.

8


9/78


2 Data Base and Basic Presumptions for Projections

The basic data for major macro economic variables2for the years 2000-20093are obtained from theofficial sources. Basic data on national accounts are obtained from the Gambian Bureau of Statistics(GBOS). Data on government finance statistics are obtained from the Statistics and Special Studies

Division (SSSD), formerly known as the Economic Management and Planning Unit (EMPU),Ministry of Finance. Data on monetary and financial statistics and the balance of payments statisticsare obtained from the Central Bank of Gambia (CBG). Data on External Debt are obtained from theGlobal Development Finance (GDF) published by the World Bank, supplemented by the dataobtained from the Debt Department of the Ministry of Finance.

2.1 Data Base on National Accounts

It presents time series data on sectoral GDP at both current and constant 2000 prices innational currency (millions of Gambian Dalasi) for the years 2000-2009. It has data on both

broad sectors of the economy viz. agriculture, industry and services, and sub-sectors within

these broad sectors. As mentioned above, four sub-sectors are considered for Agriculture viz.crops, animal husbandry, forestry and fishing. Industry is sub divided into four sub-sectorsviz. mining and quarrying, manufacturing, construction and public utilities (comprisingelectricity, gas and water supply). Services sector is sub divided into seven sub-sectors viz.viz. (a) wholesale and retail trade; (b) hotels and restaurants; (c) transport andcommunications; (d) financial services; (e) real estate and business and professional services;(f) public administration and (g) social sectors comprising health, education, religious,

personal and community services. .

2.2 Data on Balance of Payments

Data on Balance of Payments for the years 2005-2009 are obtained from the Research andRisk Analysis Department of the Central Bank of Gambia (CBG) supplemented by the datafrom the IMF for the years (2000-2004). Necessary adjustments have been made to take careof changes in the basic concepts, definitions and classifications over the years.

2.3 Data on Monetary Survey and Prices

Data on Monetary Survey and Financial Statistics for the years 2000-2009 are obtained fromthe Research and Risk Analysis Department of the Central Bank of Gambia (CBG). Data onCPI are obtained from the GBOS.

2.4 Data on Government Fiscal Operations

Basic data on government financial statistics for the years 2004-2009 are taken from theStatistics and Special Studies Division (SSSD) of the Ministry of Finance, supplemented bythe data from the IMF for the years 2000-2003. Necessary adjustments have been made totake care of changes in the basic concepts, definitions and classifications over the years.

2 The list of variables with descriptions and units is presented in Annex-1.3

The year refers to the calendar year starting with January and ending with December, which is also the fiscalyear for the Gambia.

9


10/78


2.5 Basic Presumptions for Projections

2.5.1 World Recovery Continues, But Risks Increase, Says IMF

Global economic recovery is stronger than expected, but the speed is uneven across regions.As per the IMF World Economic Outlook (WEO) Update4 , April 2010, world output isexpected to grow by 4.6% in 2010 followed by 4.3% in 2011. IMF forecasts continuingglobal recovery, but cautioned that renewed financial turbulence and euro area problemscloud the outlook, and advised fiscal consolidation based on credible medium-term plans.

Global activity in terms of trade, production and retail sales has rebounded. Employmentcontinues to contract in advanced economies but is expanding in emerging economies, helped

by strong potential growth. Industrial confidence has returned to pre-crisis levels, buthousehold confidence in advanced economies continues to lag due to subdued employment.

Economic activities still depend on highly accommodative macro-economic policies and are

subject to downside risks due to sharp declines in the countercyclical fiscal measures. IMFadvises that the monetary, fiscal, and financial policymakers will need to ensure a smoothtransition of demand from the government to the private sector and from economies with

excessive external deficits to those with excessive surpluses. In most advanced economies,fiscal and monetary policies should maintain a supportive thrust this year to further sustain

growth and employment. But many of these economies also need to urgently adopt crediblestrategies to contain public debt and later bring it down to more prudent levels. Financial

sector repair and reform are also high-priority requirements.

Emerging and Developing Economies: Activity in emerging and developing economies isleading the global recovery. In key emerging Asian economies, particularly in China and

India, output already exceeds pre-crisis levels by a wide margin, and the output growth inthese countries, averaging about 10% in Q2Q4 of 2009, is outpacing estimates of full-capacity (potential) output growth.

Sub-Saharan Africa: Sub-Saharan Africa has weathered the global crisis well and isexpected to recover rapidly from the slowdown in 2009. Although some oil-exportingeconomies were hit hard by the collapse in export and commodity markets, the regionmanaged to grow by 2.2% in 2009. Its growth is projected to accelerate to 5% in 2010 and to5.9% in 2011. The regions quick recovery is due to the relatively limited integration of themost low-income economies into the global economy and the limited impact on their terms oftrade, the rapid normalization in global trade and commodity prices, and the use of

countercyclical fiscal policies. Remittances and official aid flows have also been lessadversely affected than anticipated by the recessions in advanced economies.

Banking sectors, in general, remained resilient, and private capital inflows resumed into theregions more integrated economies. Shocks from the global crisis hit sub-Saharan Africamainly through the trade channel. Reflecting their greater openness to trade, the regionsmiddle-income economies like the South Africa were among the hardest hit.

4 World Economic Outlook: Update, IMF, Washington D.C., July 2010.

10


11/78


Table 2.1 Overview of World Economic Outlook Update July 2010 Projections

(Annual Growth Rates in percentage, unless otherwise specified)

11


12/78


2.5.2 Impact of the Financial Crisis on the Gambian Economy

A global crisis of this magnitude is bound to have adverse impact on any country. TheGambian economy was not an exception and witnessed a decline in exports, remittances,foreign investment, tourist arrivals, manufacturing production and wholesale and retail tradein 2008. However, thanks to bumper crops and very good performance by electricity,telecom and financial sectors, the real GDP growth at constant market prices improved from6% in 2007 to 6.3% in 2008, supported by a spectacular growth of 26.6% in agricultureGDP and a growth of 4.2% in services GDP despite decline by 1.2% in industrial GDP.

As per the revised estimates by the GBOS, despite a fall in tourists income and foreigninvestment and deceleration of agricultural growth, real GDP growth rate in 2009 isestimated to be 5.6%, aided by a growth of 9.8% in agriculture production, 2.1% in industryand 4.3% in services production.

.The Gambian economy is projected to expand by 5.0% in 2010, lower than 5.6% recorded in2009. Agricultural value added is estimated to grow at 4.3%, industrial value added at 5.1%

and services value added at 4.8%.

The reasons for no significant adverse impact of the global financial crisis on the Gambianeconomy include the following:

(a) Gambias financial sector has limited external liabilities and assets.(b) Although the economy has open door policy for external trade and investment and its

external current account has close links with the rest of the world, the remittances andgrants were not adversely affected significantly.

Monetary and Financial Sectors

Monetary policy remained mostly tight in 2009 with 9.3 percent growth in reserve money,

while broad money increased by 19.4 percent mainly due to 45.1 percent increase in time

deposits. The CBG maintained the rediscount rate at 16 percent, lowering it moderately to

14 percent in December. Credit to the private sector and public enterprises continued to

expand at a rapid pace (24.1 percent) in 2009, despite the increasing claims on government.

Two more commercial banks opened in 2009 and another in 2010, bringing the total number

of commercial banks to 14, leading to increased competition for depositors. The resultingpressures on operational and funding costs eroded banks profitability. Nonperforming loans

(NPLs), including restructured loans, for the banking system as a whole increased during

2009 and reached 12.3 percent of total loans at the end of December 2009. NPLs increased

further to 16.9 percent of total loans as of the end of March 2010. Banks have

correspondingly increased the provisioning for loan losses.

