8:00 PM Miami, Florida – The Central Bank of the Bahamas in the February report noted government budget widened 26% and demand for consumer and private company credit was subdued in the month.

The Central Bank of the Bahamas in its February report said that government fiscal deficit widened by 25.8% to $200.3 million in the first seven months of fiscal 2009/2010. Aggregate revenues was steady at $739.7 million and but expenditure increased 4.7% to $940 million.

Inflation for the twelve months to January eased by 2.9 percentage points to 1.8% compared to a 2.2 percentage point increase to 4.7% a year ago period.

This inflation declined after housing prices fell 0.3%, the most heavily weighted item in the index, compared to an increase of 3.7% in 2009 period.

The Bahamas economy shrank 3.9% in 2009 and is expected to decline further by 0.5% in 2010. The inflation is expected to decelerate to 0.6% in 2010 from 1.8% in 2009.

Unemployment in the Bahamas was estimated by the IMF at 14.2% in 2009 and no data is available for the 2010 target.

While the interest rate target range in the US has declined to between zero and 0.25% from 3% in February 2008, the rates in the Bahamas have stayed at 5.25% in the period.

The statement from the Central Bank of the Bahamas noted, “Money and credit trends for the month of February featured moderate growth in both liquidity and external reserves, supported by a falloff in private sector demand and net foreign currency inflows relating to real sector activities.”

The demand for consumer credit from individuals and private businesses remained weak in the month.

Bahamian dollar credit declined by $9.7 million compared to an increase in the previous year by $29.5 million.

The reduction in private sector credit broadened by $30.7 million to $33.5 million, marked by accelerated declines in consumer credit and commercial loans, of $4.9 million and $16.2 million, to $13.8 million and $21.0 million respectively.

Similarly, mortgage growth eased to a mere $1.3 million from $10.9 million.