Country Report The Gambia July 2008

Outlook for 2008-09

The overwhelming victories of the president, Yahya Jammeh, and his Alliance for Patriotic Reorientation and Construction (APRC) in the 2006 presidential, 2007 legislative and 2008 local elections have ensured that Mr Jammeh retains near-absolute control over policymaking. However, the electoral success of the APRC stems largely from splits in the opposition, and masks popular discontent in the face of perceived government corruption, lack of development and human rights abuses. Large increases in public spending will cause the budget deficit to widen to an annual average of more than 4% of GDP in 2008-09. Real GDP growth is set to fall back slightly, to 6.3% in 2008 and 6% in 2009, owing to the continued under-performance of the agricultural sector. Inflationary pressures, which increased in 2007 owing to high international commodity prices, will remain strong, and the Economist Intelligence Unit expects average inflation of 6% in 2008, easing to 5.1% in 2009. The overall outlook for the economy remains highly dependent on food-crop harvests. The re-engagement of donors will partly offset the deteriorating trade balance, but the current-account deficit is expected to be more than 12% of GDP in 2008-09.

The political scene

The veteran leader of the opposition National Democratic Action Movement (NDAM), Lamin Waa Juwara, has called for the fractured opposition parties to co-operate with the government. It is unlikely that these parties, which vehemently oppose Mr Jammeh's regime, will heed this call.

Economic policy

The third review under the country's poverty reduction and growth facility (PRGF) was generally viewed as positive by the IMF. However, as part of efforts to combat food inflation the government has suspended sales tax on rice imports. The IMF warned against generalised subsidies and urged the government to consider other social programmes to help ease the price burden on the poor, such as school feeding programmes for the poorest children.

The domestic economy

Under a recent agreement, a Senegalese telecommunications company has committed to quadrupling The Gambia's total internet bandwidth from the current capacity of 34 megabits by the end of 2008. This should improve internet services, lower costs and expand the number of internet users.

Foreign trade and payments

The Central Bank estimates that the current-account deficit narrowed from 12.9% of GDP in 2006 to 10.1% of GDP in 2007, owing mainly to strong tourist receipts, increased private transfers and donor funds for new infrastructure.