The Gambia WT/TPR/S/127
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I. ECONOMIC ENVIRONMENT
(1) MAJOR FEATURES OF THE ECONOMY
1. The Gambia is a small coastal country in West Africa, surrounded on three sides by Senegal.
It extends inland for about 320 kilometres at widths varying from 24 to 48 kilometres, and has a
coastline of roughly 80 kilometres.  Its territorial sea extends to 12 nautical miles, and its exclusive
economic zone to 200 nautical miles.  The Gambia has a population of just over 1.3 million, who liveon a total surface area of 11,300 square kilometres.  Average population density is high, at 124 people
per square kilometre, rising to 460 in rural areas, where 60% of the population live.  The largest towns
are Serrekunda (68,400 people) and the capital Banjul (44,200).  The Gambia is a least developed
country, with a per capita income of US$320 in 2001.  The Government estimates that nearly 47% of
the population lives below the poverty line, with the incidence of poverty much higher (60% or more)in rural areas. In 2002, The Gambia ranked 160th out of 173 in the Human Development Index; a
number of social indicators, particularly indices measuring literacy, education, and life expectancy,
remained lower than the average for sub-Saharan Africa.
1
2. While historically, The Gambia had been predominantly an agrarian economy, services
emerged in the early 1990s as the most important sector in terms of GDP; their share of real GDP hasincreased to around 65%.  Tourism is the fastest growing subsector, and has become the largest gross
earner of foreign exchange.  Distribution services are also significant, reflecting The Gambia's
traditional role as a hub for re-exports to countries in the sub-region.  This role has been encouraged
by: geographic factors;  the implementation by The Gambia of lower tariffs and more flexible
exchange rate policies compared with neighbouring countries of the West African Monetary Union;
and permeable borders and underdeveloped capacity of the customs administration in both The
Gambia and neighbouring countries.
3. Agriculture employs 70% of the labour force, and accounts for nearly 30% of real GDP.
Groundnuts are the single most important cash crop, and, setting aside re-exports, are The Gambia's
main merchandise export.  Productivity levels in agriculture are low, and output is affected by
climatic shocks.  Both The Gambia River and The Gambia's exclusive economic zone abound with
fish and crustaceans, and exports have grown relatively rapidly since 1996.  Domestic fisheriesactivities remain under-developed, while at the same time over-exploitation of demersal stocks, to a
large extent  owing to the activities of foreign trawlers, has become an issue of concern.
4. The Gambia's natural resources consist of deposits of kaolin, tin, ilmenite, rutile, and zircon,
though these remain largely unexploited.  Given that the seas off The Gambia are situated in the
northern region of the Casamance-Bissau basin, known for its hydrocarbon reserves, it is believed thatoil prospects for The Gambia are relatively good.  Exploration activities have commenced
(Chapter IV(3)(i)).
5. Though the potential exists for the development of light manufacturing based on the
processing of primary commodities, particularly agri-processing, there has been very little investment
in such activities.  This is in part because of pervasive supply-side constraints, particularly the highcost of credit, and costly and erratic electricity supply.  Manufacturing activities account for less than
6% of real GDP, and are geared almost entirely to the domestic market, the limited size of which
precludes economies of scale.
                                                     
1 UNDP (2002) .WT/TPR/S/127 Trade Policy Review
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6. Exchange rates were liberalized progressively between 1986 and 1990, and The Gambia's
national currency, the dalasi (D), is freely convertible; its value is determined by the market.2  The
government intervenes only on rare occasions to smooth undue fluctuations in the exchange rate. The
Gambia accepted sections 2, 3 and 4 of Article VIII of the IMF Agr eement in 1993.  The Gambia is a
heavily indebted poor country (HIPC), with a total external debt stock of US$441 million in 2001.
The net present value of its external debt is 60% of GDP.  Approximately 70% of the external debt is
owed to multilateral creditors, mainly the International Development Association of the World Bank
Group and the African Development Bank.  Debt relief under the enhanced HIPC initiative was
approved in December 2000.  The estimated present net value of debt relief needed to bring The
Gambia's debt down to sustainable levels is US$66.6 million.  Interim debt relief has been directed to
finance spending in priority social sectors, notably health, education, and rural development, throughthe operation of a special "HIPC fund".  Budegeted spending from the HIPC fund was D80.2 million
in 2002 and D109.8 million in 2003.  The Gambia is expected to reach the completion point of the
HIPC initiative by  end-2004 .
