Momodou Bamba Saho Governor of the Central Bank

The ability to reach its fiscal targets has endeared the country to world creditors

In December of 2007, the International Monetary Fund (IMF) granted The Gambia a milestone debt relief package worth $140 million. In a statement at the time, the IMF said that the country had made sufficient progress in strengthening tools to boost growth and combat poverty, and had reached a “completion point” under the Heavily Indebted Poor Countries (HIPC) Initiative.

In January of 2008, the Paris Club followed suit. The club of creditors, representing 19 of the world’s richest countries, reached a deal with the Gambian government to cancel $11.6 million of the country’s total $40 million debt. The real icing on the cake came, however, in March when the IMF announced that The Gambia had met the requirements for full debt relief, and that the country was well placed to consolidate and deepen its poverty reduction strategy while maintaining strong gross domestic product (GDP) growth.

The fact of the matter is that the Gambian economy has proved remarkably resilient over the past three years, backed by strong monetary policy from the central bank and growing macroeconomic stability. The economy grew at an average 6.4% between 2003 and 2006, and was estimated at 7% last year, buoyed by a 11.3% increase in the service sector’s value-added production. Furthermore, efforts to diversify the economy through tourism and re-exports have been successful in broadening the country’s export base, fuelled by rising levels of foreign direct investment (FDI).

“The recent economic growth in The Gambia has been driven by the services sector; mainly in the field of telecommunications, construction, and tourism,” confirms the central bank’s governor, Momodou Bamba Saho. “All these have been driven by significant flows of FDI. To a certain extent, this is due to the strong macroeconomic stability in The Gambia. The government has implemented significant reforms over the past few years, both in the Central Bank and the Department of State for Finance, as well as the other sectors, to make sure that we achieve and maintain this macroeconomic stability. Our fiscal position was also strengthened significantly. In 2007, for the first time in a decade, we had a fiscal surplus. We have been able to restore the confidence of foreign investors in the economy. All these are factors that have contributed to the growth in the economy.”

All this has had a positive effect on the national currency, the Dalasi. In 2007, it appreciated nearly 20% against the U.S. Dollar. 2008 forecasts are for the Gambian currency to remain stable. Saho comments, “As a result of the appreciation of the Dalasi, we are able to keep prices low. That has had a positive impact in terms of inflation. which is still single-digit. If you look at other places around the world, the price of oil and food has gone up significantly. In The Gambia, we have been able to keep prices in check.”