Inflation, Interest Rates and Exchange Rates

Due to prudent monetary policies adopted by the Central Bank of Gambia (CBG) and

effective liquidity management by it, and the introduction of two year government bonds in

the money market, the inflation rates have remained low and the Treasury bill yields and the

12


13/78


other interest rates have started declining since January 2010. Inflation is expected to remain

low below 4 percent for the year as a whole.

The dalasi stabilized against the U.S. dollar in 2009, trading within a narrow range of 26-

28 GMD/US$ throughout the year, with limited interventions by the CBG. In the first half of

2010, the dalasi continued to trade within a narrow range 26-29 GMD/US$.

Balance of Payments

The balance of payments was in surplus in 2009, in sharp contrast to a deficit in 2008, mainly

due to the large SDR allocation by the IMF and disbursements of budget support by the

World Bank and African Development Bank. Despite significant declines in tourism receipts

and remittances by 10 percent and 20 percent, respectively in 2009 over 2008, the current

account deficit, excluding official transfers, narrowed in 2009, due to lower world food and

fuel prices and a pick up in the re-export trade. FDI partly rebounded in 2009, following thelarge drop in 2008. As a result, net international reserves increased by USD 53.5 million

during 2009. At the end of December 2009, gross international reserves stood at

USD 186.0 million (or 6.4 months of current year imports of goods, c.i.f.).

Performance under the ECF-Supported Program

The Gambias three-year ECF5 arrangement and a new Poverty Reduction and Growth

Facility (PRGF) program were first approved by the IMF on Feb 21, 2007 for an amount of

SDR 14 million (45 percent of the quota). The IMF approved an augmentation of SDR 6.215

million on Feb 18, 2009, and at the time of the Sixth Review on Feb 19, 2010, approved aone-year arrangement extension of the ECF arrangement with an additional augmentation of

SDR 4.67 million to a total amount of SDR 24.88 million (80 percent of the quota).

The IMF funded ECF Program has three performance criteria in terms net domestic assets of

the CBD, net usable foreign exchange reserves and the basic fiscal balance. For the end of

March 2010, the ceiling on the cumulative net domestic assets of the CBG was met by a

comfortable margin, while the floor on cumulative net usable international reserves was met

by a narrow margin. However, the floor on the cumulative basic fiscal balance was missed by

GMD 88.5 million (0.3 percent of GDP), mainly reflecting the larger-than-expected fiscal

slippage during late 2009 (by GMD 145.2 million). Necessary corrective actions have sincebeen taken by the government.

5The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the

Funds main tool for medium-term financial support to low-income countries by providing a higher level of

access to financing, more concessional terms, enhanced flexibility in program design features, and more focused

streamlined conditionality. ECF-supported programs are based on country-owned poverty reduction strategies

adopted in a participatory process involving civil society and development partners and articulated in the

country's Poverty Reduction Strategy Paper (PRSP). ECF loans carry a zero interest rate until end-2011 and an

annual interest rate [of not more than 0.5 percent] thereafter, and are repayable over 10 years with a 5 -year

grace period on principal payments.

13


14/78


As regards structural benchmarks under the program, the Ministry of Finance has established

an Internal Audit Unit with core staff; the CBG has published the quarterly balance of

payments statistics for 2009:Q4 on time in March 2010; and there have been some

improvements in GDP estimates. It is expected that the 2007 audited government accounts

for 2007 will be submitted to the National Assembly by October 2010. To expedite thesubsequent audits of the 2008 and 2009 accounts, the NAO has begun preliminary reviews of

government transactions during those years.

Macroeconomic Outlook for 2011-2014

Our forecasts of key macro-economic variables for the years 2011-2015 take into account theglobal and domestic developments in the current year 2010. In addition, our projections are

based on the following presumptions:

(a) Government will continue with the prudent macroeconomic management.

(b) There will be no weather shocks;(c) There will be no other internal and external shocks, except volatile oil prices.(d) Tourists arrivals and travel incomes would return to normal levels;

(e) Remittances which contribute significantly to the construction of residentialpremises would continue to be buoyant;

(f) The inflows of Foreign Direct Investment which contribute to the trade activitiesand construction of tourists guest houses and hotels will be buoyant;

.(g) Donors support for the social sectors would continue at normal levels;

(h) There will be no change in the real exchange rate of the Gambian Dalasi in termsof US dollar during the projection period, implying that the rate of depreciation of Dalasi

per US dollar will be limited to the difference between domestic inflation and the averageinflation of the major trading partners of the Gambia.

3 Projection Techniques

Components of supply side of the GDP (i.e. sectoral value added) are projected on the basisof the historical growth rates adjusted for large variations, if any. Other variables in the

model are estimated mostly by elasticity with respect to nominal GDP at current marketprices. However, only individual items in different sub-models are projected by this method,while the aggregates are estimated on the basis of standard identities and balance equations tosatisfy consistency among various variables and partial equilibrium within the system.

3.1 Historical Growth Rates for the Real Sector

Basic methodology used is the standard time series analysis to estimate historical growthrates on the basis of three kinds of time trend growth rates viz., least squares time trendgrowth rate, exponential growth rate and simple average annual growth rate.

To start with, we estimate the average historical growth rate for each of 17 sub-sectors ofGDP (4 in agriculture, 4 in industry and 9 in services) viz. crops, animal husbandry, forestry

14


15/78


and fishing in agriculture; mining and quarrying, manufacturing, construction and publicutilities (comprising electricity, gas and water supply) in industry; and wholesale and retailtrade, transport and communications, financial services, real estate, public administration,health, education, and community, religious and personal services in the services sub-sector.Three kinds of growth rates, as indicated below, are estimated on the basis of the past timeseries data for 2000--20096 and presented in the Annex-2.

(a) Least-squares time trend growth rate

The IMF uses the Least-squares growth rates to forecast the country growth rates for theirWorld Economic Outlook (WEO) published twice in a year, wherever there is past data for atleast 9 years to permit a reliable calculation. The least-squares growth rate, r, is estimated byfitting a linear regression trend line to the logarithmic annual values of the variable in therelevant period. The regression equation takes the form

Ln Yt= a + bt

which is equivalent to the logarithmic transformation of the compound growth equation,

Yt= Yo (1 + r)t

In this equation, Y is the variable, t is time, r is the trend growth rate, Ln is the naturallogarithm operator, and a = log Yo and b = Ln (1 + r) are the parameters to be estimated.

Ifb* is the least-squares estimate ofb, the average annual growth rate, r, is obtained as

r = [exp(b*) 1] and is multiplied by 100 to express it as a percentage.

The calculated growth rate is an average rate that is representative of the availableobservations over the entire period. It does not necessarily match the actual growth rate

between any two years.

(b) Exponential growth rate

The exponential growth rate between two points in time for a variable is calculated from thefollowing equation

r= Ln (Yn /Y1)/(n-1)and is multiplied by 100 to express it as a percentage.

where Ynand Y1 are the last and first observations in the period, n is the number of years inthe period, and Ln is the natural logarithm operator. This growth rate is based on a model ofcontinuous and exponential growth between two points in time. It does not take into accountthe intermediate values of the series.

(c) Average of Annual Growth rates

6Years refer to calendar years from January to December. Data are obtained from the official sources such as

the Ministry of Finance, Central Bank of Gambia (CBG) and the Gambian Bureau of Statistics (GBOS). Data onbalance of payments are supplemented by data from the International Monetary Fund (IMF).

15


16/78


Average Annual Growth Rate () = GRi /nGRi = 100 * (Yi / Yi-1 -1) for i=1, 2, n for the years 1975,1976 ..... 2009.CV = 100 * SD/

SD = (GRi - ) / nWhere Ln stands for natural logarithm, GRi for growth rate for the i-th year, CV forcoefficient of variation and SD for standard deviation.

