Central Bank clear out. This week's news that Gambia's Central Bank Governor, Amadou Colley, two of his deputies and the bank's Finance Director were summarily relieved of their duties came as no surprise given the claims that ex-President Jammeh had departed with over $10m of public money.
The world steps back in. After recovering from the fallout of Ebola crisis activity faltered again in 2016 on the back of FX shortages, a contraction in agriculture, which accounts for around 20% of GDP, and the election-related political uncertainty which discouraged tourist inflows. However, the economy is expected to expand by 3% this year and 3.5% in 2018 as agricultural prices, particularly for groundnuts, firm. The re-engagement of international donors and development agencies should aid this uplift and the IMF is discussing support through a Rapid Credit Facility (to help address a yawning current account deficit) and possibly a Staff Monitored Program to assist with fiscal discipline, particularly regarding state-owned enterprises.
Inflation peaking this year. Excess broad money growth and FX frictions pushed inflation from 6.8% in 2015 to 7.2% last year. Although we expect the Central Bank to bear down on money creation, the ongoing decline of the Dalasi is set to drive price growth higher in 2017. By 2018 we expect a sound and credible fiscal and monetary program from the Barrow administration to underpin the start of a softening trend.