Central Bank: External reserves down to $2.2 billion

As predicted, external reserves continued to be eaten away as the ongoing slump in tourism and private banks demands persisted during the month of February.

The Central Bank of The Bahamas (CBOB) in its recent monthly economic assessment said external reserves dropped by $62.8 million to $2.2 billion last month, following the expected trend laid out by its governor over the course of the COVID-19 pandemic.

Government borrowing bolstered reserves to $2.3 billion at the end of 2020.

“This decrease was reflective of the ongoing travel restrictions related to the COVID19 pandemic, combined with the demand for foreign currency by the public sector and the commercial banks. In particular, the Central Bank’s foreign currency transactions with the public sector reversed to a net sale of $48.8 million, from a net purchase of $9.1 million in 2020,” the bank stated in its Monthly Economic and Financial Developments Report for February, released yesterday.

“Similarly, the bank’s transactions with commercial banks switched to a net sale of $15.1 million, from a net purchase of $91.2 million in the preceding year, as commercial banks reported a net sale of $16.3 million to their customers, following a net intake of $80.3 million a year earlier.”

However, CBOB stated that domestic demand for foreign currency dropped by $132.4 million in February, with sales amounting to $373 million.

“Primarily purchases of foreign goods and services via credit and debit card transactions decreased by $116.4 million, while oil imports and travel-related payments fell by $14.8 million and by $9.3 million, respectively,” the CBOB stated.

“In a partial offset, foreign currency sales rose for factor income ($3.6 million), non-oil imports ($2.8 million) and transfer payments ($1.9 million).”

The continued loss of foreign reserves is expected to be maintained at least until there is a rebound in the country’s tourism product, the bank has stated. That return is expected to remain sluggish during 2021, as COVID-19 travel restrictions remain in place.

The Central Bank reported a 86.9 percent decline in total visitor arrivals during January, revealing that there were only 16,098 international departures from Lynden Pindling International Airport.

On the other hand, vacation home rentals continue to strengthen, with a recorded 24 percent increase in room nights sold.

“With regard to the short-term rental market, data provided by AirDNA showed positive activity within the market throughout February, supported by domestic demand. Specifically, total room nights sold grew by 24 percent, compared to 9.9 percent in the prior year, while bookings for entire place listings and hotel comparable listings increased by 26.2 percent and 8 percent, respectively,” the Central Bank stated.

“Pricing indicator outcomes for both entire place listings and hotel comparable listings revealed a rise in the average daily room rate (ADR) of 6.5 percent and 3.8 percent, to $449.49 and $157.53, respectively, contrasting with decreases of 2 percent and 4.1 percent in 2020.”

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