Monthly Economic and Financial Developments, January 2011

Published: Friday March 11th, 2011

Aided by the sustained, although uneven, improvement in the global economy, the domestic market continued on its recovery path, with moderate gains in the tourism sector and stable construction activity. In the absence of a more broadly based domestic economic upturn, Governments’ fiscal deficit remained elevated, as revenue generating opportunities were subdued. Monetary developments for the month were dominated by Government’s receipt of stamp tax proceeds associated with the sale of a refinery company, which boosted both liquidity and external reserves.

Preliminary tourism data for 2010 showed an increase in overall activity, as the sector benefitted from the ongoing recovery in the main United States market, as well as a number of joint public and private sector promotional campaigns focussed on boosting stopover arrivals. Growth in total arrivals strengthened to 13.0%, for 5.2 million visitors from 5.7% in 2009. The outturn reflected a 16.5% gain in sea traffic to 4.0 million and a 3.4% firming in air visitors to 1.3 million. By ports of entry, visitors to New Providence grew by 9.2% to 2.9 million, occasioned by a 12.5% expansion in the sea component and a 3.3% rise in air arrivals. Similarly, Grand Bahama registered a surge in visitors of 34.5% to 0.8 million, as sea traffic increased by 46.6% to overturn the 9.2% reduction in the air segment. Underpinned by respective gains of 13.2% and 11.1% in air and sea passengers, total visitors to the Family Islands rose by 11.3% to 1.5 million.

Government’s deficit for the first six months of FY2010/11 widened by 22.0% ($38.9 million) to $215.9 million, as the contraction in revenue eclipsed the decline in expenditure. Total receipts fell by 8.8% ($55.4 million) to $573.5 million over the same period a year ago, reflecting an almost 50% falloff in non-tax collections, as income from other “miscellaneous” sources fell by 76.5%, following a dividend led boost in the previous period. However, tax receipts rose modestly by $7.7 million (1.5%) to $507.0 million, explained by a 6.5% gain in international trade taxes and a 40.9% advance in selective taxes on services, which offset the 6.4% downturn in the “miscellaneous” category. The 2.0% ($16.5 million) reduction in aggregate expenditure to $789.4 million, was due primarily to a two-thirds fall-off in net lending to public sector bodies. Capital spending fell marginally by $0.5 million (0.7%) to $79.9 million, as outlays for infrastructure projects decreased by 16.3%. In contrast, current outlays rose by $21.2 million (3.2%) to $687.1 million, buoyed by higher purchases of goods & services and transfer payments, of 11.5% and 5.8%, respectively.

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