Central Bank of the Bahamas.
By NEIL HARTNELL
Tribune Business Editor
The Bahamas’ key foreign currency reserves were maintained at around $2bn through the peak of the COVID-19 lockdown amid predictions yesterday that they will remain “more than adequate” to sustain the US dollar peg.
The Central Bank, unveiling its monthly economic report for May, voiced continued optimism that they will be sufficient to carry The Bahamas through COVID-19’s immediate economic fall-out despite the absence of replenishing tourism-related inflows for the remainder of 2020.
The report revealed that the reserves, which are critical to both funding imports and securing the one:one peg with the US dollar, closed May at a still-relatively healthy $1.972bn ahead of a forecast $1bn drawdown over the remainder of 2020 as businesses and the economy re-open. The Central Bank data shows they are greater than prior year levels, having expanded by almost $214m over the first five months of 2020.
“External reserve balances are projected to contract during the year on account of a decline in foreign currency inflows related to tourism sector activity, and a rise in imports to aid [Hurricane Dorian] reconstruction work. Nevertheless, external balances are estimated to remain more than adequate to sustain the Bahamian dollar currency peg,” the Central Bank reassured.
Elsewhere, the regulator confirmed that tourism arrivals “came to a standstill” in May as a result of the COVID-19 lockdown, with Lynden Pindling International Airport (LPIA) handling just 238 departing passengers for the month compared to 139,376 during the prior year. That latter figure represented a 15.8 percent growth compared to May 2018.
“During the first five months of the year, aggregate departures [from LPIA] reduced by 49.1 percent, reversing the 19.9 percent expansion in the same period of 2019. Underlying this outturn, the US segment decreased by 49.9 percent, contrasting with a 21.6 percent growth in the prior year. Similarly, the non-US segment fell by 44.8 percent, vis-à- vis an 11.2 percent increase a year earlier,” the Central Bank said.
“Data provided by AirDNA on the vacation rental market revealed similar trends for the month of May. Specifically, total room nights sold contracted by 61.9 percent, reflecting reductions of 62.7 percent and 53.6 percent in bookings for entire place listings and hotel comparable listings, respectively.
“In contrast, the average daily room rate (ADR) for entire place listings and hotel comparable listings firmed by 7 percent and by 5.6 percent to $421.31 and $160.20, respectively. On a year-to-date basis, total room nights sold reduced by 18.2 percent.
“In particular, bookings for entire place listings fell by 19.9 percent, while bookings for hotel comparable listings were lower by 3.2 percent. Pricing indicators varied, as the ADR for entire place listings edged up by 0.6 percent to $399, while the ADR decreased by 2 percent to $156.15 for hotel comparable listings.”