Monthly Economic and Financial Developments, April 2013
Published: Thursday June 6th, 2013
Domestic economic conditions were relatively subdued during the month of April, reflecting signs of softness in the tourism sector, although with stable support from foreign investment-led construction activity. Domestic energy costs eased somewhat for the review period, in line with the general downward trend in international oil prices. In the fiscal sector, the overall deficit expanded over the nine months of FY2012/13, as spending increased and revenue receipts moved lower. Supported by net foreign currency inflows associated with real sector activities, both bank liquidity and external reserves expanded in April.
Indications are that the slowdown in tourism sector output was largely attributed to weakness in the long-stay visitor segment, as economic conditions in the key North American source market remained stressed. Provisional first quarter data from a sample of large hotels in New Providence and Paradise Island showed total room revenue declining by 1.9%, owing primarily to a broad-based reduction in the average hotel occupancy rate by 3.2 percentage point to 68.0%. However, in a compensating move, almost 80% of the properties surveyed reported higher average daily room rates (ADRs), resulting in a 6.3% gain to $270.74 per day.
Domestic consumer price inflation, as measured by changes in the Retail Price Index, slowed by 1.2 percentage points to 2.0% in 2012. Underlying this outturn was a ratcheting down in transportation price gains, by 7.9 percentage points to 1.5%, while household equipment & maintenance inflation fell to 2.4% from 4.3% in the prior year. In addition, communication and recreation & culture costs contracted by 2.3% and 0.6%, respectively, versus gains of 1.3% and 1.6% in 2011.
Amid a reduction in international oil prices, the cost of gasoline and diesel decreased by 0.9% and 1.3% in April and fell by 2.6% and 1.1% year-on-year, to $5.60 and $5.35 per gallon, respectively. In contrast, the Bahamas Electricity Corporation’s fuel charge rose by approximately 6.7% relative to both March and the previous year, to 28.24 cents per kilowatt hour (kWh).
The Government’s overall deficit for the nine months of FY2012/13, deteriorated by $146.6 million (61.6%) to $384.5 million over the corresponding period a year earlier, as total revenue contracted by $74.0 million (6.9%) to $1,006.9 million, while aggregate spending firmed by $72.6 million (5.5%) to $1,391.4 million. In terms of receipts, tax collections decreased by $52.0 million (5.5%) to $897.9 million, reflecting declines in taxes on international trade, by 17.7% ($97.5 million), due to a one-third ($91.7 million) reduction in excise taxes back to trend levels, after a significant inflow in the prior year. In addition, non-tax revenue fell by $4.4 million (3.9%) to $108.9 million, due mainly to a $16.5 million (37.3%) reduction in income from other “miscellaneous” sources, following a one-off receipt in the previous period, while collections from fines, forfeits and administrative fees firmed by $3.8 million (5.7%). On the spending side, growth was underpinned by a $48.0 million (4.4%) increase in current outlays to $1,134.8 million, associated mainly with gains in personal emoluments (4.3%) and transfer payments (7.4%). Similarly, a 16.1% rise in outlays for infrastructure developments led to capital expenditure expanding by $20.9 million (13.6%) to $174.2 million, while net lending to public entities grew by $3.6 million (4.6%) to $82.4 million.
Over the nine-month period new budgetary financing amounted to $840.5 million, the majority of which was obtained from domestic sources. A total of $325.0 million was raised by way of Registered Stocks, $234.9 million in Treasury bills and $53.0 million in short-term advances, while external financing of $227.6 million included a US$180.0 million loan and project-based loan drawings.
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