(2) R
ECENT ECONOMIC DEVELOPMENTS
7. The Gambia has persevered with the economic reform programme it embarked upon in 1985,
notwithstanding a two-year hiatus following a coup d'état in 1994. 3  The pace and depth of reforms
increased in  the late 1990s.  Improved fiscal management, through efforts to ensure tax compliance,
and the introduction of computerized expenditure and revenue management systems, helped to reduce
public deficit (excluding foreign grants) from an average of 9.6% of GDP over the period 1991-97, to
4.2% in 2000.  This, together with a tight monetary policy, helped to keep inflation at below 3% per
annum.4  The reforms and the resultant low inflation have  contributed to a return to positive interest
rates, and have improved The Gambia's monetary situation; the ratio of broad money to GDP is nearly40%, one of the highest in sub-Saharan Africa.
5  However, some weaknesses still persist, particularly
in fiscal policy: expenditure management is hampered by a lack of capacity relating to budget
planning and execution, particularly the evaluation of costs.  Some accounts (termed "below-the line")
appear to be outside direct control; and the lack of timely information has hampered the Government's
ability to control commitments and implement the budget on a cash-basis.  The relatively widediscretion over the granting of duty exemptio ns (Chapter III(2)(iii)(c)) hinders both fiscal
management and efficient resource allocation.
8. The trade regime has been substantially liberalized, the maximum external tariff being cut
from 90% in 1998 to 18% in 2000, and the number of tariff bands being reduced from 30 to three over
the same period.  The Government has also initiated the implementation of a privatization programmeand regulatory reform. Coupled with a resumption in economic aid by key donors, who had
withdrawn support following the coup d'état, the reforms have enabled The Gambia to record fairly
robust economic growth, with real GDP increasing on average by 5.6% per annum between 1998 and
2001.
                                                     
2 IMF (2003).
3 The Gambia initiated economic reforms under the auspices of the Economic Recovery Programme
(ERP), launched in 1985.
4 Direct credit and fixed interest rates were abandoned in 1986; the sale of 364-day treasury bills and
the use of reserve requirements, currently set at 14% of deposit liabilities, are the main instruments of monetary
policy. The statutory minimum capital adequacy ratio is set at 8%. A rediscount facility for treasury bills has yet
to be implemented. There is no inter-bank lending market.  The central bank, in collaboration with commercialbanks, is developing a master repurchase agreement, which should usher in repurchase facilities and hence leadto a deepening of the money market.
5 World Bank (1999) .The Gambia WT/TPR/S/127
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9. Although The Gambia remains vulnerable to both adverse exogenous shocks and policy
slippages, progress in structural reforms has slow ed down;  there have been no recent advances in
privatization or the restructuring of utilities, and key draft regulatory legislation has not been enacted.
Real GDP growth slowed to 3.6% in 2002, as late a nd irregular rainfall led to a drop of 6.8% in total
agriculture output, with groundnut production falling by 12%.  Tourist arrivals dropped owing to
concerns regarding global security, and the economic downturn experienced by The Gambia's majorsource markets, particularly Germany. The re-export trade has also contracted, owing to the economic
slow-down, a loss of competiveness of Banjul Port relative to other sub-regional competitors, and the
lower costs of imports into the CFA region resulting from an appreciation of the euro (the dalasi is
depreciating against the euro/the CFA franc).  Although cash-budgeting was introduced in 2002, as
well as measures to increase ministerial surveillance of public enterprises in a bid to enforce thepayment of taxes, the fiscal policy stance loosened considerably as both overruns in expenditure and
shortfalls in revenue in 2001 and 2002 led to defi cits, excluding grants, of 12.6% and 13.7% of GDP
respectively (Table I.1).  The continuous depreciation of the dalasi against the euro and the CFA
franc, and slippages in fiscal policy, along with high oil and food prices, pushed inflation to 4% in
2001 and 10% in 2002. It is estimated that average inflation may have risen to nearly 15% in the firsthalf of 2003.
