A tendency for the general level of prices to rise rapidly has been soundly sustained over the years by the Central Bank of The Gambia, through the prudent financial policies of its Monetary Policy Committee (MPC).

The governor of the Central Bank of The Gambia, Momodou Bamba Saho, stated that "inflationary expectations remain well anchored" as the Dalasi continues to gain strength over major international trading currencies in a nationwide subdued inflationary environment.

He said that at end-December 2007, consumer price inflation reduced by 0.9 per cent while headline inflation, measured by the National Consumer Price Index (NCPI), rose from 2.0 per cent in January 2007 to 5.1 per cent at end-January 2008.

"Food price inflation was 8.4 per cent in January 2008 compared to 2.1 per cent a year earlier," he noted. "Non-food inflation also rose, albeit by about half a percentage point to 1.4 per cent. Core inflation, which excludes prices of energy and volatile food items, accelerated slightly from 3.4 per cent in January 2007 to 4.2 per cent at end-January 2008."

He said the Dalasi has strengthened against the three major international traded currencies. This, he added, was caused by robust foreign currency inflows into the country coupled with the benign global environment and improved external sector conditions in 2007, owing to the implementation of prudent monetary and fiscal policies by the MPC.

"In 2007, the Dalasi appreciated against the US Dollars, Pound Sterling and the Euro by 19.6 per cent, 17.5 per cent and 9.3 per cent relative to 2006. The strengthening of the Dalasi continued in the first two months of 2008 appreciating by 2.9 per cent, 4.2 per cent and 1.6 per cent against the US Dollars, Pound Sterling and Euro respectively."

The CBG governor also said the inter-bank foreign exchange market continues to be vibrant, adding that the volume of transactions in the inter-bank market, measured by aggregate purchases and sales of foreign currencies, increased to US$1.7 billion in 2007 compared to US$1.2 billion in 2006.

AS at end-February 2008, Mr Bamba Saho further noted, the stock of domestic public debt increased slightly to D5.48 billion, or 0.01 per cent from end-December 2007.

He explained: "The maturity structure of treasury bills, which accounted for 86.6 per cent of the total domestic public debt, continues to shift from the short-end to the long-end.

"As at end-February 2008, 364-day bills, 182-day bills and 91-day bills accounted for 67.3 per cent, 22.3 per cent and 10.4 per cent of outstanding treasury bills respectively.

"The yield on the 91-day and 182-day bills increased to 10.6 per cent [sic] and 12.19 per cent in February 2008 from 10.64 per cent and 11.43 per cent in December 2007 respectively. Similarly, the 364-day bill rose slightly to 13.72 per cent from 13.67 per cent in December 2007."

Sentiments on general economic and business activity for the first quarter of 2008 "point to a positive outlook", he said, adding that taking the positive economic factors into consideration, including the risks to the inflation outlook, the MPC has decided to maintain the rediscount rate (the policy rate) at 15.0 per cent. "The MPC has also reduced the revenue requirement ratio by 2 percentage points to 14.0 per cent," he revealed.