The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s fiscal deficit contracted by 32.2 per cent to $260.8 million for the first nine months of the 2013-2014 Budget year, driven by a drop in capital spending and increased non-border tax revenue.

The Central Bank of the Bahamas, in its report on economic developments in April, said the $123.8 million ‘red ink’ decline came from a $45.8 million (4.6 per cent) revenue rise to $1.053 billion. This combined with a $78 million spending drop, led entirely by the capital side.

While the Government will be able to take some encouragement that it is a sign its early fiscal reform efforts are bearing fruit, the report shows continued weakness in the form of reduced Customs/Excise Taxes and increased recurrent (fixed cost) spending.

And it provided further evidence of the Government’s continued heavy borrowing requirements, with the Christie administration having taken on $425.8 million in foreign borrowings in the nine months to end-March 2014.

The bulk of that came from the $300 million US dollar sovereign bond, the balance coming from $125.8 million in project loan drawdowns. Then there was the $370 million in debt financing obtained from Bahamian investors, featuring $115 million in bonds, $125 million in short-term foreign currency and $130 million in short-term debt.

The Central Bank said: “Non-tax collections grew by $38.6 million (35.4 per cent) to $147.5 million, explained by a $27.4 million (38.8 per cent) timing-related surge in fines, forfeits and administrative fees, alongside a $12.7 million (34.8 per cent) gain in ‘other sources’ of income, linked to dividend receipts from an ownership stake in [the Bahamas Telecommunications Company].

“Tax revenue also rose by $7.2 million (0.8 per cent) to $905.1 million, as rate increases led to a $37.5 million (48.6 per cent) hike in business and professional fees, which offset the $27.5 million (6.1 per cent) decline in taxes on international trade.”

The Central Bank added: “On the expenditure side, the decrease in outlays was underpinned by a $59.2 million (34 per cent) decline in capital spending to $115.1 million, associated with a $46.5 million (32.2 per cent) reduction in infrastructure-related projects and a $4 million (20.5 per cent) fall-off in asset acquisitions.

“In addition, net lending for budgetary support to the public bodies was curtailed by $38.3 million (46.4 per cent) to $44.1 million.

“Conversely, recurrent spending advanced by $19.4 million (1.7 per cent) to $1.154 billion, as higher interest payments and subsidies boosted transfer payments by $40.9 million (9.3 per cent).”

On the tourism front, the Central Bank said: “Supported by increased levels of stopover arrivals, total room revenue - based on a sample of large hotels in New Providence and Paradise Island - grew by 12.3 per cent in April, vis-�-vis the prior year.

“Both the average daily room rate (ADR) and hotel occupancy rate improved, by 12.6 per cent to $290.13, and by 3.2 percentage points to 75.2 per cent, respectively.

“Notwithstanding, the year-to-date outcome remained relatively soft, due mainly to lower inventory levels, including the closure of one property for refurbishment. Overall room revenues fell by 1 per cent over the four-month period, despite gains in average occupancy rates and ADRs, of 1.1 percentage points to 70.1 per cent, and by 1.3 per cent to $270.8, respectively.”