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Central Bank releases August economic report

Preliminary indications are that domestic economic growth remained relatively subdued, activity in the construction sector continued to be supported by FDI projects and ongoing hurricane reconstruction, and in the monetary sector, both liquidity and external reserves rose robustly. 

Central Bank of The Bahamas
Thursday, October 19, 2017
Thursday, October 19, 2017

Preliminary indications are that domestic economic growth remained relatively subdued during the review month, reflecting the sustained softness in tourism; although activity in the construction sector continued to be supported by foreign investment-related projects and ongoing hurricane reconstruction work. In the monetary sector, both liquidity and external reserves rose robustly, buoyed by the receipt of proceeds from the Government’s external loan.

In line with the reduction in high value–added air arrivals during the first half of the year, data from a sample of major hotels in New Providence showed earnings weakness. On a monthly basis, the value of room sales decreased by 3.0% in July, amid a 6.5 percentage point reduction in the average occupancy rate to 77.3%, which overshadowed the 2.4% gain in the average daily rate (ADR) to $253.67. In addition, over the first seven months of 2017, total room revenue declined by 7.0% relative to the same period last year. This outturn reflected a fall in the average hotel occupancy rate by 5.5 percentage points to 70.7%, combined with a 2.4% ($6.06) decrease in the ADR to $247.36.

These trends were reinforced by data from the Nassau Airport Development Company Ltd (NAD), which showed a 0.3% softening in international departures from the country’s largest airport during the month of August, vis-a-vis a marginal 0.9% gain in the prior year. In terms of the components, the volume of non-U.S. international passengers fell by 6.9%, after a 0.3% decline a year earlier, while growth in the dominant US segment slowed to 0.6% from 1.0% in 2016.

Fiscal Sector
Preliminary data on the Government’s operations for the first month of FY2017/18 showed a $9.1 million surplus, a turnaround from a $15.8 million deficit recorded during the corresponding period a year earlier. This outturn reflected a contraction in total expenditures by $18.0 million (10.2%) to $159.5 million, which overshadowed the $6.8 million (4.2%) gain in aggregate revenue to $168.6 million.

Capital outlays were negligible during the review month, compared to disbursements of $14.0 million last year. In addition, current expenditure fell by $4.0 million (2.4%) to $159.5 million, as transfer payments contracted by $20.8 million (23.0%) to $69.7 million. In particular, subsidies and “other” transfers decreased by $20.5 million (36.6%), with a timing-related decline in subsidies to the Public Hospitals Authority/National Health Insurance (PHA/NHI) by $8.2 million (42.5%), while transfers to public corporations decreased by $9.2 million (69.3%). In a partial offset, consumption spending rose by $16.8 million (23.1%) to $89.8 million, with purchases of goods and services and wages and salaries growing by $12.7 million (70.2%), and $4.2 million (7.6%), respectively.

The revenue improvement was underpinned by a $7.6 million (5.1%) increase in tax collections to $156.4 million. Gains were reported for the majority of the categories, led by value-added tax (VAT) receipts, which advanced by $7.9 million (11.5%) to $76.6 million, while business & professional fees firmed by more than two-fold ($4.4 million) to $8.1 million–due to a $4.3 million expansion in general business fee proceeds. Meanwhile, taxes on international trade grew by a more muted $1.5 million (3.4%), to $45.7 million. In contrast, “other” tax collections declined by $6.3 million (19.4%) to $26.5 million, as “unclassified’ receipts were negligible during the review period, compared to the prior year’s $10.4 million; however, other stamp tax receipts firmed by $2.3 million (42.3%). Total non-tax revenue softened by $0.8 million (6.1%) to $12.2 million, led by a $0.4 million (3.9%) reduction in receipts from fines, forfeits and administrative fees.

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The advancement of Bahamians to high paying jobs in the financial services sector and the enhanced regulation of the industry were some of the matters raised by Minister of Labour Dion Foulkes during discussions with executives of The Bahamas Financial Services Board and the Association of International Banks and Trusts 5 October 2017.

Under the theme ‘Strengthening the Rule of Law Through Technology’, Bahamas Attorney General and Minister of Legal Affairs Carl Bethel, welcomed and addressed 52 attorneys general, law ministers, and delegates to the 2017 Meeting of Commonwealth Law Ministers, October 16, 2017 at the official opening ceremony at Baha Mar’s Convention Centre.

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