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Monthly Economic and Financial Developments, March 2010

Published: Friday May 7th, 2010

The domestic economy showed signs of stabilisation in March, as the pace of the global recovery gathered momentum. Tourism output, while still below pre-crisis levels, recorded modest gains in the key stopover business, although other key real sector activities, such as construction, were anemic, given the weakness in foreign investment flows and a fall-off in mortgage lending. Persistent weakness in private sector demand continued to dampen Government’s tax receipts, which contributed to a widening in the overall deficit for the eight months of FY2009/10. Monetary conditions featured a moderate build-up in liquidity and external reserves.

Preliminary data from a sample of New Providence hotels indicated an upturn in overall tourist spending indicators for the first quarter of 2010. Room revenues increased by an estimated 6.7%, buoyed by a 3.2 percentage point rise in average occupancy to 67.2% and a 2.2% gain in the average daily room rate to $175.00––with the strongest increase occurring in March.

The fiscal situation for the eight months of FY2009/10 registered an expansion in the overall deficit by an estimated $36.3 million (20.1%) to $216.6 million over the corresponding period of FY2008/09. Total spending firmed by $57.2 million (5.7%) to $1,067.8 million, led by a 33.7% increase in capital outlays to $98.8 million, absorbed mainly by infrastructural works. Reflecting budgetary support to public sector bodies, net lending advanced by 69.7% to $70.9 million, while current expenditure rose marginally by 0.4% to $898.1 million. A shortfall in receipts from international trade and other “miscellaneous” taxes caused tax revenues to decline by $49.4 million to $573.8 million; however, non-tax receipts almost doubled to $156.1 million, occasioned by a one-off receipt from the sale of a business entity, combined with timing-related dividend payments.

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