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Monthly Economic and Financial Developments, March 2006

Published: Thursday May 4th, 2006

The economy continued its expansion in March, buttressed by ongoing investments in the tourism sector and further accretions to private sector demand, as evidenced by the firming in mortgages, consumer credit and imports.

Domestic price inflation for the year to March strengthened to 2.1% from 1.1% in the previous period, as higher costs for food & beverages, housing and other goods & services, negated cost declines for clothing & footwear and recreation & entertainment services. Moreover, quarterly average prices at the pump for diesel and gasoline rose on a year-on-year basis by $0.71 and $0.80, respectively.

Regarding fiscal developments, initial data for the first eight months of FY2005/06 indicated a reduction in Government's deficit by 33.5% to $79.9 million from the corresponding period a year earlier. Generally improved economic conditions supported accretions to total revenue of 20.8%. Tax receipts expanded by $106.2 million (17.8%), stemming largely from growth in import duties and related stamp taxes of 16.7% and 17.5%, respectively. Non-tax receipts also rose by $21.1 million (65.5%), owing mainly to a $14 million hike in immigration fees. However, total expenditure firmed by 15.1% to $808.4 million, on account of increases in both current and capital expenditure outlays. The 11.4% rise in current expenditure reflected, in large measure, accretions to personal emoluments (7.0%) and transfer payments (16.8%). Ongoing road and building construction activities largely explained the 80.7% increase in capital expenditure.

During the month, the Bahamas International Securities Exchange (BISX) announced that its $250,000 rights’ offering to existing shareholders was fully subscribed, with proceeds earmarked to fund its future operations. In the first quarter, there was an improvement in the volume of trading, and the All Share Index gained 0.8%, to close at 1,375.6 points for the month.

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