6
10. While the looser fiscal stance witnessed in 2001 and 2002 was partly due to one-off factors,
particularly spending related to the electoral process, road construction, and compensation to the
Swiss groundnut processing and marketing company Alim enta for the expropriation of its assets, it is
also a reflection of a number of underlying weaknesses.  The deterioration in revenue collections in
2001 was attributable, to some extent, to the accumulation of tax arrears by public enterprises, but
mainly to weaknesses in tax administration.  These were particularly evident in relation to customsrevenue collection (a historically problematic area)
7, where the shortfall relative to the target
represented 1.3% of GDP.  The combination of a  loose fiscal stance and a relatively tight monetary
policy has led to the crowding out of private investment8, as the cost of credit exceeded its already
high levels (the bank base lending rate had risen to 24% by the second quarter of 2003).
                                                     
6 Fears of further depreciation of the dalasi are lik ely to become self-fulfilling by further increasing
preference for foreign currencies, the euro in particular.
7 McNamara, P. E. and M. McPherson (1995).
8 A negative correlation has been observed between public and private investment, see IMF (1999),.
Revisions to the central bank Act of 1992 are being considered with a view to establishing the bank'sindependence.  The central bank has established an Open Market Committee and is developing a liquidityforecasting framework based on the relations between changes in commercial bank's reserves and expectedchanges in the Government's accounts.WT/TPR/S/127 Trade Policy Review
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Table I.1
Economic performance, 1997-02
1997 1998 1999 2000 2001 2002
General
GDP at current market prices (US$ million) 375.0 390.8 381.5 365.3 304.1 248.3
GDP at current market prices (D billion) 3,824.8 4,159.2 4,347.7 4,670.8 4,769.7 4,945.3
Real GDP growth, annual percentage variation 0.5 5.8 5.7 5.4 5.7 3.6
Consumer price index, percentage changes (period
average)2.8 1.1 3.8 0.9 4.0 10
Average exchange rate (Dalasi/US$) 10.2 10.6 11.4 12.8 15.7 19.9
Nominal effective exchange rate (change)a3.9 -1.1 -4.8 -3.7 -14.1 -22.6
Real effective exchange rate (change)a4.6 -1.5 -2.1 -4.9 -12.1 -17.5
Monetary sector Per cent
Interest rates on short-term savings deposit with com.
banks9.0 9.0 7.0 7.0 8 9
Interest rates on fixed-term depositsb10.5 10.5 9.5 9.0 10 11
Interest rates on treasury bills 16.0 14.0 12.5 12.0 18 23
Lending ratesb22.3 21.5 21.0 21.0 21 24
Broad money growth 22.3 10.2 12.1 34.8 19.4 35.3
Real GDP by sector Per cent
Agriculture 24.8 22.7 29.5 31.0 32.4 29.4
Mining and quarrying 0.1 0.1 0.1 0.1 0.1 0.1
Manufacturing 6.3 6.1 5.8 5.6 5.4 5.5
Servicesc68.8 71.2 64.7 63.3 62.1 65.0
National accounts Per cent of GDP
Total consumption 92.9 91.8 92.1 95.1 .. ..
Gross fixed investment 17.2 18.4 17.8 17.3 .. ..
Change in stocks .. 0.4 0.0 .. .. ..
Imports of goods and non-factor services 55.1 61.8 55.9 57.1 .. ..
Exports of goods and non-factor services 45.1 51.2 46.0 44.7
Government finance Per cent of GDP
Revenue (including grants) 22.3 22.1 21.7 23.9 23.6 31.1
Expenditure and net lending 29.4 24.7 25.7 25.5 33.3 38.2
Deficit (including grants) 7.1 2.6 4.0 1.6 9.7 7.0
Deficit (excluding grants) 8.5 4.7 5.5 4.2 12.6 13.7
External public debt
In percentage of GDP 104.4 103.3 98.4 100.1 .. ..
Debt servicing (in percentage of GDP) 5.7 5.5 4.8 3.5 .. ..
External debt servicing/total exportsd (percentage) 13.5 11.4 11.4 8.5 .. ..
International reserves
Gross official reserves (in US$ million) 69.6 75.4 78.1 86.3 81.4 87.7
Gross official reserves (months of imports c.i.f.) 5.6 5.1 5.8 6.1 4.9 5.1
.. Not available.
a Depreciation indicated by negative sign.b Average rates calculated by dividing the sum of the minimum and maximum rates by two.
c Includes electricity, water, building and construction.
d In percent of exports and travel income.
