Central Bank records ‘mild expansion’ for domestic economy

Central Bank records ‘mild expansion’ for domestic economy
The Central Bank of The Bahamas. (PHOTO: CBOB)

NASSAU, BAHAMAS – The domestic economy exhibited “mildly expansionary trends” during the first month of the year, according to the Central Bank.

The regulator made the observation in its monthly economic and financial development report for January 2020.

“ Gains in the high value-added stopover visitor segment, mainly in New Providence and the Family Islands not damaged by Hurricane Dorian, supported the rise in tourism sector output,” the report read.

“Further, activity in the construction sector was fueled by foreign investment-led projects, and to a lesser extent post-hurricane rebuilding works.

“On the fiscal front, the Government’s hurricane-related expenditure hike, overshadowed the increase in revenue collections, and contributed to a widening in the deficit during the first half of fiscal year 2019/2020.”

It. continued: “In monetary developments, bank liquidity grew, reflecting an expansion in the deposit base and a decline in domestic credit. Similarly, buttressed by net foreign currency inflows from re-insurance and real sector activities, external reserves recorded healthy growth over the review month.”

On the fiscal front, the Central Bank noted that provisional data on the Government’s budgetary operations for the first half of fiscal year 2019/2020, revealed a $14.1 million (8.1 percent) widening in the deficit, to $188.6 million, relative to the same period in Fiscal year 2018/2019.

“The outturn largely reflected a $106.1 million (8.9 percent) growth in total expenditure, to $1,292.2 million, related to Government’s initial post hurricane spending, which overshadowed the $91.9 million (9.1 percent) rise in aggregate revenue, to $1,103.6 million,” the report stated.

“The expansion in total spending was underpinned by a $69.4 million (6.3 percent) rise in current outlays to $1,175.6 million. Specifically, subsidies moved higher by $29.0 million (17.2 percent), owing mainly to higher disbursements to public corporations and other sectors.”

“In addition, outlays for compensation of employees rose by $27.5 million (7.8 percent), while “other” payments, inclusive of current transfers and insurance premiums, grew by $15.1 million (15.9percent).”

It added: “Government grants also increased more than two-fold ($2.6 million) to $4.1 million. In addition, associated with hurricane related expenses, capital expenditure rose by $36.6 million (45.8 percent) to $116.6 million, occasioned by a three-fold increase in capital transfers to $43.3 million, and the acquisition of non-financial fixed assets, by $8.1 million (12.4 percent).”