Outlook for 2011-12

The president, Yahya Jammeh, and the ruling party, the Alliance for Patriotic Reorientation and Construction (APRC), are expected to retain a firm grip on power through a combination of patronage and repression. The opposition is extremely unlikely to win a significant share of the vote in the presidential and parliamentary elections in late 2011 and early 2012 respectively, as the APRC continues to co-opt popular opposition members with lucrative job offers while also harassing the more outspoken leaders and intimidating opposition supporters. Following a recent spate of arrests, almost everyone with the influence and financial backing to orchestrate a coup is in jail or in exile. However, recent events have highlighted the possibility of unexpected changes on this front, and there is a small chance that a coup will take place over the forecast period. Real GDP growth is forecast to slow from an estimated 5.6% in 2010 to 5.3% in 2011, before picking up to 5.5% in 2012, as growth in agriculture remains strong but the recovery in tourism is held back by a dip in growth in the EU-the main market for tourism to The Gambia. The fiscal deficit is forecast to moderate to 1.5% in 2011 and 1% in 2012 as the government balances the impetus to raise spending ahead of the elections with pressure from the IMF to shift the budget into surplus.

The political scene

The Gambia has cut diplomatic relations with Iran, a former ally. The decision seems to have been linked to the seizure of an arms shipment originating in Iran and destined for The Gambia. Rumours that the president wants to become king have persisted. The ruling party won a local government by-election in October. Corruption remains rampant, according to Transparency International.

Economic policy

An IMF mission noted that fiscal performance has improved in the second half of 2010. This should pave the way for the release of the final tranche under the extended credit facility (ECF; 2007-11). The draft budget for 2011 envisages a deficit of 1.4% of GDP in 2011, which will further boost public debt.

The domestic economy

The Gambia's position in the World Bank's Ease of Doing Business rankings has slipped as business reforms have stagnated. Nigeria's Oranto Petroleum has been given the exploration rights to an onshore block in western Gambia.

Foreign trade and payments

Five loan and grant agreements, worth a total of US$45m, have been signed with the Islamic Development Bank. These include funds for the National Water and Electricity Company.