Bahamas debt up US$1bn despite tourism gains

The Bahamas debt up US$1bn despite tourism gains.

The Bahamas’ national debt rose by more than US$1bn over the year to June 2026, pushing the total above US$13bn even as the economy continued to benefit from stronger tourism activity and steady overall growth. The Central Bank of The Bahamas, in its second-quarter economic review, reported that national debt, including contingent liabilities, increased by US$1.071bn, or 8.8%, year-on-year to US$13.17bn. The increase reflected a US$697mn rise in direct government debt and a US$373.5mn increase in contingent liabilities.

“For the quarter ended-June 2026, the direct charge on the Government fell by $7.1mn (0.1%) to $12.466bn while, on an annual basis, it grew by $697mn (5.9%),” the Central Bank said.

Contingent liabilities rose to US$703.4mn, partly reflecting government-guaranteed borrowing associated with the acquisition and working-capital needs of Grand Bahama Power Company, liquefied natural gas initiatives and financing for the Public Hospitals Authority. The national debt-to-GDP ratio consequently increased to 74.7% from 72.8% a year earlier, while total public-sector debt rose to 77.3% of GDP. Direct government debt stood at 70.7% of GDP.  The increase has drawn attention because it occurred alongside substantially smaller reported fiscal deficits. At end-April, the fiscal deficit stood at US$121.2mn, while the Government had continued to project a US$32.7mn Budget surplus for the 2025/26 fiscal year.

The Fiscal Responsibility Council has also raised concerns about the composition and reporting of government borrowing. It noted that more than US$290mn in Central Bank advances were obtained during the nine months to March 2026 even though this financing source was not identified in the annual borrowing plan (ABP). “The Fiscal Responsibility Council is of the view that the Government’s financing should be presented in a manner that is consistent with the presentation in the APB, which would allow for comprehensive assessment of the Government’s adherence to that Plan and support greater transparency,” the Council said.

The higher debt burden comes despite continued expansion in the wider economy. The Central Bank said economic activity maintained a positive trajectory during the second quarter, supported by tourism and foreign investment-related construction. “Tourism sector output maintained healthy gains, undergirded by a rebound in the high value-added stopover segment of the market, and ongoing growth in the cruise sector,” the Bank reported.

Private vacation rentals also strengthened. AirDNA data showed room nights sold rising 7.7% year-on-year to 170,989 during the second quarter. Occupancy for hotel-comparable listings increased to 51.8%, while entire-place listings reached 51.6%. Average daily rates rose to US$175.68 for hotel-comparable units and US$760.39 for entire-place listings. Tourism momentum strengthened further in July. International departures from Lynden Pindling International Airport rose 7.1% year-on-year to 180,831. Non-US international departures increased 24.3%, while US traffic grew 5%.

Total outbound international traffic reached 1.1mn passengers through July, up 5.4%. Short-term rental room nights sold increased 10.5% in July to 63,399, while average daily rates climbed to US$177.49 for hotel-comparable listings and US$749.33 for entire-place properties. “Tourism output gains strengthened, as earnings growth indicators for the high value-added stopover segment improved, while cruise inflows remained robust,” the Central Bank said. The contrasting trends underline the challenge confronting The Bahamas: economic activity and tourism remain comparatively resilient, but the national debt burden continues to rise. With debt ratios again moving higher, attention is likely to remain focused on borrowing practices, contingent liabilities and the extent to which stronger economic growth can translate into sustained fiscal consolidation.