The national debt grew by 11.5 percent year-on-year in the fourth quarter of 2013, to $5.5 billion, The Central Bank of The Bahamas has reported.
In the same period, the central bank recorded a narrowing of the government's overall deficit by 10.4 percent, even as domestic economic conditions remained "relatively flat" and revenue collection fell.
The reduction of the government's overall deficit was attributed primarily to a combination of lower lending to public corporations and lower capital spending outlays which contributed to a fall in aggregate expenditure. The lower spending outweighed a 3.2 percent, or $11.8 million, falloff in total revenues collected to contribute to an overall reduction of $13 million in the deficit to $112.3 million.
Total revenue collected for the quarter stood at $356.2 million. The information was recorded in the latest Quarterly Economic Review released by The Central Bank of The Bahamas.
In the area of revenue, tax receipts fell by 9.3 percent - $29 million - due to a 46.7 percent reduction in departure taxes. The central bank described this as a fall to "trend levels" following a one-off receipt of arrears payments in the corresponding period last year.
"In addition, a timing-related decline in foreign realty tax collections reduced property taxes by 22.5 percent ($11 million) to $37.7 million, and lower proceeds from hotel occupancy and gaming taxes explained the more than halving of selective taxes on services to $4.8 million," said the bank.
Non-tax receipts -- which constituted 21 percent of total revenue -- expanded by $17.1 million (29.6 percent) to $74.7 million.
Turning to government spending, the bank said that the decline in overall spending was led by a "marked contraction" in net lending to public corporations, down to $19.3 million from a $60.8 million boost a year earlier that was "primarily earmarked for aviation operations".
"Reflecting the winding down of a number of large infrastructure programs, government's capital outlays also fell by 12.6 percent ($6.7 million) to $46.2 million; however, current spending rose by 6.2 percent ($23.5 million) to $403.2 million. By proportion, recurrent expenditure accounted for the majority (86.1 percent) of total outlays, while capital spending and net lending comprised the remaining 9.8 percent and 4.1 percent, respectively," said the review.
Turning to the national debt, the central bank notes that the direct charge on the government (the total claims on the government) grew by $83.7 million over the previous quarter, and 13.1 percent year-on-year, to $4.97 billion. Budgetary financing for the fourth quarter was dominated by domestic foreign currency loans, totaling $125 million, short-term local advances ($39 million) and treasury bills ($31 million). Of the total claims on the government, Bahamian dollar debt made up 73.8 percent. The government guaranteed debt decreased by 15.1 percent to $601.1 million.
On the monetary sector, both bank liquidity and external reserves strengthened over the three-month period, bolstered by the government's foreign currency borrowing activities.
Speaking of economic activity more generally, the central bank said: "Ongoing positive contribution from foreign-led construction investment activity was counterbalanced by weakness in the high value-added stopover component of the tourism market. With gains mostly in the construction sector, employment conditions improved slightly, while domestic inflation remained relatively benign, despite modest firming in international oil prices."

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