Source: Central Bank of The Gambia (2000 and 2001), Annual Report ; Government of The Gambia (2003), Budget for 
2003 ; Government of The Gambia, Department of statistics; and IMF (2001), Country Report , Statistical 
Appendix, 29 June.The Gambia WT/TPR/S/127
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(3) TRADE PERFORMANCE AND INVESTMENT
(i) Trade in goods and services
11. The Gambia's current account balance has typically been in deficit; one-off imports in 2001
contributed to a peak of SDR 62 million (Table I.2).9 The deficit is primarily a reflection of a low
coverage of merchandise imports by exports, with export-import ratio averaging 62% over the past
seven years.  Private unrequited transfers, principally by Gambians living overseas , averaged around
SDR 17.6 million between 1998 and 2001, up from an average of SDR 12.1 million in 1995-97. The
preliminary current account surplus recorded in 2002 was  due largely to a marked increase in official
transfers.
12. The Gambia's merchandise exports (excluding re-exports) are relatively concentrated; a large
and generally increasing share are agri-based products (Table AI.1).  This reflects The Gambia'sdifficulties in increasing exports of fish, crustaceans, and non-traditional products such as
horticultural crops (Chapter IV(2)).  Groundnuts have been the single largest merchandise export,
though the share of groundnuts in total exports has shown a dramatic variation from year to year,
reflecting the relative instability of commercialization arrangements in the subsector
(Chapter IV(2)(ii)(a)).  Exports of manufactures made in The Gambia are negligible, though for someyears statistics for manufactured exports were bloated as re-exports of manufactures were erroneously
recorded as Gambian exports.
13. Re-exports have historically accounted for a very high percentage of The Gambia's overall
trade (Table I.2).  Diamonds (to Europe), and manufactured products, notably textiles, machinery, and
electric and electronic equipment (to the sub-region
10, and East Africa) account for the bulk of re-
exports (Table AI.2). The introduction of a costly preshipment inspection programme in 1999
contributed to stagnation in re-exports in 1999 and 2000 (Table I.2). The decline in re-exportssuggested by data for 2002 and preliminary estimates for 2003 are attributable to a loss in
competitiveness of Banjul Port relative to other regional transit hubs, notably Dakar, caused by
efficiency-boosting reforms implemented by rival hubs, and to the steady appreciation of the euro,
which has made direct imports in the CFA area cheaper than imports sourced through The Gambia.
14. Rice, The Gambia's staple food, is the single most important imported food commodity,
though it is estimated that a substantial proportion is re-exported to Senegal through unofficial
channels.  Rice and other food products (e.g. sugar, vegetables), account for slightly over 30% of total
merchandise imports in value (Chart I.1, and Table AI.3).  Imports of manufactures are dominated by
machinery and transport equipment.  The European Union accounts for approximately half of all
merchandise imports (Table AI.4).  East Asia is the next biggest source. Imports from Sub-Saharan
Africa originate overwhelmingly in West Africa, notably Côte-d'Ivoire.
                                                     
9 The surge in imports resulted from the implementation of various projects, including road
construction.
10 Mainly Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, and Senegal.WT/TPR/S/127 Trade Policy Review
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Table I.2
Balance-of-payments, 1995/96 to2002a
(SDR million, unless otherwise indicated)
1995/96 1996/97 1997 1998 1999 2000 2001 2002
Prel.
Current account -35.6 -19.0 -11.0 -9.3 -13.5 -14.9 -20.0 3.3
Trade balance -58.7 -52.8 -49.0 -56.9 -53.6 -50.0 -61.6 -59.6
Exports 80.3 78.1 78.8 95.8 87.9 95.8 110.3 92.0
Groundnuts/groundnuts products 6.8 3.5 3.5 9.6 7.3 9.8 11.2 15.0
Other domestic exports 7.1 7.3 6.5 5.6 4.3 6.1 7.5 2.7
Re-exports 66.4 67.3 68.8 80.6 76.3 79.9 91.6 74.3
Imports, f.o.b. -139.0 -131.0 -127.9 -152.7 -141.5 -145.9 -171.9 -151.6
For domestic use -96.4 -87.6 -84.3 -97.7 -91.9 -95.3 -113.9 -98.1
of which: oil products -7.6 -9.2 -7.6 -9.2 -11.6 -17.7 -18.2 ..