3.2 Base Line Time Trend Projections

On the supply side, the projections of sectoral value added for the years 2010-2013 are doneon the basis of the expected growth rates judged by the three types of growth rates asmentioned above. In general, for most of the variables, the exponential growth rate is lowerthan the least squares trend growth rate, which in turn is lower than the average annualgrowth rates. The same methodology is used to project the FISM and net indirect taxes(INDT, i.e. indirect taxes less subsidies and transfers).

GDPFC = GDPAGR + GDPIND + GDPSER

GDPBP = GDPFC + FISM

GDPMP = GDPBP + INDTAX

GNI = GDPMP+BOPINCOME

GNDI=GNI+BOPTRANSFER

GDPAGR= GDPCROPS + GDPHUSBANDRY+GDPFORESTRY+GDPFISHING

GDPIND=GDPMIN+GDPMANF+GDPUTILITY+GDPCONST

GDPSER=GDPTRADE+GDPHOTEL+GDPTRANS+GDPFIN+GDPREALEST+GDPPUBADMN+GDPHEALTH+GDPEDUCATION+GDPSOCIAL

As mentioned earlier, past data for the years 2000-2009 along with standard descriptive

statistics and the projections of sectoral GDP at both current and constant prices for the years

2010-2015 are presented in the Annex-2. The Tables also indicate the fitted regression lines

log (Yt) = + Time and log (Yt) = + log (GDPMPt) and the corresponding R

2

forestimation of the trend growth rates of the variables and the elasticity of the variable with

respect to the GDP at current market prices.

16


17/78


3.3 Projections of GDP for the years 2010 to 2014

In general, we use the following equation for forecasting:Yt = Yo (1 + r)

t

Where Yo = GDP in the base year 20090 = Base year 2009t = 1, 2, 3, 4, 5 for years 2010, 2011, 2012, 2013 and 2014

Nominal GDP at current market prices is projected by the following equation:GDPNt = GDPNt -1 (1 + 0.01 * GRt) (1+0.01*INFt)Where GDPNt -1 is the nominal GDP in the previous year, GRt is the real GDP growth rateand INFt is the projected inflation rate for year t.

3.4 Projections of other variables

Projections of other macroeconomic variables for government finance, balance ofpayments, and money supply are done on the basis of standard elasticity approach. Firstof all, a log linear regression equation is fitted by regressing natural logarithm of avariable on the natural logarithm of GDP at current market prices.

LnYt = + LnGDPt

where Yt is the value of a variable in year t and GDPt is the nominal GDP at current market

prices in year t for the years 2000 to 2009. It is clear that is the elasticity of the variable

with respect to GDP.

y,gdp = LnYt / LnGDPt

Projected growth rate for the variable for a year is estimated by the following relation:

Projected growth rate for a variable Y = y,gdp times GRgdp

Where y,gdp = elasticity of Y with respect to nominal GDP (which is constant) and

GRgdp = Growth rate of nominal GDP in year t (which may change over the years).

Annex-2 alsopresents the projections of all variables for the years 2010-2014 along with

resultant annual growth rates and the ratio of a variable to the GDP at the current marketprices. The table clearly indicates the projection method and the average growth rate with CVfor a variable for the projection period.

3.5 Test and Calibration Techniques

As mentioned earlier, trend growth rates are estimated by fitting exponential (semi-log)time trends and elasticity of a variable with respect to GDP at current market prices isestimated by fitting log-linear (double log) regression equations. The ordinary leastsquares (OLS) method is used for fitting these relations. The goodness of fit is judged byR2 which is observed to be very high for most of the variables (Annex-2).

17


18/78


4. Summary Results

The projections of real sectors for the years 2010-2014 are done on the basis of thehistorical growth rates as judged by the three kinds of growth rates as indicated above.However, it should be remembered that the historical growth rates for all the sectors areobserved to be volatile with high standard deviation (SD) and co-efficient of variation(CV). So the achievement of the historical growth rates will depend on the condition thatthe government will continue with ongoing structural reforms and policies which includethe following:

a. Renewed focus of agriculture, horticulture, modernizing andcommercializing agriculture, particularly the groundnut sector;

b. Exploration of new oil fields;

c. Encouraging free economic zones and export processing zones;

d. Creating enabling environment for public-private partnership and privateparticipation in all sectors of the economy.

e. Encouraging travel and tourism;

f. Encouraging FDI for development of physical infrastructure such asconstruction, real estate, sea ports, airports, transport and communications;

g. Strengthening financial and money markets and the supervision andregulation of commercial banks.

4.1 Real GDP Growth Rates

The projected sectoral GDP, sectoral growth rates and sectoral shares in GDP for theyears 2010-2014 are presented in the Appendix. Projections for major macroeconomicvariables are summarized in Tables 2.1 to 2.12. The Tables 4.1and 4.2 summarize theresults for GDP growth, sectoral GDP shares and savings-investment balance.

Despite global financial crisis and economic slowdown since 2008, the Gambianeconomy performed well in recent years with an average growth of 6 per cent per annum.The real GDP growth rate decelerated from 5.6 percent in 2009 to 5 percent in 2010. It is

projected that the real GDP growth will improve to around 5.5 percent during 2011-2014aided by agricultural growth around 4.3 percent, industrial growth in the range of 4.7 to

5.5 per cent and services growth in the range of 5.3 to 5.5 percent over the period..

Leading Sectors

In addition to tourism, sustained growth is expected to come from: (i) transport andtelecommunications, particularly the mobile revolution; (ii) construction, financed by FDIin the hotel sector and by remittances in residential houses; (iii) banking and insurance,(iv) social sectors funded by donors and (v) the agricultural sector, benefiting from thethrust of government policy to encourage agriculture investment for poverty reduction andemployment generation and to ensure food security.

18


19/78


Table-4.1: Trends of Sectoral GDP Growth Rates and Shares in 2010-2014 (in %)I T E MS 2008 2009 2010 2011 2012 2013 2014

Actual Actual Est. Proj. Proj. Proj. Proj.

Growth Rates (%)

GDP const 1976/77 FC 6.3 5.6 5.0 5.3 5.4 5.5 5.6

Agriculture and allied 26.6 9.8 4.3 4.3 4.3 4.3 4.3Industry -1.2 2.1 5.1 4.7 5.1 5.3 5.5

Services 4.2 4.3 4.8 5.3 5.4 5.6 5.7

Sectoral Composition (%)

GDP AT 1976/77 FC 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Agriculture and allied 25.3 26.3 26.2 26.0 25.8 25.6 25.4

Industry 13.4 13.0 13.1 13.0 13.0 13.1 13.1

Services 61.3 60.7 60.7 60.9 61.1 61.3 61.6

4.2 Savings, Investment and Consumption

Given low per capita income and high poverty ratios, the domestic savings ratio (to GDP) isvery low in the Gambia and is expected to decline from 5.1 percent in 2010 to 4.7 percent in2014. Most of the savings will be generated by the government sector.

Gross domestic investment ratio (to GDD) is also expected to decline from 16.3 percent in2010 to 14.6 percent due to decline in private investment. Investment will be mostly financed

by inflows of foreign capital and the remittances sent by the Gambians living abroad.

Table-4.2: Trends of Savings and Investment Ratios in 2008-2014 (in percentage)I T E MS 2008 2009 2010 2011 2012 2013 2014

Actual Actual Est. Proj. Proj. Proj. Proj.

