NASSAU, Bahamas, CMC – The Central Bank of the Bahamas (CBB) says that preliminary indications are that the domestic economy sustained its recovery momentum in February from the adverse effects of the coronavirus (COVID-19) pandemic.
In its monthly Economic and Financial Developments (MEFD), the CBB said that tourism output continued to register strong growth, undergirded by gains in both the high value-added air segment and sea traffic, as travel restrictions related to COVID-19 remained eased, and the demand for travel in crucial source markets increased.
It said on the fiscal front government’s budgetary operations for the first six months of the financial year 2022/23 showed a narrowing in the deficit, underpinned by a rise in revenue collections, which outstripped the growth in aggregate expenditure.
In price developments, the CBB said average consumer price inflation, as measured by changes in the average Retail Price Index (RPI), rose during the 12 months to January 2023, reflecting the pass-through effects of higher international oil prices.
It said monetary sector developments featured an expansion in banking sector liquidity, as the rise in the deposit base contrasted with the reduction in domestic credit. Further, external reserves increased during February, reflecting the government’s external borrowing activities and private sector inflows.
According to the CBB, initial data suggested that the tourism sector registered robust growth during February, surpassing pre-pandemic levels. The performance continued to benefit from relaxed pandemic-related conditions and heightened demand for travel in key source markets.
Official data from the Ministry of Tourism (MOT) showed that total passenger arrivals rose to 0.8 million in February from 0.4 million in 2022. In particular, the dominant sea segment more than doubled to 0.7 million from 0.3 million visitors in the previous year.
In addition, air traffic stabilized at 0.1 million, exceeding pre-pandemic levels, representing 97.5 percent of the air arrivals recorded in 2019.
“On a year-to-date basis, total arrivals recovered to 1.7 million, compared to 0.7 million in the comparative 2022 period,” the CBB said, noting that data provided by AirDNA on the short-term vacation rental market mirrored these positive trends.
“Specifically, in February, total room nights sold increased by 51.1 percent to 148,726 nights. Correspondingly, the occupancy rates for entire place and comparable hotel listings increased to 66.3 percent and 63.6 percent, respectively, vis-à-vis 55.2 percent and 50.7 percent in the previous year.
“Further, price indicators showed that year-over-year, the average daily room rate (ADR) for the entire place rose by 9.6 percent to US$533.56 and for comparable hotel listings, by 8.6 percent to US$196.91.”
The CBB said preliminary data on the government’s budgetary operations for the first six months of this financial year revealed that the deficit narrowed to US 276 million from US $281.3 million in the last financial year.
It said underlying this outturn, total revenue expanded by US$124.6 million, or 11 percent, to US$1,258.3 million, outpacing the US$119.3 million or 8.4 percent increase in aggregate expenditure to US$1,534.3 million.
The CBB said the recovery in revenue collections was primarily attributed to a US$130.6 million rise in tax receipts. It said taxes on goods and services grew by US$17.8 million as valued added tax (VAT) receipts strengthened by US$54.2 million to US$598.8 million, responding to the recovery in economic activity.
In addition, financial & realty stamp taxes increased by US$5.7 million to US$53.5 million. Further, gaming tax revenue rose from US$8.4 million to US$26.1 million. Likewise, proceeds from international trade and transactions, including exports, customs & other import duties, and departure tax, expanded by US$88.5 million to US$314.3 million relative to the prior fiscal year.
In addition, property tax collections grew by US$22.7 million to US$59.5 million, while general stamp taxes increased by US$1.6 million to US$5.8 million.
In contrast, non-tax revenue decreased by seven million dollars to US$160.6 million, as property income fell by US$17.5 million to US$32 million, while proceeds from the sale of goods and services reduced by US$14.0 million to US$100.2 million.
The CBB said as it relates to expenditure, recurrent spending grew by US$105.3 million to US$1,416.6 million, led by a rise in employee compensation of US$399.4 million. In comparison, interest payments moved higher to US$280.9 million.
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