Country Report The Gambia October 2008

Outlook for 2009-10

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 a budget deficit of more than 4% of GDP in 2009-10. Real GDP is forecast to grow by 6.4% in 2009 and 6.5% in 2010, led by strong growth in construction and high public spending. Inflationary pressures will ease in the second half of 2008 and into 2009, before picking up again in 2010 as oil prices rise. The Economist Intelligence Unit therefore forecasts average inflation of 5.1% in 2009 and 5.5% in 2010. The overall outlook for the economy remains highly dependent on food-crop harvests. Donor transfers will partly offset the wide trade deficit, but the current-account deficit is expected to be around 13% of GDP in 2009-10.

The political scene

The leader of the United Democratic Party (UDP), Ousainou Darboe, has spoken out against media repression, but his calls for action are likely to go unheeded. Conversely, the former leader of the National Democratic Action Movement (NDAM), Lamin Waa Juwara, has become a member of the APRC, continuing the ruling party's policy of co-opting opposition members and independents.

Economic policy

The IMF completed its third review of The Gambia's poverty reduction and growth facility (PRGF, 2007-10) in September and approved a disbursement of US$3.1m. The continued waivers relating to structural reforms highlight the existence of capacity constraints and the weak political will to undertake the more difficult reforms.

The domestic economy

The government has awarded a fourth mobile operator licence to QuantumNet, Gambia's leading Internet service provider. It is expected to enter the market with aggressive marketing strategies in order to attract new customers.

Foreign trade and payments

The Central Bank has projected that the balance-of-payments surplus will shrink from D742m (US$29.8m) in 2007 to D362m (US$15.7m) in 2008 as the trade deficit widens due to high international food and fuel prices.