NASSAU, BAHAMAS — The country’s external reserves grew to $2.7 billion in August, bolstered by the receipt of Special Drawing Rights (SDR) from the International Monetary Fund (IMF), the Central Bank has noted.
The regulator in its Monthly Economic and Financial Developments report for August noted that due to the SDR, the reserves grew by $140.2 million to $2,753.2 million — a moderation from the $144.9 million growth the prior year.
The Central Bank also noted that its net purchase from the public sector slowed to $193.4 million, from $225.6 million in the previous year. Meanwhile, its net sale to commercial banks tapered to $57.0 million from $86.6 million in 2020. Further, commercial banks net sales to their customers decreased to $65.7 million from $95.0 million a year earlier.
The regulator continued: “Provisional data on foreign currency sales for current account transactions revealed that outflows rose by $246.4 million to $632.7 million in August, compared with the same period last year. Underpinning this outturn, “other” current items—mainly services and credit card-financed imports—grew by $112.7 million, factor income remittances, by $54.9 million, and non-oil imports, by $48.7 million. In addition, payments for oil imports advanced by $15.0 million, travel-related transactions, by $11.5 million, and transfers, by $3.5 million.”
It was also noted that credit to the public corporations was reduced by $15.5 million, a slowdown from the $40.8 million retrenchments last year.
The regulator also noted that private sector net foreign currency drawdowns are forecasted, due to a falloff in inflows, related to lackluster tourism sector activity and higher imports to aid reconstruction work, external reserve balances are anticipated to end the year at a higher level than in 2020, underpinned by government external borrowings. In this context, external balances are expected to remain more than adequate to sustain the Bahamian dollar currency peg.
As to the commercial banking sector, the regulator noted that the bank’s credit quality indicators improved during the review month, as total private sector arrears contracted by $19.3 million (2.4 percent) to $786.9 million, while the accompanying ratio declined by 32 basis points to 14.20 percent.
“Contributing to this outturn, short-term arrears (31-90 days) reduced by $11.8 million (4.2 percent) to $271.3 million, corresponding with a 20 basis points decrease in the attendant ratio to 4.9 percent. Similarly, non-performing loans (NPLs) fell by $7.5 million (1.4 percent) to $515.6 million, while the relevant ratio moved lower by 11 basis points to 9.3 percent—with decreases in NPL rates for mortgages, by 24 basis points to 11.5 percent and commercial loans, by 15 basis points to 5.5 percent; however, consumer loans edged up by 2 basis points to 8.2 percent,” the Central Bank noted.
It was noted that the reduction in total delinquencies was led by a decline in commercial arrears by $9.3 million (11.8 percent) to $69.1 million, as both the short and long-term components fell by $8.6 million (28.7 percent) and by $0.6 million (1.3 percent), respectively.
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