Total consumption 94.0 94.1 94.9 95.1 94.8 95.0 95.3Private consumption 84.0 83.5 83.5 83.5 83.0 83.0 83.0

Government consumption 10.0 10.6 11.4 11.6 11.8 12.0 12.3

Gross domestic savings 6.0 5.9 5.1 4.9 5.2 5.0 4.7

Private domestic savings 0.9 0.9 2.0 1.2 0.9 0.0 -1.0

Govt domestic savings 5.1 4.9 3.1 3.7 4.3 5.0 5.7

Gross domestic investment 12.4 16.4 16.3 15.7 15.5 15.2 14.6

Private investment 8.0 9.7 12.6 11.6 11.0 10.2 9.1

Govt investment 4.4 6.7 3.7 4.1 4.5 5.0 5.5

Investment-Savings Gap 6.4 10.5 11.2 10.8 10.4 10.2 9.9

Private Sector 7.1 8.8 10.6 10.4 10.2 10.2 10.1

Govt Sector -0.7 1.8 0.6 0.4 0.2 0.0 -0.2

Incremental Capital/OutputRatio (in percentage)

2.0 3.0 3.2 3.0 2.9 2.7 2.6

Notes:

(1) Total Consumption = Private Consumption + Government Consumption(2) Private Consumption is estimated by past trends.(3) Government Consumption = Current expenditure of the government.(4) Gross Domestic Savings = GDP at current market prices minus Total Consumption(5) Government Savings = Domestic Revenue minus Government Consumption,(6) Private Savings = Gross Domestic Savings minus Government Savings.(7) Gross Domestic Investment = Gross Domestic Savings minus BOP C/A Balance(8) Government Investment = Government Capital Expenditure

(9) Private investment = Gross Domestic Investment minus Government Investment.(10) Incremental Capital Output Ratio (ICOR) = Gross Domestic Investment / Real GDP GR

19


20/78


4.3 Inflation Rate during 2011-2014

Although global prices of oil and food products have registered significant declines fromtheir highest levels in 2008, it is assumed that high prices of food and petroleum productswill continue to put pressures on prices and cost of living in the Gambia as Gambia ishighly dependent on the imports of food and petroleum products. We also believe that fora developing country like Gambia, slightly higher rate of inflation than observed in thedeveloped countries is necessary to induce work efforts and productive investment.Inflation rate in terms of CPI is projected to be 5% during 2011-2014 compared with anaverage rate of 7.1% registered in 2000-2009.

Table 4.3 Projected Inflation Rates during 2010-2014 (in percentage)

I T E MS

2000-

2009 2009 2010 2011 2012 2013 2014CPI Inflation (average) 7.1 4.5 4.0 5.0 5.0 5.0 5.0

GDP Deflator Inflation 8.5 5.9 6.9 7.4 7.2 7.2 7.3

Ave Exchange Rate(Dalasi/US$)

23.8

26.7 27.5 28.3 29.2 30.0 30.9

Appreciation (-)/Depreciation (+)

9.2 19.4 3.0 3.0 3.0 3.0 3.0

4.4 Rate of currency depreciation during 2010-2014

European Union, India and China had been the main trading partners of the Gambia in

recent years. It is assumed that average producers prices inflation in these countries willbe around 2 percent in future. Accordingly, it is assumed that Dalasi would depreciate by3 per cent (equal to the difference between domestic inflation at 5 percent and worldinflation at 2 percent) in terms of US dollar during 2011-2014 to keep the real effectiveexchange rate unchanged.

Table-4.4: Exchange Rate (Dalasi per US dollar)

Base

period

Dalasi/

US$

Month/

Year

Dalasi/

US$

Proj./

Year

Dalasi/

US$

2000 12.79 Aug 2009 26.63 2010 27.48

2001 15.69 Sep 2009 26.95 2011 28.30

2002 19.92 Oct 2009 26.91 2012 29.15

2003 28.53 Nov 2009 26.93 2013 30.03

2004 30.03 Dec 2009 26.94 2014 30.93

2005 28.58 Jan 2010 26.94

2006 28.07 Feb 2010 26.94

2007 24.88 Mar 2010 27.01

2008 22.35 Apr 2010 27.25

2009 26.68 May 2010 28.73

Average 23.75 June 2010 27.00

20


21/78


21


22/78


4.5 Balance of Payments during 2009-2013

As explained earlier, we estimate elasticity of exports, imports and other items in the BOPcurrent and capital account by fitting log-linear equations with GDP as the independentvariable. Projected growth rate (GR) of an item is estimated by multiplying the estimatedelasticity by the growth rate of GDP in terms of US$. Then the standard BOP accountingframework is used to estimate the trade balance, current account balance, capital andfinancial balance, overall BOP balance and build up of foreign exchange reserves duringthe projection period 2009-2013.

Results indicate that the prospects of both exports and re-exports are gloomy and thegrowth rate would decelerate in future. Tourism exports and remittances are expected tocontinue their buoyancy in the medium and long term. On the capital account FDI willcontinue to rise. The results are presented in the Tables 2.13 to 2.20 in the Annex-2 andsummarized in Tables 4.5-A to 4.5-B below.

4.5-A Balance of Payments as ratio of GDP at current prices (in percentage)

Year/Items

Exp Imp Goods

Bal

Service

Balance

Income

Balance

Transfer

Balance

Govt.

Trans

Pvt.

Trans

CAB

2007 11.1 31.8 -20.4 8.0 -5.7 8.7 0.9 7.8 -9.32008 8.5 30.0 -15.2 6.1 -4.5 7.1 1.1 6.0 -6.42009 9.8 30.8 -21.0 6.0 -4.5 8.9 3.5 5.4 -10.52010 est. 9.6 30.6 -21.0 5.9 -4.0 7.9 2.4 5.5 -11.22011 proj. 9.4 30.3 -20.9 5.9 -3.7 7.8 2.4 5.5 -10.82012 proj. 9.2 30.1 -20.9 6.2 -3.2 7.6 2.2 5.4 -10.42013 proj. 9.0 29.9 -20.9 6.4 -3.2 7.5 2.1 5.4 -10.2

2014 proj. 8.7 29.6 -20.9 6.4 -3.0 7.7 2.1 5.6 -9.9

4.5-B Balance of Payments as ratio of GDP at current prices (in percentage)

Year/Items

CAPFIN

PvtCap

FDI Portfolio Other Fin

BOPBAL

EXCREV

Mnthof M

XGS

2007 14.9 9.6 9.8 -0.1 4.5 5.6 17.1 6.5 29.62008 12.5 5.8 6.8 -1.0 3.9 6.1 11.2 4.5 24.22009 16.3 7.1 7.5 -0.4 5.7 5.8 19.2 7.5 27.72010 est. 9.7 5.9 6.1 -0.1 2.5 -1.5 17.2 6.7 27.42011 proj. 10.5 6.1 6.0 -0.1 2.7 -0.3 16.0 6.3 27.1

2012 proj. 10.4 5.8 5.8 -0.1 3.0 0.0 14.9 6.0 26.82013 proj. 10.3 5.7 5.5 0.0 3.3 0.1 13.9 5.6 26.52014 proj. 11.6 5.3 5.3 0.0 5.1 1.7 14.7 5.9 26.2

External Trade

Projections indicate that in line with GDP growth, growth of exports of goods andservices is expected to be largely driven by tourism, groundnuts and non-traditionalagricultural exports. Re-exports are projected to grow at a slower rate than in the past asthe country loses some of its comparative advantage in liberal trade and tariff policies and

ports infrastructure facilities to the neighboring countries trade regimes as a result of

tariff harmonization in the ECOWAS. Nominal merchandise export growth is expected todecelerate from 8.5 percent in 2009 to an average of 4.7 percent over the medium-term

22


23/78


2010-2014 due to poor performance of re-exports. Merchandise imports are projected togrow at an average annual rate around 6.4 percent over the medium term 2010-2014compared with average growth of 6.1 per cent recorded in the past decade 2000-2009.

