IMF Working Papers

International Reserve Adequacy in the Gambia

By Eugen Tereanu

September 1, 2010

Download PDF

Preview Citation

Format: Chicago

Eugen Tereanu. International Reserve Adequacy in the Gambia, (USA: International Monetary Fund, 2010) accessed December 12, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper applies intertemporal models of precautionary saving to compute an optimal level of international reserves for The Gambia. The analysis focuses on current account shocks specific to a low-income economy with a significant import component and complements a more standard, rule-of-thumb reserve adequacy assessment. The results suggest a central range from 4.5 months to 7 months of imports, which is broadly aligned with the recent actual coverage. Notwithstanding parameter sensitivity, the simulations allow for more informed policy decisions that balance flexibility with a prudent approach to reserve use.

Subject: Central banks, Consumption, Imports, International reserves, International trade, National accounts, Reserve positions, Reserves accumulation, Terms of trade

Keywords: Adequacy assessment, Adequacy indicator, Asset, Balance of payments, Consumption, Coverage indicator, Coverage ratio, Gambia, Global, Holdings in The Gambia, Import coverage indicator, Imports, International reserves, Lower bound, Lower bound for the opportunity cost, Open economy, Opportunity cost, Optimal reserves, Precautionary motive, Precautionary savings, Reserve, Reserve adequacy, Reserve adequacy indicator, Reserve coverage, Reserve positions, Sub-Saharan Africa, Terms of trade, West Africa, WP, Yield

Publication Details

  • Pages:

    16

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2010/215

  • Stock No:

    WPIEA2010215

  • ISBN:

    9781455208807

  • ISSN:

    1018-5941