A recent report from The Central Bank of The Bahamas (CBB) for June indicates "mild economic momentum" in the domestic economy and a reduced government deficit, while issues continued to plague the mortgage and loan market. CBB released its Economic and Financial Developments report for the month of June 2014 on Monday, which shows mildly positive growth for the local economy and a decrease in the deficit supported by modest gains in tourism output, stable foreign investment-led project activity and declining unemployment rates over the past six months. The report argues that further improvement in the government's deficit hinged on the pace of the economic recovery and government expanding into other sectors, citing the upcoming implementation of a value-added tax (VAT) as a significant revenue generating measure for the government. "Additional revenue gains should also accrue from the successful implementation of several new measures -- the most significant of which is the [VAT]," reads the report. The report also suggests that inflation remained "relatively benign", despite rising energy costs, stating: "In the near-term, domestic inflation is poised to remain benign, although on-going instability in several oil producing markets could lead to higher international oil prices over the medium term, which could exert upward pressure on local energy costs."June saw an increase in people defaulting on their loans. Total private sector loan delinquencies grew by $20.2 million (1.5 percent), up to $1,359.5 million. Delinquencies in the short-term, 31-90 day segment, grew by $8.7 million (2.5 percent) to $359.1 million. The value of arrears in excess of 90 days also grew $11.5 million (1.2 percent) to $1 billion.However, mortgage woes proved particularly discouraging, with growth in total mortgage delinquencies expanding by $9.8 million (1.4 percent) to $725 million, as both the short-term and non-performing segments grew by $6.3 million (3.3 percent) and $3.5 million (0.7 percent), respectively. "Consumer arrears also rose, by $6.1 million (2.4 percent) to $266.8 million, due to a $3.9 million (4.4 percent) increase in 31-90 day delinquencies and a $2.2 million (1.3 percent) rise in non-accrual loans. The commercial component advanced by $4.2 million (1.2 percent) to $367.7 million, as the $5.7 million (2.0 percent) increase in the non-performing category, outpaced the $1.5 million (2.1 percent) decline in short-term delinquencies," says the report. Banks increased their loan loss provisions, by $51 million (9.8 percent), to $568.8 million due to the continued deterioration in credit quality. Because of this, the ratio of provisions to both arrears and non-performing loans grew to 41.8 percent and 56.9 percent, respectively. Banks also wrote-off approximately $7.1 million in delinquent loans, and recovered an estimated $3.4 million. CBB reported that amid concerns surrounding weak employment numbers and business conditions, credit to the private sector fell during the month by $34.1 million, below the prior year's $64.4 million contraction. Mortgages also declined by $11.0 million to $31.7 million. However, consumer credit recovered by $8.6 million, from a $23.8 million reduction last year.CBB ultimately noted that its policies remained largely unchanged, given the mild improvements to the economy.

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