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-----Opprinnelig melding-----
Fra: Cherno Marjo Bah [mailto:[log in to unmask]]
Sendt: 6. januar 2003 12:04
Til: Momodou Jobarteh
Emne: Current economy situation





The rapid movement in the currency markets is making the economy of the
Gambia unsettle, leading to renewed weakness in economic growth. The
depreciating in the currency has provided less-needed incentive for
structural reform and greater inefficiency in the economy. The optimum goal
of any weak exchange rate has always been to stimulating export demand and
foreign investment, but in case of the Gambia, is the opposite. It has
proved to be a catalyst for non- improvements in productivity. The risk here
is the dramatically accelerates depreciating value of the Dalasis that
provided no positive effects on the export drive sector of the economy, in
turn it has injected some negative effects on the domestic demand of the
economy.

Over the past decade the focus has been high investment in infrastructure
development in the Gambia leading to higher demand in foreign exchange.  As
a result a disruptions in foreign exchange market, has produced a very
significant rise in prices. The burst of high consumer prices in the Gambia
has blow consumer sentiment and pushed an already fragile economy into
almost what I might term a "recession". We are not yet there but it is on
the way.

The Dalasis trading at premium should in a sense make it easy for the
Gambian economy to export, but instead the export-oriented sector of the
economy has fails to react to the competitive exchange rate. Re-export
trading sector is diminishing, tourisms actors preferred to keep their hard
currency outsider the economy, depriving authorities (Decision Makers) the
opportunity to reduce the Dalasis in circulation and not only by higher
interest rate. As a result prices are rocket high.

The escalating prices have hit Gambian consumers particularly hard because
of their dependence on imported goods. It is also increasingly putting
pressure on the economy by weaken internal demand, which has the effect of
making the economic to depend on exports to drive growth. Yet this export
has failed to show up. So, what we are seeing is a weak Dalasis that demands
weaker productivity.

The Fuel market in the Gambia is constantly facing difficulties to march
demand, paralysing daily business transaction. A solution to this problem is
yet to be seen at a distant. As the price of oil climbed above $30 a barrel
newly, it highest level in 15 months, amid growing fears of war against Iraq
and a crippling oil strike in Venezuela, the world's fifth-largest producer.
As a result Gambia and Gambian will further feels the hit of the oil crises.

So the question we have to ask ourselves now is; whether the depreciating
Dalasis will gradually remove the crutches on which the cripple Gambian
economy depended? I will certainly answer No. First the depreciating Dalasis
has not yet gone too far for Gambian consumers and businesses to realise the
situation of the economy. As long as there is a large volume of Dalasis
circulating in the economy by making higher demands on imported goods,
allowing imports oriented businesses to enjoy large and handsome profit
margin, and couple with inflation rate lower than our neighbouring
countries. I promised the end of the depreciating Dalasis is not yet seen.

Second, the export sector in the Gambia tends to be more dependent on global
demand than on a competitive exchange rate. A continuous fall in the value
of the Dalasis should have the effect of stimulating growth in export, but
this is not what is happening in the Gambia.  Instead import prices are
high, decreasing real disposable income of consumers, affecting the standard
of living of the Gambia people.



Pa Che,






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