Monthly Economic and Financial Developments, November 2011

Published: Friday December 23rd, 2011

Preliminary data for the Bahamian economy suggests a continuation of the mild recovery momentum during November, with construction output supported by both foreign investment and public sector infrastructure projects, and tourism activity benefitting from holiday travellers. Against this backdrop, and the persistence of high employment levels, the monetary sector outcome continued to be characterized by robust levels of bank liquidity, relatively mild private sector credit expansion and high loan arrears. The external reserves position contracted, in line with the seasonal—although muted—firming in consumer demand towards the end of the year, but was sustained at levels in excess of the year-earlier period. Indications are that the overall fiscal deficit for the first four months of FY2011/12 registered some improvement, linked to gains in tax receipts, while average consumer price inflation exhibited a moderate firming bias in November.

Preliminary data from a sample of hotels in New Providence and Paradise Island point to a moderate improvement in tourism output in November, as Thanksgiving holiday traffic, the hosting of a significant sports event and various promotional activities led to broad-based gains in revenues. The 16.2% gain in hotel receipts was explained by growth in hotel occupancy of 8.9 percentage points to 63.9%, reinforced by a $3.69 hike in the daily average room rate to $201.23. Over the eleven-month period, total revenues reportedly firmed by 2.8%, supported by a 1.1 percentage point advance in the occupancy rate to 64.5% and a 1.8% expansion in average daily rates.

Preliminary data on Government’s budgetary operations for the first four months of FY2011/12 place the overall deficit lower by 4.2% ($6.9 million) at $160.3 million from the corresponding period a year earlier. Total revenues firmed by 3.8% ($13.4 million) to $366.5 million, underpinned by a 6.1% ($19.1 million) expansion in tax collections, as higher excise tax receipts (20.1%) led to an increase in taxes on international trade (3.0%). “Other” miscellaneous taxes also rose by 9.3% ($9.7 million), attributed to a timing-related $14.1 million firming in stamp taxes, mainly from the sale of medium to high-end properties. In contrast, non-tax collections softened by 15.2% ($5.8 million), due to the lower incidence of dividend payments from public bodies. Total expenditures firmed by 1.2% ($6.5 million) to $526.8 million, with current outlays higher by 4.1% ($18.6 million), due in large measure to a 30.3% increase in purchases of goods and services. In contrast, capital expenditures declined by 20.2% ($11.1 million), led by a $8.3 million contraction in asset acquisitions from the prior year, when Government purchased land from an oil company; and net lending to support the budgetary operations of public corporations fell by 5.8% ($1.0 million) to $15.9 million.

In terms of prices, the average monthly cost of gasoline rose by 1.8% to $5.17, and diesel prices firmed by 1.6% to $5.09. When compared to the previous year, the average costs for both products rose significantly, by 18.6% and 34.0%, respectively.