Money exchange dealers and the banking industry have welcomed Gambia’s decision to lift restrictions on foreign exchange rates, CEO of a private-sector pressure group has told Anadolu Agency.
In May last year, the Gambian dalasi nosedived against major currencies, prompting the government’s intervention in setting exchange rates and placing restrictions on FOREX shipments.
One of the institutions which engaged with the government to lift the restriction was the Gambia Chamber of Commerce and Industry, an institution that protects the interests of private businesses in the West African country.
Its CEO, Alieu Secka, said though the private sector respects the government’s intention to maintain the value of the dalasi, exchange rates must be left to be determined by market forces.
“We believe that it was not proper for the government to fix exchange rates and to ban the shipment of FOREX… I think everybody is happy again,” he said.
“The lifting of restrictions on FOREX was a good move because Gambia thrives on a free-market economy… The government proclaims that it is a market-led economy – so we would like to use the free-enterprise mechanism as much as possible.”
Secka added that the “fixing of the foreign exchange rate” has made “it difficult for banks to ship in FOREX and that was why the action caused some concerns in that sector”.
The banking sector, foreign exchange bureaus, importers and ordinary Gambians whose survival are dependent on remittances received from family members abroad were hardly hit by the decision, a local politician, Hamat Bah said.
The government lifted the control on FOREX two weeks ago on claims that the dalasi had “stabilized” and there was “positive impact… on the pricing of goods and services,” Bah added.
However, Gambia’s finance minister told lawmakers during a budget speech barely a month ago that the average inflation rate has continued its upward trajectory with Consumer Price Index recording 6.6 percent.
The main driver of consumer price inflation, according to Abdou Colley, was a food price which was at 8.05% by the end last year.
Since the lifting of the foreign exchange controls, the dollar has moved one place against the dalasi – from D41 to D42 – based on the exchange rates at local FOREX bureaus.
However, a number of bureau exchanges in Serrekunda, Gambia’s economic capital, have reported they have seen little effect on their businesses, though they have welcomed the decision.
Kebba Touray, one of the many Gambians whose families survive on remittances sent from abroad, said the lifting of FOREX control is good news for families.
The Gambian economy has suffered serious financial challenges. Last year saw a fiscal deficit, according to the country’s finance ministry, which reached 9.6% of GDP— more than 50 percent of which was to be financed from domestic sources.
Following a fall-out with the European Union – which had been giving the country budget support to withstand the spending pressures – the government resorted to addressing its fiscal, trade and budget-deficit challenges from domestic borrowing.
With an overall debt stock hitting 108% of GDP by the fall of 2015, the International Monetary Fund has warned that the country’s debt is approaching an unsustainable level.