Suntou, I think we need an independent analyst... Omar has been too indoctrinated!!!

 

Any takers out there??? Burama Jammeh... Laye would be a good one too - finance????

 

Thanks

Demba

 

 

On Mon, Feb 20, 2012 at 11:14 AM, Bolonba <[log in to unmask]> wrote:

Demba, don't worry our junior economist is at hand to decipher the details. Sinyo kuu buka sinyo karr. Suntou

Sent from my iPhone

On 20 Feb 2012, at 18:54, Demba Baldeh <[log in to unmask]> wrote:

Laye,

 

Hmmmmmm!!! this is an interesting position from the IMF and it should be worrisome for our little Gambia... I wonder what happened to the good economic growth forecast that was recently louded by the World financial body? It is certainly starting to trickle bit by bit that all factors use to assess the economic health of a nation were not used..

 

We need an economist to explain the ramifications of this possible devaluation... Any recommendations who we can talk to out there?

 

Thanks

Demba

On Mon, Feb 20, 2012 at 7:05 AM, Laye Jallow <[log in to unmask]> wrote:

IMF: Gambian currency may be overvalued

http://www.africanews.com/site/IMF_Gambian_currency_may_be_overvalued/list_messages/41132

Posted on Monday 20 February 2012 - 10:28

Madi Njie, AfricaNews reporter in Serekunda, Gambia

The International Monetary Fund has indicates that the local currency, the Gambian Dalasi, may be overvalued by 17 percent. According to IMF report, "a number of complementary approaches were adopted to assess whether the Gambia's exchange rate is aligned with fundamentals.

These alternative approaches proposed by the IMF Consultative Group on Exchange Rate issues include the macroeconomic balance approach, the external sustainability approach and equilibrium real exchange rate approach.”

According to the report, the purchasing power parity approach was also involved in the assessment, pointing out that these alternative approaches produce somewhat different results.

“The macroeconomic balance approach suggests that the Dalasi may be overvalued by 17 percent. The country’s underlying current account deficit is 12 Percent of Gross Domestic Product (GDP). The underlying fundamental driving this result is the large fiscal deficits in recent years.

Temporary factors such as Government’s financial external payments for a large telecommunications project also played a role. With an estimated current account norm of about 2 percent, roughly in line with estimates in past assessments, a depreciation of 17 per cent would be needed to restore sustainability.”

The report outlined that the external sustainability approach indicates an overvaluation of 8½ percent.

The report published by Gambia local newspaper- Foroyaa, adds, “With an underlying current account balance of 12 Percent of GDP, The Gambia’s long run net foreign assets would be unsustainable at about -138 percent of GDP in order to bring the NFA to a sustainable level of -70 percent of GDP, that the exchange rate would require a depreciation of 8 ½ percent with a corresponding current account deficit of 6 ½ percent of GDP”, the report states.

--
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