For re-export -42.6 -43.4 -43.6 -55.0 -49.6 -50.6 -58.0 -53.1
Factor services -3.9 -4.8 -6.0 -5.2 -5.0 -4.9 -5.9 -5.9
Non-factor services balance -2.7 9.1 11.2 9.0 7.3 -0.8 2.5 -5.7
Of which: travel income 37.0 44.3 46.0 51.0 46.6 36.2 38.2 30
Private unrequited transfers (net) 11.9 12.1 12.4 17.5 14.8 17.0 21.0 15.1
Official unrequited transfers (net) 17.8 17.4 20.4 26.3 22.9 23.7 24.0 59.4
16.4
Capital account 47.9 24.2 15.7 16.4 15.9 15.9 9.6 29.4
Official loans (net) 25.1 12.4 8.4 3.8 3.1 4.5 -6.0 35.9
Project related 35.6 19.7 15.2 10.4 10.0 13.2 11.3 21.9
Amortization -10.5 -7.3 -6.8 -6.6 -6.9 -8.7 -17.3 -7.9
Private capital inflow 22.8 11.8 7.3 12.6 12.8 11.4 15.6 -6.4
Foreign direct investment (net) 4.6 5.9 6.2 8.8 5.4 1.2 4.0 5.3
Commercial loans (net) 2.6 -0.3 -0.5 -0.3 -0.8 0.0 -0.8 0]
Short-term capital (net)b12.0 5.5 1.6 -2.4 0.1 8.7 4.0 -26.1
Suppliers' credits 3.6 0.7 0.0 6.5 8.1 1.5 8.4 14.4
Overall balance 12.4 5.2 4.7 7.1 2.3 1.0 -10.3 32.8
Financing -12.4 -5.2 -4.7 -7.1 -2.3 -1.2 10.3 -32.8
Change in gross official reserves (increase =-) -7.6 -0.4 0.0 -6.4 -2.7 -6.4 -4.9 -32.3
Repurchases/repayments (IMF) -4.8 -4.8 -5.1 -4.0 -3.1 -1.7 -0.5 -0.5
Purchases/loans (IMF) 0.0 0.0 0.0 3.3 3.4 6.9 6.7 ..
London Club 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ..
Debt reliefc0.0 0.0 0.5 0.0 0.0 0.0 0.0 ..
Memorandum items:
Current account balance (in percent of GDP)
Excluding official transfers -20.1 -12.8 -10.6 -11.6 -11.7 -12.1 -14.8 ..
Including official transfers -13.4 -6.7 -3.7 -3.0 -4.4 -4.7 -6.7 ..
.. Not available.
a Up to 1996/97, fiscal years (July/June), calendar years thereafter.
b Including errors and omissions (in SDR million) of 18.2 in 1995/96, 5.9 in 1996/97, 1.1 in 1997, 4.6 in 1998 and 0.0 
onwards.
c Forgiveness of D 7.2 million interest payment by Chinese Taipei.
Source: IMF (2001), Country Report , Statistical Appendix, 29 June and Staff Report   (2002), 26 June.The Gambia WT/TPR/S/127
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0%10%20%30%40%50%60%70%80%90%100%
1995 1996 1997 1998 1999 2000
0%10%20%30%40%50%60%70%80%90%100%
1995 1996 1997 1998 1999 2000
0%10%20%30%40%50%60%70%80%90%100%
1995 1996 1997 1998 1999 2000Chart I.1
Structure of exports and imports, 1995-00
(a) Ex ports 
(b) Imports
Source: WTO Secretariat calculations, based on UNSD, Comtrade database.Groundnuts Other
Machinery and transport equipment
CrustaceansFish, frozen
TextilesOther food products
Other foodAutomotive products
Other semi-manufactures Fuels TextilesOther machinery and transport equipment ChemicalsIron and steel Other RiceIncluding re-exportsExcluding re-exportsWT/TPR/S/127 Trade Policy Review
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15. The European Union is the largest market for Gambian exports, though The Gambia has
managed to make some in-roads into the Japanese market, notably for fish products (Tables AI.5 and
AI.6).  If re-exports  are taken into account, the sub-region, and particularly Senegal, becomes The
Gambia's largest trading partner.  Trade with the sub-region is hard to measure accurately because of
re-exports, which are sometimes recorded as Gambian exports, or sometimes made entirely through
parallel circuits and not recorded at all.11  The Gambia's role in mediating trade reflects, to a
significant degree, the ability of its traders to exploit the wedge between tariffs applied in The Gambia
and those applied by neighbouring countries, underdeveloped customs capacity in the sub-region, and
exploitation by traders of advantages relating to its relatively liberal exchange rate regime.  It does not
reflect the development of cross-border supply chains nor the "outsourcing" of production, which are
a characteristic of advanced entrepôt/transit trade centres such as Hong Kong, China.12
16. In general, The Gambia is a net services exporter.  Tourism is the largest service export;
travel income represents nearly 50% of merchandise exports.  Freight and insurance are the biggest
services imports.  The downturn in the tourism subsector contributed to the net balance on trade in
non-factor services turning negative in 2000.
