National debt up as spending rises faster than revenue growth

• Deficit widens slightly, grows $206m in Q1

• National debt up by $206m, reserves decline

• Liabilities drop, national debt grows by $206m

• Direct charge surges, up by $213.5m

• Reserves moderate, $60m reduction noted

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

The Central Bank revealed yesterday that the national debt grew by $206m over the last quarter.

The regulator yesterday released its quarterly economic review as at December 2023 and revealed that during the first quarter of the new fiscal year the government’s deficit “widened marginally”.

Central Bank also noted that external reserves declined over the period in line with seasonal demands.

“Preliminary estimates revealed that during the first quarter of FY2023/2024, the government’s overall deficit widened marginally, vis-à-vis the comparative quarter of FY2022/2023,” the Central Bank said.

“Contributing to this outturn, the rise in aggregate expenditure outstripped the growth in total revenue. Budgetary financing was obtained largely from internal sources and included a combination of long and short-term debt

“Further, in line with the seasonal demand for foreign currency, external reserves declined over the review period, albeit a moderation vis-à-vis the same period last year.”

The regulator said that government contingent liabilities reduced by $7.5m and the National Debt grew by $206m and the debt to GDP ratio decreased to 84.2 percent.

“The government’s contingent liabilities reduced by $7.5 million or 2.1percent over the quarter, and by $39.3m or 10.1percent, year-on-year, to $350.9m. As a result, the national debt which includes contingent liabilities grew by $206m or 1.8percent over the three-month period, and by $352.2m or 3.1percent on an annual basis, to $11,778.9m at end-2023;” the Central Bank report said.

“As a ratio to GDP, the Direct Charge decreased by an estimated 3.9 percentage points on a yearly basis, to 81.7 percent at end-December. In addition, the national debt-to-GDP decreased to an estimated 84.2 percent, compared to 88.6 percent in 2022.

“For the quarter ended-December 2023 the Direct Charge on government grew by $213.5m or 1.9 percent over the September quarter, and by $391.5m or 3.5 percent, on an annual basis to $11,428m. The end December breakdown by currency, revealed that Bahamian dollar debt represented 53.3 percent of the total, while foreign currency liabilities accounted for the remaining 46.7 percent.”

Foreign reserves “moderated” to $60m during the quarter with net purchases from government growing to $184.7m and net sales to commercial banks reducing to $100.4m.

“The seasonal reduction in external reserves moderated to $60.0 million or 2.3percent from $588.6 million or 18.4percent in 2022. In the underlying developments, the Central Bank’s net foreign currency sales decreased to $80.6m, from $376.1m in 2022,” said the Central Bank.

“In particular, the net purchases from the Government advanced to $184.7m from $3.7m a year earlier. Further, the net foreign currency sales to the commercial banks reduced to $100.4m from $266.2m in the previous year. However, the net sales to public corporations mainly for fuel purchases extended to $164.9m from $113.6m in the preceding year.”