Domestic energy costs strengthen during first quarter

Buoyed by the persistent supply-led increase in oil prices globally, domestic energy costs have continued to strengthen during the review period according to the Central Bank of The Bahamas’ latest quarterly report.

The report, which focused on the country’s fiscal policy, also reviewed the government’s changes in levels of taxation and government spending – a phenomenon that undoubtedly influenced aggregate demand and the level of economic activity.

In April, gasoline and diesel retail prices rose by 0.7 per cent and 3.8 per cent, to $4.52 and $4.37 per gallon, respectively, relative to the prior month (March).

Likewise, on a year to year basis, gasoline prices increased by 7.4 per cent and diesel prices firmed by 13.8 per cent.

Focusing on the fiscal sector, data central bank has received on government’s budgetary operations for the ten months of FY2017/2018 indicated a $141.5 million (46.8 per cent) reduction in the deficit to $160.6 million when compared to a year earlier, amidst a $119.0 million (6.1 per cent) contraction in expenditure to $1,836.9 million and a $22.5 million (1.4 per cent) increase in revenue to $1,676.3 million.

The contraction in total government expenditure was due primarily to a halving in capital outlays, by $130.2 million (49.5 per cent) to $132.7 million, as the winding-down of hurricane rebuilding work led to a $92.6 million (45.6 per cent) reduction in infrastructure spending.

Additionally, asset acquisitions declined by $37.5 million (63.0 per cent), owing mainly to a $25.0 million (74.8 per cent) decrease in the purchase of other ‘miscellaneous’ assets.

In contrast, current expenditure firmed by $11.4 million (0.7 per cent) to $1,704.3 million, with consumption spending up by $13.1 million (1.5 per cent), driven by a the $22.5 million (3.9 per cent) increase in personal emoluments, which overshadowed the $9.4 million (3.0 per cent) decline in purchases of goods and services.

Meanwhile, transfer payments fell marginally, by $1.8 million (0.2 per cent), with the $13.0 million decrease in subsidies and other transfers, outpacing an $11.2 million (5.0 per cent) rise in interest payments.

Furthermore, revenue gains were underpinned by a $28.5 million (1.9 per cent) increase in tax inflows.

Specifically, Value Added Tax (VAT) receipts firmed by $12.1 million (2.2 per cent), while departure taxes and motor vehicle collections grew by $8.5 million (8.2 per cent) and $6.8 million (32.8 per cent), respectively.

Several of the other categories recorded increases, as evidenced by the over ten-fold ($44.0 million) rise in the “unclassified” taxes category, while selective taxes on services firmed by $5.8 million (26.3 per cent).

On the other hand, international trade tax receipts decreased by $17.9 million (4.0 per cent), owing mainly to a $19.0 million (8.1 per cent) decline in import taxes.

Moreover, business and professional fees recorded a reduction of $16.5 million (12.4 per cent) and non-tax revenue also contracted, by $6.1 million (3.7 per cent) to $157.5 million, due to a timing associated decline in income by $15.3 million (37.1 per cent), which overshadowed the $8.3 million (6.8 per cent) increase in receipts from fines, forfeits & administrative fees.