Goods Balance

Consequently, goods deficit is expected to remain almost stable around 21% of GDP.

Service and Income Balance

Service surplus as percentage of GDP is expected to improve from 5.9% in 2010 to 6.4%in 2014 due to revival of tourist arrivals. Income deficit as percentage of GDP is alsolikely to improve from (-) 4% to (-) 3% over the period.

Transfer

Official grants as a percentage of GDP at current market prices is expected to declinemarginally from 2.4 percent in 2010 to 2.1 percent in 2014, while private transfers as a

percentage of GDP is expected to remain stable around 5.5 percent over the periodcontributed by sustained growth in remittances sent by the Gambians living abroad.

Current account deficit

Current account deficit including official grants is projected to improve from (-) 11.2percent of GDP in 2010 to (-) 9.9 percent of GDP in 2014 mainly due to improvements inservice and income balance.

Capital Flows

Net capital and financial lows as a percentage of GDP at current market prices is expectedto improve continuously from 9.7 percent in 2010 to 11.6 percent in 2014 due to sustainedgrowth in both debt and non-debt creating financial flows.

Foreign Investment

Significant foreign investments are expected to continue in the tourist sector which is amajor beneficiary of FDI and a key driver of growth. Although FDI inflows to Gambia

are projected to remain robust due to improved infrastructure, lower tax regime and muchopen economy, the ratio of FDI inflows to GDP would decrease steadily from 6.1 percentin 2010 to 5.3 percent in 2014 as a result of the lower growth of FDI inflows than theGDP growth rate.

Foreign Exchange Reserves

There will be a modest build up of foreign exchange reserves from US$177.6 million(equivalent to 6.7 months of imports and 17.2 percent of GDP) in 2010 to US$201.4million (equivalent to 5.9 months of imports and 14.7 percent of GDP) in 2014.

23


24/78


4.6 Fiscal Situation during 2010-2014

Basically, elasticity approach with respect to GDP at current market prices is used toforecast major components of revenues and expenditures. All components of taxes, non-tax and expenditures are observed to be highly elastic (i.e. elasticity exceeding unity) withrespect to GDP at the current market prices. Results for fiscal projections are presented inthe Tables 2.21 to 2.32 and summarized in Tables 4.6-A to 4.6-C.

4.6-A Government Finance as ratio of GDP at current prices (in percentage)Year/Items

Total Exp. Current

Exp.

Interest

Payments

Capital

Exp.

Externally

Funded

Net

Landing2007 17.7 12.6 4.0 4.7 3.8 0.42008 18.0 13.1 3.1 4.4 2.2 0.52009 20.9 13.7 3.0 6.7 3.9 0.62010 est. 17.9 14.0 2.6 3.7 1.1 0.22011 proj. 18.6 14.3 2.7 4.1 1.2 0.3

2012 proj. 19.4 14.6 2.8 4.5 1.2 0.32013 proj. 20.3 14.9 2.9 5.0 1.3 0.42014 proj. 21.2 15.2 2.9 5.5 1.4 0.5

4.6-B Government Finance as ratio of GDP at current prices (in percentage)Year/Items

Receipts Domestic

Revenue

Tax Nontax Grants Fiscal

Balance2007 17.8 16.9 14.8 2.1 0.9 0.12008 15.9 15.1 13.8 1.4 0.7 -2.22009 17.9 15.6 14.1 1.4 2.3 -3.12010 est. 16.0 14.5 12.3 2.2 1.5 -1.92011 proj. 16.8 15.3 13.0 2.2 1.5 -1.9

2012 proj. 17.6 16.1 13.8 2.3 1.5 -1.92013 proj. 18.4 17.0 14.7 2.3 1.4 -1.82014 proj. 19.4 18.0 15.6 2.4 1.4 -1.8

4.6-C Government Finance as ratio of GDP at current prices (in percentage)Year/Items

BasicBalance

PrimaryBalance

ExternalBorrowing

Amorti-zation

Domestic

Borrowing

Dom Debt

Outstand.2007 3.0 7.0 2.9 -2.1 -2.5 22.12008 -0.7 2.4 1.5 -1.3 2.6 25.72009 -1.5 1.5 2.4 -1.9 1.4 24.02010 est. -2.3 0.3 2.2 -1.2 0.2 22.02011 proj. -2.2 0.5 2.9 -1.2 -0.3 19.7

2012 proj. -2.1 0.7 2.7 -1.2 -0.4 17.42013 proj. -1.9 0.9 2.5 -1.2 -0.6 15.22014 proj. -1.8 1.1 2.3 -1.2 -0.8 13.0

Fiscal Performance

Domestic revenue collection as percentage of GDP ranged from 9.2% to 16.9% during2000-2009 and is expected to decline to 14.5% in 2010 and is projected to increasecontinually to 18% in 2014. Both direct and indirect taxes and non-tax collections areexpected to maintain their buoyancy over time. However, grants as a percentage of GDPis expected to show declining trend. Total revenue and grants as percentage of GDP are

projected to increase from 16 percent in 2010 to 19.4 percent in 2014.

24


25/78


There will be pressures on total expenditures and net lending which is expected to remainabove the total revenue and grants leading to overall fiscal deficit. Overall fiscal deficitwill be contained within 1.8 percent of GDP and will be manageable over the mediumterm. However, it will be difficult to satisfy the zero basic balance required under the IMFECF funded Program support for the Gambia.

In our opinion, the concept of zero basic balance may not be appropriate to judge fiscal

discipline. Zero basic balance implies that we need to finance both current and capital

expenditure by the current receipts. That is a too restrictive criterion for a developing and

small economy like the Gambia which has limited financial and physical resources. The

Budget Management and Fiscal Responsibility Acts of most of the developing countries

require that the revenue receipts (taxes and non-taxes) should be able to finance at least the

current expenditure, and the government can finance capital expenditure by borrowing (either

internal or external depending on debt servicing conditions over time).

In the recent past, the Gambia has been able to maintain high growth rates with low inflation

and stability in exchange rates despite difficult global economic situation. There have also

been declining trends of domestic and external debt and interest payments as percentage of

GDP. After the multilateral debt relief, the Gambia has never defaulted on debt servicing

obligations. Given these trends, we do not anticipate any problems for debt servicing and

sustainability of debt over medium and long term. So we do not see any specific problem

with the negative basic balance which is basically the overall fiscal deficit (after excluding

grants). In fact as evidenced by international best practices, an overall fiscal deficit at 3

percent of GDP may be allowed for the Gambian budget and the concept of basic balance

may be dropped in future programs.

4.7 Money Supply and Demand

Detailed projections of money supply and demand are given in Tables 2.33 to 2.36 inAnnex-2 and summarized in Tables 4.7-A to 4.7-D below.

The growth rate of money supply is expected to be 18.1 percent in 2010 and is projectedto increase to around 18.8 percent during 2011-2014 contributed by a growth of currency

by around 14.3 percent and growth of deposits by 19.5 percent. As a percentage of GDP,

money supply is expected to increase continuously from 49 percent in 2010 to 66 percentin 2014.

On the demand side, growth is projected to be contributed by a growth of 19.1 percent inNet Foreign Assets and a growth of 18.6 percent in Net Domestic Assets. Governmentcredits are expected to rise by 23.7 percent and private credits by 16.2 percent over themedium term.

The velocity of money supply is projected range in between 1.5 to 2 percent and moneymultiplier is projected to range around 3 percent over the medium term.