(ii) Investment
17. The total stock of foreign direct investment (FDI) in The Gambia was US$21 million in 2001.
Gross inflows of FDI averaged US$35 million per year between 1997 and 2001, compared with US$8
million per year between 1985 and 1995.  Inflows of FDI accounted for over 60% of gross fixed
capital formation in The Gambia in 1999 and 2000.13  The increase in FDI inflows can be attributed to
the macroeconomic stability that prevailed in The Gambia in the late 1990s, the sale of government
assets through the privatization process, and the opening up of certain subsectors to the private sector.
18. The stock of FDI has largely been concentrated in financial institutions, tourism,
manufacturing, and the wholesale and retail subsectors (Chart I.3).  Agri-processing activities, notably
manufactures of horticultural products and of groundnut oil, have been more recent beneficiaries of
FDI inflows.  The principal source countries in recent years have been Libya, India, Lebanon,
Mauritania, and  the United Kingdom. Balance-of-payments data show some evidence that imports
increase in tandem with FDI inflows.  This is expl ained, to a certain extent, by the relatively large
investment in re-exportation activities, and in tourism, for which inputs are generally imported.
19. FDI inflows showed signs of tapering off in  2001, reflecting the general downswing in the
global economy.  The manufacturing sector's potential to attract FDI has been somewhat hampered by
biases in the tariff structure in certain industries (Chapter III(2)(iii)(a)), and the costs generated by
deficiencies in  infrastructure.  The recently established second free zone may in part address theformer problem.  The quality of infrastructure could improve if certain subsectors, such as power and
fixed-line telecommunications, were themselves opened to foreign investment.
                                                     
11 WTO (2003).
12 Feenstra and Hanson (2000).
13 UNCTAD (2002).The Gambia WT/TPR/S/127
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%199519961997199819992000
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%199519961997199819992000Chart I.2
Direction of merchandise trade, 1995-00
(a) Exports
(b) Imports
Source: WTO Secretariat calculations, based on UNSD, Comtrade database.United States
Other EU NetherlandsBrazil
Côte d'Ivoire ChinaUnited Kingdom Germany
OtherFranceBelgium-Luxembourg
Asia FranceGermany
Guinea-Bissau SenegalNetherlands United Kingdom
OtherSpainThe Gambia WT/TPR/S/127
Page 11
sales tax act aimed at, inter alia , creating a single revenue authority responsible for both inland taxes
and customs revenue collection. Given that the potential to introduce new taxes is limited, the
effectiveness of measures envisaged or taken in recent years to improve revenue collection will be
critical.  As measures to improve expenditure management and strengthen revenue collection take
effect, the budget deficit, excluding grants, is projected to decline to less than 3%.
23. Besides playing a key role in maintaining macroeconomic stability and low inflation
expectations, expenditure and revenue measures would allow the Government to channel scarce
resources to priority sectors, and to avoid the crow ding-out effect of its borrowing. Given the share in
fiscal revenue of taxes on international trade (approximately 50% in 2001), more efficient
macroeconomic management will also facilitate the implementation of further trade reforms required
to eliminate anti-export biases in the tariff structur e, and to establish an overall set of incentives to
attract investment in processing activities.
24. Significant downside risks are nevertheless becoming apparent, which could lead to growth
well below projected rates.  In the short term, these  risks stem from persistent fragility in the global
economy and an uncertain international security situation, which could affect key sources of growth
such as tourism and exports, including the re-export  trade.  Continued depreciation of the dalasi, andpersistently high petroleum prices, could make it difficult to reduce inflation, and may thus keep
upward pressure on interest rates. Recent developments have begun to expose The Gambia’s over-
reliance on the re-export trade, which is particularly vulnerable to exogenous factors.  There are also
signs, notably the mounting list of draft legislation that awaits enactment, that the pace of reforms is
decelerating.
25. Continued implementation of structural reforms, particularly in utilities, and regulatory
reform, along with trade reform, is likely to increase investment opportunities in The Gambia, andcontribute to economic diversification.  This, in turn, should make The Gambia more resilient to
external shocks.