The tourism sector continues to trend upwards while global oil prices and energy costs have contributed to the country’s ballooning debt, according to Central Bank of The Bahamas’ quarterly statement.
“Developments within the domestic economy remained largely positive during the review period of May 2018, as tourism indicators continued to trend upwards, while foreign investment projects supported construction-related activity,” the bank’s statement said.
Additionally, foreign investment projects supported construction-related activity, the statement said, also pointing out that global oil prices and energy costs have contributed to the cumulative deficit over the ten months of 2017/2018 fiscal year.
“Reflecting the increase in global oil prices, domestic energy costs rose during the period, while on the fiscal front, the cumulative deficit contracted over the ten months of FY2017/2018, due to a decline in capital expenditure and an increase in revenue,” the bank’s statement read.
As it relates to monetary developments, broad liquidity expanded, which the bank said is owing to increased short-term financing to the Government.
However, external reserves contracted which was attributed in part to the seasonal increase in foreign currency demand during the holiday period, combined with public sector net foreign currency debt payments.
Moreover, the quarterly statement pointed out that preliminary tourism sector indicators suggest that the sector continued to exhibit signs of strengthening during the review period.
“Data from the Nassau Airport Development Company Ltd. (NAD), showed that total visitor departures (net of domestic departures) grew by 15.3 per cent in May, a reversal from a 2.4 per cent decline a year earlier,” the statement said.
“…this was supported by gains in both the United States (US) and non-US components, by 15.9 per cent and 11.8 per cent, compared to declines of 2.6 per cent and 1.0 per cent respectively, in the prior year.
“Similar trends were noted over the five month period, as total visitor traffic advanced by 12.7 per cent, vis-à-vis a 3.4 per cent contraction a year earlier.”
Central Bank said it monitors these conditions as part of its monetary policy mandate, to assess whether money and credit trends are sustainable relative to levels of external reserves required to protect the value of the Bahamian dollar and, if not, the degree to which credit policies ought to be adjusted.