The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s fiscal deficit for the first 11 months in its 2011-2012 fiscal year rose 24 per cent year-on-year to $293.8 million, as spending - and the size of government - outpaced a 4.5 per cent improvement in tax revenues.

The Central Bank of the Bahamas, in its monthly economic report for July 2012, said the fiscal deficit for the 11 months to end-May 2012 had risen $56.8 million year-over-year due to a $117.8 million, or 7.8 per cent, rise in total spending exceeding a $61.1 million revenue improvement.

The latter’s increase, though, to a $1.329 billion total was driven by the Government receiving “arrears” Excise Tax payments by a public corporation.

With total government spending hitting $1.622 billion, the Central Bank said: “On the spending side, current outlays grew by $28.2 million (2.2 per cent) to $1.33 billion, led by hikes in purchases of goods and services and wages and salaries, of 18.3 per cent and 3.4 per cent, respectively.

“However, transfer payments declined by $35.5 million (6.6 per cent), as interest expenses contracted by $14 million (7.4 per cent), and subsidies and other transfers decreased by $21.6 million (6.1 per cent).

“Capital spending firmed by $38.2 million (24.3 per cent) to $195.6 million, of which 81.5 per cent was associated with ongoing infrastructure development works, while net lending to public corporations doubled to $97.1 million.”

As for the tax side, the Central Bank added: “Under revenue, the $24.8 million (2.2 per cent) increase in tax receipts, to $1.181 billion included a $124 million (67 per cent) expansion in excise taxes, which were bolstered by the receipt of arrears payments by a public corporation, and was significantly offset by an $89 million (18.9 per cent) contraction in ;’miscellaneous’ tax collections to $382.2 million from the previous year, when one-off stamp tax collections from the sale of a local oil company boosted receipts.”

The Central Bank said the Bahamian economy continued to see positive, but mild, growth in July. Total visitor arrivals for the first seven months of the year were up 8.1 per cent at 3.67 million, exceeding the 7 per cent gain of 2011.

“Notably, there was a rebound in air traffic by 8.6 per cent, in contrast to the prior year’s 3.3 per cent contraction, while growth in the dominant sea component tapered to 8 per cent from 2011’s 10.9 per cent,” the Central Bank said.

“Disaggregated by first port of entry, visitors to New Providence were up by 12 per cent to 1.97 million, on account of a 13.2 per cent surge in sea traffic and a robust 9.7 per cent gain in the high value-added air segment.

“Similarly, the number of tourists to the Family Islands expanded by 5.9 per cent, occasioned by improvements in both sea (6.5 per cent) and air (1.2 per cent) arrivals. In contrast, the Grand Bahama market fell marginally by 0.1 per cent, as the 2 per cent reduction in the larger sea segment overshadowed the 14.4 per cent rise in air visitors.”

As for the all-important fuel costs, the Central Bank added: “Domestic fuel costs trended downwards in July, benefiting from a reduction in international oil prices in the earlier months.

“The average price of gasoline and diesel declined by 4.5 per cent and 8.2 per cent, on a monthly basis, to $5.27 and $4.81 per gallon, respectively. However, over the year, the average price of gasoline was flat, while diesel costs rose by 3.4 per cent.

“In contrast, the Bahamas Electricity Corporation’s fuel charge was higher by 5.7 per cent month-on-month, at 28.51 cents per kilowatt hour (kWh), and surged by 25.3 per cent relative to last year.”