Monthly Economic and Financial Developments (MEFD) May 2026
Published: Monday June 29th, 2026
Domestic Economic Developments
Overview
Indications are that in May, the domestic economy continued to expand at a healthy pace, with economic indicators normalizing closer to their expected medium-term potential. Tourism earnings indicators firmed in comparison to 2025 supported by strengthened indicators for the higher value-added stopover component and sustained gains in cruise arrivals. In monetary developments, during the review month, the narrow measure of banking sector liquidity contracted, as the expansion in domestic credit outpaced the rise in the deposit base. However, external reserves increased in May, reflective of net foreign currency inflows through the public and private sectors.
Real Sector
Tourism
Monthly data indicated that tourism output indicators remained moderately firmed in comparison to 2025, paced by improved outcomes for the high-value stopover segment, alongside further gains in the cruise category. However, accommodation capacity remained constrained.
Official data from the Ministry of Tourism showed that total arrivals increased by 3.3% to 1.1 million visitors in April, when compared to the same period of the previous year. Supporting this outturn, sea passengers grew by 3.6% to 0.9 million, while air arrivals rose by 1.8% to 0.2 million.
By major port of entry, total arrivals to Grand Bahama more than tripled to 128,467, from 36,346, relative to the same month the prior year. Contributing, sea visitors expanded to 122,077 from 29,998 in the comparative 2025 period, given new onshore destination facilities, while air arrivals advanced by 0.7% to 6,390 visitors. Further, visitors to the Family Islands increased by 2.7% to 0.5 million, vis-à-vis the corresponding period last year, as sea passengers rose by 3.0% to 0.5 million, outstripping a 1.4% decline in air traffic to 38,328. In contrast, total visitors to New Providence contracted by 13.2% to 0.5 million during the review month, relative to the comparable period in 2025, amid a 18.3% decline in sea arrivals to 0.3 million, albeit air traffic increase by 2.8% to 0.1 million.
On a year-to-date basis, total arrivals expanded by 13.9% to 5.0 million visitors. Contributing, sea passengers grew by 15.7% to 4.3 million, while air traffic recovered by 4.3% to 0.7 million visitors (see Table 1 for disaggregated year-to-date figures).
According to the latest data provided by Nassau Airport Development Company Limited (NAD), total departures—net of domestic traffic—increased by 7.1% in May, vis-à-vis the comparative 2025 period. Supporting this outcome, international departures rose by 18.4% to 22,985. Further, US departures grew by 5.2% to 0.1 million.
In the five-months to May, total outbound traffic expanded by 5.2% to 0.8 million. Specifically, international traffic moved higher by 39.5% to 149,394, contrasting with the 0.8% falloff in US departures, to 0.6 million.
Short-term vacation rental market metrics indicated that total room nights sold increased by 6.6% to 48,730 in May, vis-à-vis the corresponding period in 2025. Specifically, outpacing additional listings, occupancy rates for hotel comparable and entire place listings rose to 47.9% and 45.3%, respectively, from 44.2% and 42.6% in the previous year. Further, the average daily room rate (ADR) for entire place listings grew by 9.5% to $752.89. In contrast, the rate for hotel comparable listings declined by 1.1% to $167.72.
On a year-to-date basis, total room nights sold grew by 9.9% to 306,687, when compared to last year. In addition, the average daily room rate increased for entire place and for hotel comparable listings by 7.3% 4.5%, respectively.
2026/2027 Budget Communication Highlights
Under the theme “A Budget that Builds on Progress”, the Government presented its Budget Communication for FY2026/2027 to Parliament on May 27, 2026 and approved at end-June. The Government outlined a strategy to consolidate economic recovery and fiscal stability, while investing in key national development priorities. The Government also signalled initiatives to boost revenues through better tax compliance, targeted tax measures, and improved administration, while avoiding broad tax increases. Expenditure allocations highlighted priorities for healthcare, education, national security, infrastructure, and digital transformation. These initiatives were framed to enhance public services, boost economic competitiveness, lower debt levels, and foster long-term sustainable growth for The Bahamas.
In the 2026/2027 Budget, the Government emphasized revenue enhancement to strengthen collection, improve fairness and increase efficiency. The approach to revenue optimisation was based on five pillars—cost of living relief, building a modern revenue system, revenue compliance, enhancement and protection, ease of doing business and fair contribution. In this regard, the budget forecasts revenue intake of $4.4 billion for FY2026/27, relative to the projected $3.9 billion in FY2025/26.
