Monthly Economic and Financial Developments, February 2011

Published: Monday April 11th, 2011

Domestic economic conditions remained relatively stable over February, although there were some signs of softness in the key tourism sector, with construction sector activity supported by Government’s infrastructure works and several tourism-related investment projects. As the recovery has yet to translate into any notable improvement in labour market conditions, domestic demand continued to be weak, and opportunities for a reduction in banks’ credit quality indicators, limited. The fiscal situation through January benefitted from extraordinary revenue receipts arising from the sale of a business entity, with the converted proceeds bolstering both liquidity and external reserves.

Key tourism performance indicators from a sample of hotels in New Providence and Paradise Island for the first two months of the year suggest a contraction in hotel revenues by 6.1%, due to lower occupancy and average daily room rates—although with some variability in the outturn for the various properties.

Data on Government’s budgetary operations for the seven months through January of FY2010/11 showed a narrowing of the overall deficit, by $32.0 million (15.9%) to $169.1 million, over the corresponding period of FY2009/10. Total receipts rose by 3.2% ($23.6 million) to $763.3 million, buoyed by a 14.5% gain in tax collections, associated mainly with a nearly 90% surge in stamp tax proceeds from the sale of a business entity. In contrast, non-tax collections were reduced by 45.9% ($63.4 million), in line with the $66.2 million (75.9%) reversion in income from other sources to trend levels, following a one-time boost from the sale of an energy business in the previous period. Aggregate expenditure declined by $8.4 million (0.9%) to $932.4 million, primarily on account of a $34.8 million (54.6%) contraction in net lending to public corporations. However, capital expenditure rose by $3.9 million (4.3%), as the $14.2 million expansion in the acquisition of assets, related to land purchases from a local oil company, outpaced the $9.2 million decrease in infrastructure investments. Current spending grew by 2.9% ($22.4 million), paced by a 14.2% ($19.2 million) rise in purchases of goods and services.

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