The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank yesterday said the Government's "front loaded" foreign currency borrowing meant the expected decline in The Bahamas' external reserves will be "delayed" until 2021.

The regulator, in its monthly economic developments report for August, said the Minnis administration's borrowing to fund an anticipated $1.3bn deficit for the 2020-2021 fiscal year had increased the external reserves by $145.3m compared to July to hit $2.128bn by month' end.

Indicating that the previously projected drawdown on the reserves to $1bn by year-end 2020 will now not happen to such an extent, the Central Bank suggested there will be sufficient foreign currency to maintain the one:one US dollar peg into 2021.

"While private sector net foreign currency drawdowns are projected to continue through the end of the year, external reserves are forecasted to end the year higher than in 2019, largely supported by the front loading of Government’s external financing operations," the Central Bank said.

"As a consequence, the cumulative reduction in external balances is expected to be delayed to 2021. This continues to be in line with only gradual recovery prospects for tourism, utilisation of private sector reinsurance proceeds still committed to hurricane reconstruction, and outflows on imports of goods and services, due to the various fiscal stimuli. Nonetheless, external balances are estimated to remain more than adequate to sustain the Bahamian dollar currency peg."

Elsewhere, the Central Bank said tourism's July re-opening attracted just 23,398 visitor arrivals compared to 650,353 for the same month the previous year. "In particular, air arrivals amounted to 14,970, in contrast to a 7.7 percent growth to 175,971 in the same month of 2019. Further, sea arrivals totaled 8,428, relative to an 8 percent expansion to 474,382 a year earlier," it added.

"By major port of entry, total arrivals to New Providence declined to 7,899, contrasting with a 2.9 percent uptick in the prior year to 329,520, with the air and sea components comprising 7,199 and 700, respectively.

"Similarly, total traffic to the Family Islands decreased to 13,645, vis-à-vis a 17.8 percent increase to 241,962 in the preceding year, reflecting reductions in the air and sea traffic segments, to 7,253 and 6,392, respectively. Further, arrivals to Grand Bahama fell to 1,854, following a 2.6 percent growth to 78,871 in 2019, as respective sea and air passengers declined to 1,336 and 518."

The Central Bank continued: "On a year-to-date basis, total arrivals contracted by 61.9 percent, a reversal from a 13.2 percent increase during the same period of the preceding year. Underlying this outturn, the air component fell by 68.5 percent, while the sea segment decreased by 59.6 percent.

"As it relates to the vacation rental market, data provided by AirDNA for the month of August, compared with the same period last year, showed that total room nights sold contracted by 70.5 percent, as bookings for entire place listings and hotel comparable listings reduced by 71 percent and 65.5 percent, respectively.

"Pricing indicators varied, with the average daily room rate (ADR) for entire place listings firming by 4 percent to $407.99, while the ADR for hotel comparable listings fell by 6.9 percent to $141.87. On a year-to-date basis, total room nights sold declined by 45.3 percent, attributed to respective reductions in bookings for both the entire place and hotel comparable components, of 46.6 percent and 33 percent.

"Pricing indicator outcomes were mixed, as the ADR for hotel comparable listings decreased by 2.5 percent to $152.83, while the ADR for entire place listings rose by 2.4 percent to $411.96."