The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank of the Bahamas agrees with international agencies that the Bahamian economy “will continue to grow at a very mild pace in 2016”.

While giving no projected growth rate, unlike the International Monetary Fund (IMF) and Standard & Poor’s (S&P), which are both forecasting 1.5 per cent, the Central Bank’s assessment at least bring it into line with its international counterparts.

Its report on November 2015’s economic developments revealed that little has changed in the Bahamian economy, with total private sector loan arrears remaining stubbornly at around the $1.2 billion mark.

This still means that $1 out of every $5 in credit lent by the commercial banking sector is in default, with the industry’s total loan loss provisions now standing at $532.5 million.

And for every $1 in delinquencies that the commercial banking sector managed to recover in November, another $10 had to be written-off.

“Reflecting a deterioration in a few institutions’ loan portfolios, total private sector loan arrears were higher by $8.3 million (0.7 per cent) at $1.201 billion, and by 16 basis points to 20 per cent of total loans,” the Central Bank said.

“Specifically, short-term arrears(31 to 90 days) grew by $18.5 million (6.3 per cent) to $311.1 million, and by 31 basis points to 5.2 per cent of total loans.

“In contrast, the non-performing segment fell by $10.2 million (1.1 per cent) to $890.3 million, and the corresponding loan ratio declined by 15 basis points to 14.8 per cent.”

November’s minor deterioration was caused entirely by the mortgage segment, where almost $675 million worth of home loans are either 31-90 days in arrears or non-performing.

“The increase in total delinquencies was due solely to higher mortgage arrears, which advanced by $13.1 million (2 per cent) to $674.9 million,” the Central Bank said.

“ Growth in the short-term segment, of $16.1 million (9.8 per cent), negated the $3 million (0.6 per cent) reduction in non-accrual loans.

“Banks’ total provisions for loan losses declined by $0.3 million (0.05 per cent) at $532.5 million in November,” the Central Bank added. “Although the ratio of provisions to arrears narrowed by 33 basis points to 44.3 per cent, the corresponding ratio to non-performing loans was higher by 65 basis points at 59.8%. During November, banks wrote-off a total of $10.7 million in bad debts, and recovered approximately$1.4 million in delinquencies.”

On the fiscal front, the Government’s deficit fell by 57 per cent or $113.5 million for the four months to end-October 2015, driven largely by some $229.5 million in Value-Added Tax (VAT) revenues.

Total revenues rose by $161.2 million (36.9 per cent) to $597.9 million, outpacing a $47.7 million (7.5 per cent) increase in total government spending to $683.5 million. The web shops also drove a $7.8 million rise in gaming taxes.

“Growth in revenue was driven by a $156.2 million (41.7 per cent) surge in tax receipts, to $531.3 million, as VAT collections of $229.5 million outpaced declines in the remaining categories,” the Central Bank said.

“Specifically, taxes on international trade contracted by $20.1 million (10.5 per cent) to $172.1 million, owing to reductions in import ($14.6 million) and excise ($7.9 million) taxes, which countered a $2.4 million rise in export taxes.

“In addition, ‘other miscellaneous’ taxes fell by $31 million (21.2 per cent),as lower real estate sales contributed to a $26.6 million (72 per cent) drop in ‘other’stamp taxes, while departure taxes fell by $7.7 million (15.8 per cent).

“Similarly, the intake from business and professional fees declined by $13.6 million (63.5 per cent) to $7.8 million, as timing associated factors resulted in a $13.4 million (70 per cent) fall-off in general Business Licence fees.”