The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

External reserves slid by four percent in November, continuing a trend, according to the Central Bank of The Bahamas.

The bank’s Monthly Economic and Financial Developments (MEFD) for November, said: “External reserves contracted by $113.0m to $2,475.4bn during November, extending the $100.4m decline a year earlier. Reflective of this outturn, the Central Bank’s net sale to the public sector deepened to $50.8m from $32.6m in the preceding year.

“Meanwhile, the Central Bank’s net sale to commercial banks moderated to $61.2m from $73.1m. Further, commercial banks net outflows to their customers tapered to $53.8m from $100.7m in the prior year.”

The bank has prided itself on keeping a robust external reserve portfolio during the bulk of the COVID-19 pandemic and even going as far as restricting external capital flows from commercial banks in 2020 as a way to protect it.

This modest slide in external reserves may be reflective of investors looking to repatriate profits to their home jurisdiction as the bank also said: “Provisional data on foreign currency sales for current account transactions showed a $166.5m growth in outflows, to $647.6m in November, relative to the same period of 2020, attributed to increases across almost all categories. The outturn reflected higher payments for “other” current items ($56.1m)—mainly credit and debit card financed imports—non-oil imports ($48.2m) and factor income payments ($42.9m). Similarly, a rise in foreign currency sales were noted for oil imports ($28.3m) and travel related transactions ($4.5m). In contrast, foreign currency sales for transfer payments decreased by $13.4m.”

The bank also said: “The reduction in domestic foreign currency credit continued at $3.6m vis-à-vis $4.0m in the previous year. Specifically, private sector credit decreased by $2.8m, a moderation from a $3.8m falloff last year. The decline in commercial credit slowed to $1.2m from $11.1m in 2020, while mortgages fell by $1.5m, a turnaround from the $7.4m increase in the prior year.

“Meanwhile, net claims on the Government reduced by $0.8m, following a $1m gain in 2020. Further, credit to public corporations registered a flat outturn, after a $1.3m reduction in the preceding year.”