By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ national debt was just less than the size of the economy at end-September 2021 after increasing to almost $10.5bn over the previous three months, it was revealed yesterday.

The Central Bank’s 2021 third quarter review revealed that the debt expanded by a net $132.2m, or 1.3 percent, during that period to take the Government’s total debt - both it direct liabilities and those guaranteed on behalf of state-owned agencies - to a new high of $10.488bn.

However, the slower pace of debt increase, coupled with increased economic activity as The Bahamas continued its post-COVID re-opening, grew gross domestic product (GDP) just enough to ensure the latter was marginally bigger than the national debt.

The Bahamas’ debt-to-GDP ratio dropped from 100.4 percent at end-June 2021 to 98.4 percent some three months later, according to the Central Bank, but still at an elevated level that continues to give the Government and many citizens/residents much cause for concern.

“The national debt, inclusive of contingent liabilities, expanded by $132.2m (1.3 percent) over the three-month period, and by $1.141bn (12.2 percent) on an annual basis to $10.488bn,” the Central Bank report said.

“As a ratio to GDP, the direct charge rose by an estimated 4.6 percentage points on a yearly basis to 94.4 percent at end-September. In addition, the national debt-to-GDP ratio increased to an estimated 98.2 percent compared to 94.3 percent in the same quarter of 2020.”

Breaking down the 2021 third quarter increase in the national debt, the Central Bank added: “Budgetary financing during the first quarter of fiscal year 2021-2022 was dominated by domestic sources. Specifically, internal borrowings amounted to $473.8m, and consisted of Treasury bills/notes ($265m); loans and advances ($160m) and government bonds ($48.8m).

“Further, drawdowns on existing external facilities totalled $23.7m. Debt repayment for the period totalled $342.9m, of which the largest portion (89.3 percent) went towards retiring Bahamian dollar debt. As a result of these developments, the direct charge on the Government rose by $151.6m (1.5 percent) over the quarter and by $1.183bn (13.3 percent) year-on-year to $10.087bn at end-September.”

Bahamian dollar-denominated debt, the Central Bank added, accounted for 55.1 percent of The Bahamas’ total national debt while foreign currency liabilities made up the balance at around 44.9 percent.

“Public sector foreign currency debt declined by $37.5m (0.7 percent) to $5.053bn during the third quarter, but rose by $904.5m (21.8 percent) relative to the same period last year,” the Central Bank said. “In particular, amortisation payments of $59.1m outweighed new drawings of $24.6m.

“By component, the Government’s outstanding liabilities - which accounted for 89.7 percent of the total - decreased by $15.8m (0.3 percent) to $4.533bn on a quarterly basis. In addition, the public corporations’ debt stock reduced by $21.7m (4 percent) to $520.3m.

“Relative to the same quarter of 2020, total foreign currency debt service payments contracted by $298.8m (76.4 percent) to $92.1m,” the regulator continued. “Contributing to this outturn, the public corporations’ segment declined significantly by $237m (88.5 percent) to $30.8m, with amortisation payments reducing sharply by $235.4m (91.2 percent) to $22.6m, while interest payments fell by $1.6m (16.5 percent) to $8.2m.

“Similarly, the Government’s debt component moved lower by $61.8m, as amortisation payments contracted by $66.3m (64.5 percent) to $36.5m, although interest charges rose by $4.5m (22.4 percent) to $24.7m.

“As a consequence of these developments, the Government’s debt service to revenue ratio decreased to 10.7 percent at end-September from 40.9 percent in the previous year, while the debt service ratio narrowed to 9.5 percent from 70.3 percent in 2020, when exports contracted sharply due to COVID-19.”

Elsewhere, tourism’s post-COVID rebound resulted in a $700m-plus increase in net travel receipts in the 2021 third quarter as it was up against a year-before period when the sector was virtually shutdown.

“The services account position switched to an estimated surplus of $399.2m from a deficit of $188.5m in 2020,” the Central Bank said.

“Leading this outturn, the dominant net travel receipts - largely tourism driven - recovered to $752.3m from $46.5m in the same period last year, as the sector output registered a healthy rebound, following the COVID-19 related fall-off in the preceding year.”