25


26/78


4.7-A Growth Rates of Money Supply (in percentage),

And Money Multiplier and Velocity

Year/Items

GR of M2

(%)

GR of

Currency

GR of

Deposit (%)

GR of RM

(%)

Velocity Moneymultiplier

2007 6.7 -12.8 13.1 4.0 2.5 2.82008 18.4 8.5 20.9 4.0 2.3 3.22009 20.6 4.0 24.4 28.0 2.2 3.02010 est. 18.1 13.8 18.9 17.3 2.0 3.02011 proj. 18.9 14.4 19.8 18.0 1.9 3.02012 proj. 18.7 14.3 19.5 17.8 1.8 3.02013 proj. 18.8 14.2 19.5 17.8 1.6 3.12014 proj. 18.8 14.3 19.5 17.9 1.5 3.1

4.7-B Growth Rates of Money Demand (in percentage)Year/Items

NFA NDA Credit Creditsto Govt.

PrivateCredits

Forexcredits

Otheritems

2007 -6.3 22.7 -1.4 -24.7 13.3 0.0 -106.52008 -4.9 40.4 25.5 96.3 -2.6 0.0 1265.42009 30.0 14.6 17.3 20.0 22.8 -100.0 -5.92010 est. 18.6 17.8 19.0 23.0 15.7 0.0 6.52011 proj. 19.3 18.6 19.9 24.0 16.4 0.0 4.82012 proj. 19.1 18.5 19.8 23.7 16.2 0.0 2.02013 proj. 19.1 18.5 19.9 23.7 16.2 0.0 -1.72014 proj. 19.1 18.6 20.1 23.7 16.2 0.0 -7.3

4.7-C Money Supply and Demand as ratio of GDP at current prices (in percentage)Year/

Items

Broad

Money M2

Currency Deposit Reserve

Money

NFA NDA

2007 40.3 8.2 32.0 14.5 19.6 20.72008 42.6 8.0 34.7 13.5 16.6 26.02009 45.8 7.4 38.4 15.4 19.3 26.52010 est. 49.1 7.6 41.5 16.4 20.7 28.42011 proj. 52.8 7.9 44.9 17.5 22.4 30.42012 proj. 56.8 8.2 48.6 18.6 24.1 32.62013 proj. 61.0 8.4 52.6 19.9 26.0 35.02014 proj. 65.6 8.7 56.9 21.2 28.1 37.5

4.7-D Money Demand as ratio of GDP at current prices (in percentage)Year/Items

NFA NDA Credit Creditsto Govt.

PrivateCredits

Forexcredits

Otheritems

2007 19.6 20.7 20.4 5.8 13.8 0.9 0.22008 16.6 26.0 22.9 10.2 12.0 0.8 3.02009 19.3 26.5 24.0 10.8 13.1 0.0 2.52010 est. 20.7 28.4 25.9 12.1 13.8 0.0 2.52011 proj. 22.4 30.4 28.1 13.6 14.5 0.0 2.32012 proj. 24.1 32.6 30.5 15.2 15.3 0.0 2.22013 proj. 26.0 35.0 33.1 17.0 16.0 0.0 1.92014 proj. 28.1 37.5 35.9 19.1 16.9 0.0 1.6

26


27/78


4.8 Public Debt and External Debt Situation

Detailed projections of public debt and external debt situationare given in Tables 2.37 to2.40 in Annex-2 and summarized in Tables 4.8-A to 4.8-C below.

Both public debt and external debt as percentage of GDP are expected to decline in themedium term and to remain sustainable. Total debt service (repayment of principal plusinterest payments) as percentage of revenue is expected to decline from 28.8 percent in2010 to 20.6 percent in 2014, while external debt service as percentage of gross exports isexpected to decline from 6.7 percent to 5.3 per cent over the period.

4.8-A-External Debt as percentage of GDP at current market prices (%)

Year/Items

ExternalDebt

Long termExt Debt

Ext Debtservice

Amortization Interestpayments

2007 36.2 35.5 3.2 2.1 1.1

2008 31.4 30.2 2.0 1.3 0.72009 37.1 35.2 2.6 1.9 0.6

2010 est. 35.1 33.4 1.8 1.2 0.6

2011 proj. 33.6 32.0 1.8 1.2 0.6

2012 proj. 32.9 31.4 1.8 1.2 0.6

2013 proj. 32.1 30.7 1.8 1.2 0.6

2014 proj. 31.2 29.8 1.8 1.2 0.6

4.8-B-Public Debt and Debt Service as percentage of GDP at current MP (%)Year/Items

PublicDebt

ExternalDebt

DomesticDebt

Debt service Ext DebtService

Dom DebtService

2007 58.4 36.2 22.1 6.9 3.2 3.72008 57.1 31.4 25.7 4.8 2.0 2.8

2009 61.1 37.1 24.0 5.1 2.6 2.6

2010 est. 57.2 35.1 22.0 4.1 1.8 2.3

2011 proj. 53.3 33.6 19.7 4.0 1.8 2.2

2012 proj. 50.3 32.9 17.4 4.0 1.8 2.2

2013 proj. 47.3 32.1 15.2 4.0 1.8 2.3

2014 proj. 44.1 31.2 13.0 4.1 1.8 2.3

4.8-C-Debt Service Ratios (%)

Year/Items

Total DebtService/Revenue

ratio

Dom DebtService /Revenue

ratio

Ext DebtService/Revenue

ratio

Ext DebtService/ XGS

ratio

Ext DebtService/ Forex

ratio

2007 41.0 22.0 19.0 10.8 18.72008 29.0 18.6 10.4 6.5 14.02009 29.4 16.7 12.7 7.1 10.3

2010 est. 28.8 16.1 12.7 6.7 10.72011 proj. 25.8 14.6 11.2 6.3 10.72012 proj. 23.5 13.6 9.9 5.9 10.72013 proj. 22.0 13.3 8.7 5.6 10.72014 proj. 20.6 12.9 7.7 5.3 9.4

27


28/78


5 Concluding Observations

5.1 Main Results

Projections of key macroeconomic variables for the medium term lead to the followingconclusions:

(i) The Gambia will be able to sustain moderate growth rate around 5.4 percent in themedium term supported by broad based growth in agriculture, industry and services.However, good monsoons and sustained growth rate in agriculture will be a key factor forsustaining growth. The Gambian economy generally does well when the agriculture sector

performs well.

(ii) Inflation rate at 5 percent and exchange rate depreciation around 3 percent will bemanageable and will provide necessary incentives for work efforts and exports.

(iii) Given the low per capita income and small size of the economy, domestic savingswill continue to remain at low levels and the economy will depend on external capital tofinance domestic investment for sustaining growth and employment.

(iv) Current account balance will remain in deficits and will be financed by net surplus incapital and financial accounts throughout the projection period 2010-2014 due to ongoinginvestment projects supported by donors, and the absorption of the substantial non-debtcreating capital flows in construction, telecommunications, hotels and financial sectors.

(v) Current account deficit including official grants is projected to improve from (-) 11.2

percent of GDP in 2010 to (-) 9.9 percent of GDP in 2014 mainly due to improvements inservice and income balance.

(vi) The overall fiscal balance of the government will remain in deficit but will bemanageable. Both the domestic debt and external debt as percentage of GDP are expectedto decline over the medium term. The debt service ratios to revenue will also havedeclining trends.

(vii) There will be need for exceptional financing due to uncertain situation for bothexternal loans and grants over the medium term.

5.2 Development Prospects and Challenges

As reported earlier, despite the current unprecedented global financial crisis and economicrecession in the developed countries and slowdown in the emerging developingeconomies, Gambias medium term prospects for sustained growth and poverty reductionare considered to be bright, but vulnerable to both internal and external risks. With itsfertile land accompanied by plenty of water and sunshine, newly discovered oil resources,talented people and strategic geographical location in the Western Africa to support otherlandlocked countries in the hinterland such as Guinea Bissau, Guinea and Casamanceregion of Senegal, Gambia has a natural advantage to achieve growth rates in the range of5 to 5.5 per cent in the medium term 2010-2014. But, there will be pressures on both

domestic finances and external balance of payments in the medium term.

