Bahamas Deficit Falls

by Amanda Banks, Tax-News.com, London

15 April 2011

The Bahamas has released its monthly economic figures for February, which show a relatively stable economy, a decrease in the overall deficit, and a bolstering of the fiscal situation by the sale of an unspecified business entity.

Published by the Central Bank on April 11, the results show some signs of softness in the key tourism sector, and state that, as the recovery has yet to translate into any notable improvement in labour market conditions, domestic demand continued to be weak, and opportunities for a reduction in banks’ credit quality indicators, limited. However, the converted proceeds of extraordinary revenue receipts arising from the sale of a business entity, the details of which are not specified, boosted both liquidity and external reserves in the Bahamas.

The data also shows a narrowing of the country's overall deficit during the seven months through January of the 2010/11 financial year. The figure fell by BSD32m (USD32,) or 15.9% to BSD169.1m over the previous year's corresponding period. A 14.5% gain in tax collections, associated mainly with a nearly 90% surge in stamp tax proceeds from the sale of the business entity, aided a rise in total receipts of BSD23.6m (3.2%) to BSD763.3m. However, non tax collections fell by BSD63.4m (45.9%), which the Bank states is in line with the BSD66.2m reversion in income from other sources to trend levels, following a one-time boost from the sale of an energy business in the previous period.

Expenditure is also detailed in the figures. A decline in aggregate expenditure of BSD 8.4m (0.9%) to BSD932.4m is attributed to a BSD34.8m (54.6%) contraction in net lending to public corporations. Nonetheless, capital expenditure did rise, by BSD3.9m (4.3%), as the BSD14.2m expansion in the acquisition of assets, related to land purchases from a local oil company, outpaced the BSD9.2m decrease in infrastructure investments. In addition, current spending grew by BSD22.4m (2.9%), paced by a 14.2% (BSD19.2m) rise in purchases of goods and services.

Recommended