The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau/Paradise Island hotels produced a 3 per cent room revenue increase for the 2015 full-year, with average occupancy rates beating 2014 comparatives for eight out of 12 months.

The Central Bank of the Bahamas, in its report on monthly economic developments for January 2016, said data from the Ministry of Tourism and Bahamas Hotel and Tourism Association (BHTA) showed a gradual improvement in sector performance.

Referring to the 3 per cent expansion in total room revenue, it said: “This outturn reflected gains in the average occupancy rate by 2.5 percentage points to 69.2 per cent, as the recovery in the key group segment led to rates exceeding their comparable 2014 levels in eight of the 12 months.

“Similarly, the average daily room rate (ADR) firmed by 6 per cent ($14.41) to $253.88.”

When it came to the Government’s fiscal performance for the 2015-2016 half-year, the Central Bank’s figures differed slightly, but still showed the same trends as Monday’s mid-year Budget statement.

“The deficit narrowed by $110.9 million (42.6 per cent) to $149.3 million,” its report said.

“Supported by a series of revenue enhancement measures and the widening of the tax base following the introduction of the VAT, total receipts rose by $209.6 million (30.6 per cent) to $895.6 million, outpacing a $98.8 million (10.4 per cent) gain in aggregate expenditure to$1.045 billion.

“Tax revenues firmed by $213.2 million (36.3 per cent) to $800.9 million, with a VAT yield of$317 million.”

But, as Prime Minister Perry Christie confirmed on Monday, the Government’s net revenue increase was lower at around $217 million due to the taxes either scrapped, lowered or consolidated to make way for VAT.

“On account of tariff rate reductions which were applied to offset the VAT related increases, taxes on international trade declined by $41.9 million (13. per cent) to $259.4 million, as the import and excise tax components decreased by $26.2 million (16.3 per cent) and $17 million (12.4 per cent), respectively,” the Central Bank said.

“The elimination of the hotel occupancy tax displaced $14.9 million in receipts from selective taxes on services, while a timing-related reduction in ‘other miscellaneous inflows’ contributed to business and professional fees declining by $17.6 million (58.1 per cent).

“Receipts from ‘other taxes’ contracted by $25.1 million (10.8 per cent) to $207.3 million, reflecting a $38.3 million (71.2 per cent) reduction in Stamp taxes from property sales, as most of the corresponding revenue had shifted in composition to the VAT.”

On the spending front, the Central Bank suggested that most of the increase in the Government’s fixed costs had resulted from subsidies to the public corporation being shifted from the capital to recurrent side.

“Driven mostly by reclassification of subventions to public enterprises, current outlays firmed by $141.2 million (17.4 per cent) to $953.1 million,” the Central Bank found.

“The most significant increase was recorded for transfer payments, which expanded by $105.7 million (28.7 per cent) to $474.2 million, with the reclassification of ‘net lending’ resulting in an eight-fold ($42.3 million) rise in transfers to public corporations.

“Subsidies and transfers to households also rose by $19.7 million and $10.2 million, respectively,” the Central Bank added.

“In addition, consumption expenditure grew by $35.4 million (8 per cent) to $479 million, as spending on goods and services climbed by $23.6 million (19.4 per cent) and disbursements for wages and salaries rose by $11.9 million (3.7 per cent) amid some public sector union- negotiated payments.”

In the commercial banking sector, total ‘bad’ loan arrears continued to hover stubbornly at $1.2 billion at end-January 2016, meaning that 20 per cent - or $1 out of every $5 lent - is in default.

Some $678.6 million worth of mortgages are at least one month past due, with total non-performing loans in the commercial banking industry equalling $902 million.

“Banks maintained their conservative approach to addressing the high level of loan arrears, and therefore increased their loan loss provisions by 2.3 per cent to $542.5 million,” the Central Bank said.

“As a consequence, the ratio of provisions to both total arrears and loans advanced by 115 and 51 basis points to 45.2 per cent and 60.2 per cent, respectively. Banks also wrote-off an estimated $6.2 million in delinquencies and recovered approximately $2.4 million in bad debt.”