28


29/78


The main challenge will be to ensure fiscal sustainability and stability in prices and realexchange rates by adopting strict fiscal and monetary discipline and sound managementof public debt and external assistance. In addition to these policy risks, medium termoutput is vulnerable to unfavorable weather shocks in the domestic sector and risk ofsharp upward trends of global prices of petroleum and food products and downward trendof export prices of its traditional and non-traditional agricultural products.

An important development challenge is to use government revenues to attain higher

growth and at the same time to tackle the problems of poverty and inequity. In this

respect, the ongoing efforts on the Public Financial Management Reforms (PFMR) and

the intentions of the government to introduce Program Budgeting within the Medium

Term Expenditure Framework (MTEF) are in the right directions.

Although the concerned ministries have the major responsibilities for achieving MDG

targets and the newly constituted Ministry of Economic Planning and Industrial

Development will have responsibility to assist the budgetary agencies for the preparation

of strategic plans and Public Investment Programs (PIPs), the Ministry of Finance, being

the coordinating and leading Ministry for budgeting, has special responsibilities to

provide necessary advice and directions to other ministries on Program Budgeting.

The core challenge for the government budget is how to adopt long-term MDG targets

within the short-term and medium-term national budget constraints and priorities. MDG

strategies are both needs basedand resource constrained. The national budget must

take care of poverty reduction strategies as a guide to MDG action, and set out clear

priorities for pro-poor public expenditure and investment plans based on a realistic

assessment of the available resources and the needs of other sectors.

29


30/78


Selected References

Budget Directorate (2010) Budget Call Circular for the 2011 Budget, pp.1-21, Ministryof Finance (MOF), The Republic of the Gambia, July 2010.

Das, Tarun (2009) Inception Report- Macroeconomic Analysis, Modeling andProjections, pp.1-57, Institutional Support Project for Economic FinancialGovernance (ISPEFG), The Department of State for Financial and Economic Affairs(DOSFEA), the Gambia, Quadrangle, Banjul, January 2009.

Epstein, Gerald and Ilene, Grabel (2007) Training Module No.3: Financial Policy,International Poverty Centre (IPC), Brazil, July 2007.

Filho, Alfredo Saad (2007) Training Module No.2: Monetary Policy, InternationalPoverty Centre (IPC), Brazil, July 2007.

International Monetary Fund (2010a) The Gambia- Building on the Gambia RevenueAuthority (GRA) Success- A Tax Reform Program anchored on VAT, Report prepared

by the IMF TA Mission comprising David Kloeden (Head of TAM), Patriick Fossat andMaureen Kidd, pp.1-62, IMF, June 2010.

International Monetary Fund (2010b) The World Economic Outlook Update, July2010, IMF, Washington D.C.

International Monetary Fund (2010c) The Gambia- Strengthening BudgetaryManagement and Sequencing Reforms, Report prepared by the IMF TA Mission

comprising Duncan Last (Head of TAM), Florence Kuteesa and Camille Caramaga, pp.1-51, IMF, July 2010.

International Monetary Fund (2010d) The Gambia- Staff Report for the 2010 ArticleIV Consultation, pp.1-46, IMF, 12 July 2010.

Ministry of Finance, The Republic of the Gambia (2010) Draft Memorandum ofEconomic and Financial Policies (MEFP), submitted by the Government of the Gambia,16 July 2010, PP.1-16.

Statistics and Special Studies Division (SSSD (2010a) The Gambia Monthly Economic

Bulletin,pp.1-38, Ministry of Finance (MOF), The Republic of the Gambia, June 2010.

Statistics and Special Studies Division (SSSD) (2010b) Macroeconomic Frameworkand Fiscal Envelope for the Budget 2011, pp.1-24, Ministry of Finance (MOF), TheRepublic of the Gambia, July 2010.

Weeks, John and Shruti Patel (2007) Training Module-1: Fiscal Policy,International Poverty Centre (IPC), Brazil, July 2007.

30


31/78



ANALYTICAL

FRAMEWORK

, MODEL

STRUCTURE

AND

SPECIFICATIONS

,DATA BASE, TEST AND CALIBRATION TECHNIQUES,COMPUTER ALGORITHMSAND BASE LINE PROJECTIONS

TARUN DASMACROECONOMIC ADVISER

Statistical Annex Tables

Annex-1:

Variables and Identities Used in the Model-Descriptions and Units

Annex-2:

Data Base for 2000-2009,Descriptive Statistics,Exponential Trends log (Yt) = + Time

Log-Linear Functions log (Yt) = + log (GDPMPt)Projections for 2010-2014Growth Rates for the Years 2001-2014Ratios to GDP at current MP for the Years 2000-2014

31


32/78


Annex-1

Variables used for the Upgraded Nepal Macroeconomic Model

SerialNo.

Variable Description Units Type

1 Year 2000 to 2014 Exogenous

2 Time 1 to 15 with Year 2000=1 Exogenous

3 Population Population Million Endogenous

Real Sector and National Accounts Block(Million Dalasi)

4.3

GDPCSTMP Overall GDP at constant 2004 market price=GDPFC + FISM + INDTAX

Million Dalasi Identity

5.4

AGR Agriculture GDP at constant 2004 factor cost=Crops+Livestock+Forestrty+Fishing


6.Crops

Crops GDP at constant 2004 factor cost Million Dalasi Endogenous

7.

Livestock

Livestock GDP at constant 2004 factor cost Million Dalasi Endogenous

8.Forestry

Forestry GDP at constant 2004 factor cost Million Dalasi Endogenous

9.Fishing

Fishing GDP at constant 2004 factor cost Million Dalasi Endogenous

10.5

IndustryIndustry GDP at constant 2004 factor costMining + Manufacturing + Utility + Construction


11.

Mining

Mining GDP at constant 2004 factor cost Million Dalasi Endogenous

12.

Manf

Manufacturing GDP at constant 2004 factor cost Million Dalasi Endogenous

13.

Utility

Utility GDP at constant 2004 factor cost Million Dalasi Endogenous

14.

Construction

Construction GDP at constant 2004 factor cost Million Dalasi Endogenous

15.6

ServicesServices GDP at constant 2004 factor cost= Trade + Hotels + Transport + Financial + RealEstate + Public Administration +Health + Education+ Community services


1

6. Trade

Wholesale and retail trade GDP at constant 2004

factor cost

Million Dalasi Endogenous

17. Hotels

Hotels and restaurants GDP at constant 2004 factorcost


18. Transport

Transport & communications GDP at constant 2004factor cost


19. Financial

Financial GDP at constant 2004 factor cost Million Dalasi Endogenous

20. Real Estate

Real estate GDP at constant 2004 factor cost Million Dalasi Endogenous

2 Pub Admn Public administration GDP at constant 2004 factor Million Dalasi Endogenous

32


33/78


cost

22. Health

Health services GDP at constant 2004 factor cost Million Dalasi Endogenous

2

3. Education

Education services GDP at constant 2004 factor

cost


24. Community

Community services GDP at constant 2004 factorcost


25.7

GDPFCOverall GDP at constant 2004 factor cost=Agriculture + Industry + Services


26.8

FISMFinancial intermediary services at constant 2004price


33


34/78


27.9

GDPBPOverall GDP at constant 2004 basic price=GDPFC + FISM


28.1 INDTAX

Indirect tax less subsidies at constant 2004 price Million Dalasi Endogenous

29.1 GDPCSTMP

Overall GDP at constant 2004 market price=GDPBP + INDTAX


30.1 GDPCURMP

Overall GDP at current market prices Million Dalasi Identity

3

1.1 GNI

Gross national income at current market prices

=GDPCURMP + BOPINCOME


32.1 GNDI

Gross national disposable income at current prices= GNI + BOPTRANSFER


33 ExRate Exchange rate of Dalasi per US dollar Dalasi/US$ Endogenous

34 GDPMP$ GDP at current market price in terms of US dollar Million US$ Derived

35 Population Population Million Endogenous

36 PCGDP$ Per capita GDP in terms of US dollar US dollar Derived

37 CPI Consumer price index with base 2004=100 Index Endogenous

Balance of Payments Block (Million US Dollar)38 GB Goods Balance=Exports-Imports Million US$ Identity

