The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the First Quarter of 2016. The Review provides an examination of the economic and financial developments over the review period and presents a comprehensive analysis of the contribution of the financial services sector to the economy during 2015.
In summary, indications are that domestic economic conditions were relatively subdued during the first quarter, as the weakness in the tourism sector broadly offset a firming in construction activity, which was supported by the continued development of a number of medium-scale projects throughout the country.
The Government’s operations, corresponding to the third quarter of the fiscal year, culminated in a deficit position as compared to the surplus which was registered in the previous year, as growth in expenditures outpaced a more stable revenue position. Budgetary financing was sourced mainly from the external market.
The Government’s external debt proceeds, in the context of a further reduction in private credit were associated with gains in both bank liquidity and external reserves. In addition, reflecting in part sustained loan write-offs and debt consolidation measures, banks were able to improve credit quality indicators over the review quarter. The profitability measures for the fourth quarter of 2015, were also strengthened for domestic banks.
The Bank conducts an annual review of financial services activity and its contribution to the overall economy—which is published in the March Economic Review. The results of the 2015 Survey indicate that notwithstanding mild growth in the sector, and an increase in expenditure contribution to the economy, both domestic and international banks remain in a retrenchment mode and continued their efforts to streamline and rationalize their operations. The non-bank sector—inclusive of insurance companies, credit unions, mutual funds administrators and financial and corporate service providers—sustained a more broad-based positive growth trajectory.
The potential reduction in correspondent banking arrangements, known as “de-risking” remains of considerable concern to the Central Bank, which will require continued monitoring of international developments as well as the enhanced implementation of the highest international regulatory standards to diffuse the impact on the sector. The Central Bank’s work programme will also address issues related to financial inclusion and explore proposals for more regulation and oversight of activities not currently conducted through commercial banks.
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