The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank believes Bahamian tourism industry performance in the 2017 first quarter “weakened” compared to last year, with passenger traffic at Lynden Pindling International Airport (LPIA) down 6.5 per cent.

The regulator, in its March 2017 economic report, said the decline, which is “net of domestic departures”, was likely influenced by timing, as the Easter weekend last year fell in March.

That period, which is widely regarded as the winter tourism season ‘peak’, occurred in April this year, providing a possible explanation for the drop-off in foreign passenger traffic at the Bahamas’ main gateway.

Describing tourism output as “mild”, the Central Bank said: “NAD airport traffic was down over the three-month period.

“Indications are that tourism sector performance weakened in the first quarter of 2017. Data from the Nassau Airport Development Company (NAD) showed passenger traffic at Lynden Pindling International Airport contracted by 6.5 per cent - net of domestic departures - during the three months to March 2017, compared to a 4 per cent gain in the prior year.”

Describing the later Easter 2017 as “a factor”, the Central Bank said returning US passenger numbers fell by 7 per cent during the three months to end-March 2017, compared to a 5.5 per cent improvement last year.

Other international departures were down 3.9 per cent, following a 3.4 per cent decline a year earlier.

LPIA’s second quarter departure traffic will provide a much clearer indication of the tourism industry’s performance, as it will include the peak Easter weekend.

However, the Central Bank said of the figures for March alone: “Data from the Nassau Airport Development Company (NAD) showed a 10.2 per cent decline in departures, a turnaround from a 6.7 per cent uptick in March 2016.

“Within this trend, US departing passengers fell by 11.6 per cent, in contrast to a 7.9 per cent increase in the prior year, when visitors from that market travelled for the long holiday weekend. In addition, travellers returning to other countries decreased by 1.3 per cent, extending the prior year’s 0.2 per cent contraction.”

Elsewhere, the Central Bank said Value-Added Tax (VAT) revenues for the first seven months of the 2016-2017 fiscal year were down by just $5.8 million or 1.5 per cent year-over-year, standing at $373.8 million.

It added that the decline reflected the reduction in economic activity following Hurricane Matthew, with 80 per cent of VAT revenues coming from New Providence.

Grand Bahama and Abaco generated 11 per cent and 4 per cent of VAT revenues, as measured by the Department of Inland Revenue. Of the balance, 2 per cent was collected in Eleuthera, with Exuma and Bimini responsible for 1 per cent each.

The biggest VAT-generating industries were the hotel and financial services sectors, along with the retail industry.

Meanwhile, Central Bank data showed that the rate at which delinquent homeowners are qualifying for the Government’s Mortgage Relief Plan (MRP) slowed down considerably early in the New Year.

The majority of the qualifying 479 borrowers were enrolled by January 2017, and numbers have flat-lined since then, although there was a slight pick-up in March 2017.

“Ongoing enrolment in the Relief Programme rose sharply in the first five months of the programme, and has since remained stable,” the Central Bank said.

“As at March 2017, of total potential borrowers, approximately 1,478 or 88.4 per cent of eligible home owners have been contacted. Four hundred and seventy-nine homeowners, or 28.6 per cent of eligible borrowers, have been enrolled in the programme.”

Still, the Central Bank said Scotiabank (Bahamas) decision to sell a portion of its delinquent mortgage portfolio to Gateway Financial had been a key factor in the near-18 per cent reduction in non-performing loans over the year to end-March 2017.

“A longer term comparison with March 2016 data showed that banks’ asset quality indicators improved significantly,” the regulator added, “supported largely by one bank’s sale of several non-performing loan tranches, sustained loan restructuring activities and, to a lesser extent, the implementation of the Government’s Mortgage Relief Programme (MRP).

“Reflecting these developments, total loan arrears fell sharply by $213.5 million (17.8 per cent) year-on-year, while the corresponding ratio of arrears to total loans narrowed by 3.4 percentage points.

“By age of delinquency, the non-performing loan ratio fell by three percentage points, while the short-term delinquency rate decreased by 36 basis points. An assessment by loan type revealed reductions in the mortgage, commercial and consumer loan arrears rates of 5.2, 1.6 and 1.5 percentage points, respectively.”

On the credit front, private sector credit expanded by just $2.5 million during the 2017 first quarter, likely reflecting fragile business confidence and the tepid economic climate.

While commercial loans expanded by $26.6 million in the three months to end-March 2017, mortgage credit and consumer loans contracted by $13 million and $11.1 million, respectively.

The Central Bank added that there had been “a substantial slowdown” in the expansion of external reserves, which grew by $23.5 million to $925.5 million at end-March, compared to the $171.1 million expansion in 2016.

Last year’s reserves growth was boosted by a $100 million loan to the Government, and the Central Bank added: “At end-March, reserves were equivalent to an estimated four months of total merchandise imports, unchanged from a year earlier. External reserves represented 70.5 per cent of demand liabilities, compared to 83.4 per cent at end March 2016.”