39 Exp Goods exports, fob=DomExp+Reexports Million US$ Identity

40 DomExp Domestic exports Million US$ Endogenous

41 Reexports Reexports Million US$ Endogenous

42 Imp Goods imports, fob=Domuse+Reexports Million US$ Identity

43 Domuse Imports for domestic use Million US$ Endogenous

44 Reexports Imports for Reexports Million US$ Endogenous

45 Service Net service Million US$ Identity

46 Travel Travel services Million US$ Endogenous

47 Others Other services Million US$ Endogenous

48 Income Net income Million US$ Endogenous

49 Transfer Transfer net=Official+Private+Remittances Million US$ Identity50 Official Official grants Million US$ Endogenous

51 Private Private transfer Million US$ Endogenous

52 Remittance Remittances Million US$ Endogenous

53 CAB Current account balance= GB+Service+Income+Transfer

Million US$ Identity

54 CapFinBal Capital and Financial balance=Pvt Capital + Other Investment + Other Fin

Million US$ Identity

55 PvtCap Private capital = FDI + Portfolio Million US$ Identity

56 FDI Foreign direct investment Million US$ Endogenous

57 Portfolio Portfolio investment Million US$ Endogenous

58 Other Inv Other investment = Loans- Amortization Million US$ Identity

59 Loans Disbursement of loans Million US$ Endogenous60 Amortization Repayment ofprincipal Million US$ Endogenous

34


35/78


61 Other Fin Other financial inflows Million US$ Endogenous

62 BOPBAl Overall BOP Balance= CAB + FinCapBal Million US$ Identity

63 ExRes Foreign exchange reserve Million US$ Derived

35


36/78


Government Finance Block (Million Dalasi)

64 Receipts Total government receipts = Revenue + grants Million Dalasi Identity

65 Revenue Domestic revenue = Tax + Non-tax Million Dalasi Identity

66 Tax Total Taxes = Direct Tax + Indirect Tax Million Dalasi Identity67 Dir Tax Direct tax = Personal + Corporate + Other tax Million Dalasi Identity

68 Personal Personal income tax Million Dalasi Endogenous

69 Corporate Corporate income tax Million Dalasi Endogenous

70 Other tax Other direct taxes Million Dalasi Endogenous

71 Ind Tax Indirect taxes = Domestic + Customs Million Dalasi Identity

72 Domestic Domestic indirect tax (VAT, excise, sales etc.) Million Dalasi Endogenous

73 Customs Customs duties Million Dalasi Endogenous

74 Nontax Nontax duties Million Dalasi Endogenous

75 Grants Grants Million Dalasi Endogenous

76 ExpNL Total expenditure and net lending=Curr Exp + Cap Exp and NL


77 Curr Exp Current expenditure= Wages + Other Curr + Interest


78 Wages Total emoluments (wages, salaries, allowances Million Dalasi Endogenous

79 Other cur Other current expenditure Million Dalasi Endogenous

80 Interest Interest payments = ExtInt + DomInt Million Dalasi Identity

81 ExtInt Interest payments for external debt Million Dalasi Endogenous

82 DomInt Interest payments for domestic debt Million Dalasi Endogenous

83 CapExpNL Capital expenditure and net lending= CapExp + GLF + NL


84 CapExp Capital expenditure = ExtExp + LoanCapExp Million Dalasi Identity

85ExtCapExp

Capital expenditure financed by external funds= LoanCap + GrantCap


86 LoanCap Capital expenditure financed by external loans Million Dalasi Endogenous87 GrantCap Capital expenditure financed by external grants Million Dalasi Endogenous

88 GLF Gambia Local Fund Million Dalasi Endogenous

89 NL Net lending Million Dalasi Endogenous

90 FisBal Fiscal Balance = Receipts - ExpNL Million Dalasi Identity

91 Basic Bal Basic Balance = Domestic Revenue (ExpNL excluding ExtCapExp)


92 Primary Bal Primary Balance = Basic Balance + Interest Pay Million Dalasi Identity

93 Financing Financing of fiscal deficit = - FisBal Million Dalasi Identity

94 External External borrowing - Amortization Million Dalasi Identity

95 Borrowing External borrowing Million Dalasi Endogenous

96 Amortization Repayment of principal of external debt Million Dalasi Endogenous

97 Domestic Net domestic finance = Netborrow + CapRev+Accumulation + Privatization


98 Netborrow Net domestic borrowing= Banks + Nonbanks - Amortization


99 Banks Borrowing from banks Million Dalasi Endogenous

100 Nonbanks Borrowing from non-banks Million Dalasi Endogenous

101 Amortization Repayment of domestic debt Million Dalasi Endogenous

102 Cap Rev Capital revenue Million Dalasi Endogenous

103 Accumulatn Accumulation- change of values Million Dalasi Endogenous

104 Privatization Receipts from privatization Million Dalasi Endogenous

105 DomDebtOut Domestic debt outstanding = previous DomdebtOut+ net domestic borrowing


36


37/78


Money Block (Million Dalasi)

106 NFA Net foreign assets Million Dalasi Endogenous

107 NDA Net domestic assets = Credit+Mothers Million Dalasi Identity

108 Credit Total credits= govcredit+pvtcredit+forexcredit Million Dalasi Identity109 GovCredit Credits to government Million Dalasi Endogenous

110 PvtCredit Credits to the private sector Million Dalasi Endogenous

111 Forexcredit Credits to foreign exchange dealers Million Dalasi Endogenous

112 Mothers Other items of money demand Million Dalasi Endogenous

113 M2D Broad money demand = NFA + NDA Million Dalasi Identity

114 M2S Broad money supply= Currency+ Million Dalasi Identity

115 Currency Currency in circulation with the public Million Dalasi Endogenous

116 Deposits Deposits Million Dalasi Endogenous

117 M0 Reserve money Million Dalasi Endogenous

External Debt

118 Extdebt External debt Million US$ Endogenous

119 Lingterm Long-term external debt Million US$ Endogenous120 Debtservice External debt service = amortization + interest Million US$ Identity

121 Amortizatio Repayment of principal of external bebt Million US$ Endogenous

122 Interest Interest payments Million US$ Endogenous

Public Debt

123 Public debt Public debt = Domestic debt + external debt Million Dalasi Identity

124 Debtservice Total debt service = Domestic debt service +external debt service


125 DomDtSer

Domestic debt service = amortization + interestpayments for domestic debt


126 DomAmort Amortization of domestic debt Million Dalasi Endogenous

127 DomInt Interest payments for domestic debt Million Dalasi Endogenous

128 ExtDtser External debt service = amortization + interestpayments for domestic debt


129 ExtAmort Amortization of external debt Million Dalasi Endogenous

130 ExtInt Interest payments for external debt Million Dalasi Endogenous

131 DomDS/Rv Domestic debt service to domestic revenue ratio Percentage Derived

132 ExtDS/XGS External debt service to exports of goods andservices

Percentage Derived

37


38/78


AN OPERA

Documents

Gambia Macro Economic Accounting Model Update 30 July 2010