Monthly Economic and Financial Developments, April 2011

Published: Tuesday May 31st, 2011

Supported by the ongoing recovery in the global economy, domestic economic conditions maintained a stable to improving trend over the review month. Indications are that positive developments in the key group business contributed to steady gains in tourism output, while a number of foreign investment-related and public sector projects underpinned activity in the construction sector. Monetary conditions remained favourable, as proceeds from the privatization of the Bahamas Telecommunications Company facilitated a significant increase in external reserves to record highs. On the fiscal side, the Government’s overall deficit narrowed during the nine months of FY2010/11, as revenue gains, benefitting from one-off stamp duty receipts, outstripped the growth in expenditure.

Partial data on tourism performance suggest a modest firming in activity, following signs of softness in the first quarter. Based on a sample of large hotels in New Providence and Paradise Island for the month of April, room revenues expanded by 9.6% on account of a 1.3 percentage point advance in the average hotel occupancy to 74.1%, combined with a 7.4% rise in the average daily room rate to $292.2.

Preliminary data on Government’s budgetary operations through the nine months of FY2010/11 showed a narrowing in the fiscal deficit, by 25.3% ($64.2 million) to $189.6 million. Total revenue expanded by 8.1% ($77.2 million) to $1,028.1 million, supported by an 18.9% ($149.0 million) surge in tax revenue, as receipts from the sale of an oil company led to an almost doubling of non-trade stamp tax collections to $202.4 million. More modest gains were noted for international trade and transaction taxes, of $15.5 million; departure taxes, of $26.0 million and selective taxes on services, of $18.7 million. In contrast, non-tax receipts contracted by 43.9% ($71.8 million), owing to a return of income from “other” sources to trend levels, following extraordinary inflows in the previous fiscal year. Total expenditure rose by 1.1% ($13.0 million) to $1,217.7 million, led by a 3.3% increase in current outlays, as purchases of goods & services firmed by 18.5%. Capital spending advanced by 14.3%, buoyed by a three-fold rise in asset acquisitions—mainly for land, while capital formation outlays grew by 2.8%. Conversely, net lending to public corporations fell by one-half to $37.2 million.

Consistent with the upward trajectory in international oil prices, average prices for both gasoline and diesel in April firmed by 6.9% and 9.8%, and on an annual basis, by 17.6% and 35.3% to $5.28 and $5.06 per gallon, respectively.

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