The Gambia: Selected Issues
IMF Staff Country Reports, January 18, 2024
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- The Gambia: Selected Issues
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Bibliographic details
- Published: January 18, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400263859.002
Overview
- Time period analyzed: 2014–2023.
- Scope: Drivers of headline inflation and the degree of exchange rate pass-through (ERPT) in The Gambia.
- Context: The Gambia is a net importer of essential foods and energy.
Key Findings
- Long-term decisive drivers of inflation:
- Global prices of commodities: food, oil, and fertilizer.
- The exchange rate.
- The domestic output gap.
- Short-run dynamics of inflation:
- Global food price movements play a prominent role.
- Second-round effects from changes in food prices and the output gap influence headline inflation.
- Exchange rate pass-through (ERPT):
- Evidence of an asymmetric ERPT to domestic prices.
- The size of currency depreciation matters for inflation dynamics.
- Monetary policy effectiveness:
- Monetary policy can tame inflation in the short run provided the monetary policy rate is adjusted rapidly and boldly.
Policy Implications and Recommendations
- Adjust monetary policy rates rapidly and boldly to contain short-run inflationary pressures driven by commodity price shocks and exchange rate movements.
- Recognize and monitor asymmetric ERPT effects and the nonlinear impact of the size of currency depreciations when designing policy responses to exchange rate shocks.
- Account for both external (global commodity prices) and domestic (output gap, exchange rate) factors in inflation forecasting and policy formulation.
Content in this bundle
- The Gambia: Selected Issues; IMF Country Report No. 24/16; December 18, 2023