Research published by the IMF in September 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.

Notwithstanding parameter sensitivity, the simulations allow for