The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s fiscal deficit was slashed by almost 46 per cent to $78.1 million for the first quarter of its 2013-2014 fiscal year, even though the Bahamian economy continues to face “significant headwinds”.

Acknowledging that the Bahamas continued to endure “a lacklustre tourism performance”, the Central Bank of the Bahamas’ October monthly economic review said the Government’s financial performance for the three months to end-September was aided by a combination of revenue and spending improvements.

With the total deficit dropping by $66.2 million year-over-year, the Central Bank said this stemmed from “a gain in total revenue of $8.5 million (2.9 per cent) to $305.3 million, and a decline in aggregate expenditure of $57.8 million (13.1 per cent) to $383.3 million”.

It added: “In terms of revenue, non-tax receipts grew by $9.4 million (39.1 per cent) to $33.5 million, primarily explained by a $9.5 million (46.7 per cent) rise in fines, forfeits and administrative fees.

“In contrast, tax collections contracted marginally by $0.9 million (0.3 per cent) to $271.7 million, led by a $15.2 million (9.9 per cent) decline in taxes on international trade, which offset the almost two-fold increase in other ‘non-allocated’ taxes to $28.4 million.”

As for the factors more within the Christie administration’s control, the Central Bank added: “On the spending side, current expenditures decreased by $27.5 million (7.5 per cent) to $342.1 million, reflecting in part a decrease in subsidies to a local public health authority.

“Capital spending contracted by $32.1 million (51.5 per cent) to $30.2 million, occasioned by a $21.8 million (45.2 per cent) fall-off in capital formation, in line with the reduced level of infrastructural projects. However, Government’s budgetary support to public entities grew by a net of $1.9 million (20.2 per cent) to $11.1 million.”

As for the real economy, the Bahamas’ overall tourism performance remained down, despite the boost one hotel received from hosting a major sporting event.

“According to preliminary information from a sample of major hotels in New Providence and Paradise Island, total room revenue contracted by 15 per cent in October year-on-year, with the 9.4 percentage point fall-off in the average hotel occupancy rate to 44 per cent, outweighing the 2.5 per cent rise in the average daily room rate (ADR) to $161.05,” the Central Bank added.

“Similarly, over the 10-month period, properties surveyed reported an 8 per cent drop in revenue, as the 2.8 per cent increase in the average daily room rate to $234.11 did not compensate for the 5.8 percentage point reduction in room occupancy to 64.3 per cent.”

When it came to the arrivals component of the tourism industry, the Central Bank added: “Sustained weakness in key source markets, alongside increased competition from other regional destinations, constrained growth in tourist arrivals for the nine months to September to 2.3 per cent, from 8.3 per cent in 2012, for a 4.5 million visitor count.

“In particular, the high value-added air segment contracted by 6.5 per cent, a reversal from last year’s 9.4 per cent gain, while the expansion in sea passengers tapered to 5.1 per cent from 8 per cent.

“By port of entry, visitors to New Providence rose by 7.8 per cent to 2.6 million, with the 15.5 per cent hike in the dominant sea component outpacing the 6.9 per cent fall-off in air traffic,” the Central Bank added.

“In contrast, the Grand Bahama market experienced a decline of 2.8 per cent, owing to contractions in both the air and sea segments, by 17.1 per cent and 0.7 per cent, respectively.

“Despite the opening of a mid-sized resort in the middle of the year, arrivals to the Family Islands decreased by 4.7 per cent, as a 5.5 per cent fall-off in sea visitors outstripped the 1.4 per cent improvement in the air component.”