NASSAU, Bahamas, CMC – The Central Bank of the Bahamas (CBB) says preliminary indications are that during the third quarter of 2023, the Bahamian economy sustained its growth trajectory at a moderated pace.
“As the recovery from the Novel Coronavirus (COVID-19) pandemic neared completion, growth indicators returned closer to their expected medium-term levels,” the CBB said in its latest Quarterly Economic Review (QER).
It said tourism output continued to record healthy gains, with the aggressive marketing efforts undertaken by the destination bolstered ongoing improvements in earnings inflows, as the demand for travel in crucial source markets persisted.
“Tourism output sustained its robust growth momentum during the third quarter of 2023, undergirded by healthy gains in high-valued air traffic and sea arrivals, amid persistent demand for travel in key source markets. Aggressive promotional efforts of the destination also drove positive results.”
Preliminary data from the Ministry of Tourism showed that total visitor arrivals grew by 22.8 percent to 2.2 million during the third quarter, exceeding the 1.8 million visitors in the same period in 2022.
Underpinning this development, sea traffic expanded by 26.8 percent to 1.8 million arrivals, surpassing the 1.4 million passengers in the comparable period last year. Likewise, the high-value-added air segment advanced 6.7 percent to 0.37 million passengers, exceeding the 0.35 million visitors in the prior year.
In addition, several small to medium-scale foreign direct investment projects supported the construction sector.
In domestic financing developments, total mortgage disbursements for new construction and repairs, as reported by banks, insurance companies, and the Bahamas Mortgage Corporation, rose by 3.3 percent ($0.7 million) to $22.0 million, a turnaround from the 2.1 percent decline a year earlier.
In price developments, inflationary pressures eased during the 12 months to August despite remaining elevated, reflective of the tapering in global oil prices, relative to the same period last year, the CBB said.
It said provisional data showed that the government’s overall deficit narrowed during the fourth quarter of 2022/23, compared to the same quarter for the financial year 2021/22.
“Contributing to this outturn was a decrease in aggregate expenditure, combined with an increase in total revenue. Budgetary financing was sourced from domestic and external markets, with a larger portion from the former and included a mix of long and short-term debt.”
According to preliminary estimates of the government’s budgetary operations for the fourth quarter of this financial year, the CBB noted that the overall deficit narrowed by US 101.8 million to US$283.7 million relative to last year’s comparative period.
“Contributing to this outturn was a US85.3 million reduction in total expenditure to US$1,060.5 million, combined with a US$16.5 million growth in aggregate revenue to US$776.8 million,” the CBB said.
The Central Bank said that bank liquidity contracted during the review quarter in monetary developments, as the deposit base reduction contrasted with the growth in domestic credit. Further, external reserves declined, reflecting the seasonal increase in demand for foreign currency.
Meanwhile, banks’ credit quality indicators improved over the review quarter, underpinned by the sustained strengthening in the domestic economy and ongoing loan write-offs. Similarly, according to the latest available data, domestic banks’ overall profitability for the second quarter grew, primarily attributed to a rise in banks’ comprehensive interest income.
In external sector developments, the estimated current account deficit widened during the third quarter due to an increase in the merchandise trade deficit and higher primary and secondary income outflows, which outweighed the growth in the services account surplus.
“Further, underpinned by a shift in portfolio investment transactions to a net outflow, the financial account inflows contracted from a net inflow the year prior. Meanwhile, the capital account transfers recorded nil transactions during the review quarter, similar to the comparative 2022 period.”
According to preliminary estimates of the government’s budgetary operations for the fourth quarter of 2022/23, the overall deficit narrowed by US 101.8 million to US 283.7 million relative to last year’s comparative period.
“Contributing to this outturn was a US$85.3 million (7.4 percent) reduction in total expenditure to US$1,060.5 million, combined with a US$16.5 million (2.2 percent) growth in aggregate revenue to US$776.8 million.”
The CBB said that tax receipts, representing 84.3 percent of total revenue, grew from US$55.2 million to $654.9 million. In particular, general taxes on goods and services rose by US$11.9 million to $343.9 million, as value-added tax (VAT) proceeds, which accounted for a dominant 48.3 percent of tax revenue, rose by US$15.9 million to $316.6 million, overshadowing a less weighted decrease of four million US dollars to US$27.3 million, in stamp taxes on financial and realty transactions.
The Central Bank said that collections from specific taxes, mainly gaming, increased by US$1.5 million to US$15.4 million vis-àvis the prior year. It noted further revenue from excise taxes increased almost four-fold to US$1.1 million from US$0.3 million a year earlier.
About the other components, taxes on the use of supply of goods expanded by US$28.8 million to $74.7 million. Leading this outturn, business license fee receipts grew from US$30.2 million to US$62.0 million.
The CBB said that by providing some offset, marine license taxes fell by US$0.8 million. In comparison, motor vehicle taxes decreased by US$0.3 million (3.1%) to nine million, and company taxes by $0.3 million to US $2.6 million.
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