The Government’s revenue strategies primarily focused on enhancing compliance, modernizing tax administration, and implementing targeted tax reforms, rather than introducing broad-based increases impacting ordinary Bahamians. The Government proposed a two-tier Real Property Tax System, distinguishing between Bahamian-owned and foreign-owned properties, ensuring equal and transparent tax contributions. In this context, foreign-owned property owners are now mandated to pay a defined tax rate of 0.625% and a maximum $200,000 cap, regardless of their length of stay. In addition, an increase of 0.25% has been applied to the business license rate, for businesses earning over $175.0 million per annum. Moreover, registration and fee schedules for foreign-owned recreational vessels were introduced.
With regard to relief measures, the Government extended VAT relief for first-time homeowners by applying zero-rated treatment to multi-unit properties where at least one unit was owner-occupied. Further, exemptions for first-time Bahamian homeowners under the Real Property Tax Act, was extended for properties valued up to $600,000. In addition, duty rates were eliminated or reduced for a number of items, including chair lifts designed for the elderly and persons with disabilities, human hair and wigs (to accommodate persons with related medical conditions), common household plastic items, paper goods and sanitary products. In other tax relief measures, the Budget provisioned for reduced electricity costs to Family Islanders and reduced work permit fees for caregivers for the elderly.
The budgeted expenditure allocation of $4.1 billion for FY2026/27, contrasted with the $3.8 billion provision for FY2025/2026. Recurrent outlays were provisioned to reach $3.7 billion, vis-à-vis the $3.4 billion approximation in FY2025/2026. Capital spending was allocated $415.8 million, higher than the $376.3 million budgeted in 2025/2026. Of note, Government outlined several scheduled infrastructure projects throughout the islands of The Bahamas related to medical facilities. Major housing development projects were also scheduled in both New Providence and Grand Bahama. In addition, approximately $21.5 million has been allocated to the Water and Sewerage Corporation to upgrade water main systems in the Family Islands. Further, funding has been allocated to supplement a recently secured loan to develop a major drainage system in Pinewood Gardens. Meanwhile, additional spending has been allocated for various roadworks initiatives and a guarantee will be given for Bridge Authority loan to construct a new Glass Window Bridge in Eleuthera.
New initiatives associated with energy generation was announced as the Bahamas Power and Light Company has secured investments for solar energy and battery power. Moreover, developments under the Shore Power Project were announced for the construction of a power plant that captures and converts wasted heat and steam into electricity. As it relates to national safety, the Budget included allotments to acquire and refurbish vehicles and vessels essential to national security. Concerning healthcare, expansions were budged for the Prescription Drug Programme. Further, resources were allocated to secure, recruit and retain more health-care professionals, along with investments in medical and surgical equipment for a new correctional medical centre for inmates, as well as upgrades to existing hospital facilities.
In terms of systems upgrades, additional resources were earmarked for new data sharing system platforms in healthcare, the continued advancement of the Virtual Courts Project, and the modernisation of government systems. Outlays were also allotted for upgrades to surveillance, security and CCTV systems, in addition to the modernisation of financial and administrative systems through Oracle Data Centre and new biometric systems. Funds were also earmarked to integrate the Central Bank Digital Currency “SandDollar” into the Government payments system. In the pursuit of eliminating food insecurity, the Budget increased the overall agriculture allotment to $40.0 million, from $35.0 million. In addition, further investments were earmarked for the development of complete cultivation centres in New Providence and Eleuthera, as well as for a food processing plant.
Budgeted expenditures associated with education and personal development included continued support of the Bahamas Polytechnic Accreditation and Training Hub, increased grants for the School Boards of special schools, and increased funding for the increase in teachers’ salaries. Further, spending has been outlined for the construction of a new school in Grand Bahama and investments in the National Maritime Academy.
Based on the current outlook, the Government anticipates a fiscal surplus of $223.1 million or 1.2% of GDP, for FY2026/2027, compared with the projected $75.5 million surplus (0.5% of GDP) for FY2025/26. Given the projections, a reduction in the direct debt charge was forecasted, alongside a decrease in the corresponding ratio to GDP.
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