Is DR economy back on track?

Riu

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Just want it to hear comments on the DR economy. Is the DR economy back on track? A while back we held a discussion on this forum on what would be the exchange rate. I predicted 30-35. So far it looks stable at 30 or so. Is this an acceptable range for the DR? What do we think on this forum?

On reading the news I see the current administration starting numerous projects, for instance the metro. Although these projects serve for the improvement of the DR infrastructure, is this the moment to push forward these megaprojects or will this help to further deterirate economy when next administration takes over?

The short term impact of these projects would be good in a way. More jobs, consumer confidence on the rise, more money for consumers to spend, more money for politicians to steal (not a good thing). Mid term effects, improved infrastructure ( we have to wait and see if these projects were worthwhile). Long term effects, to what extent is the DR indebted, will these serve as a catalyst for next economic downturn and the severity of it. From the figures in the news this projects are quite costly.

In conclusion, what is the economic outlook for the DR from an expat's point of view as a place to live and from an investor's point of view as an investments jurisdiction preference?
 

Escott

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"In conclusion, what is the economic outlook for the DR from an expat's point of view as a place to live and from an investor's point of view as an investments jurisdiction preference?"

I think that this is a great place to make money if you don't have to make a living. This economy is going backwards but there is money to still be made in that sort of economy especially if you have money.
 

quejeyoke

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hang in there, it's coming

the 2005 budget was calculated at like 35pesos to 1usd; can't remember the exact #, but it's close to that. But the peso is getting ready for another launch to the stratosphere, to the joy of everyone holding usd's. How? just add mega projects like the Santo Domingo Metro, add salt and stir, let simmer for a minute and borrow another dollar and we're well on our way to 40 to 45 pesos to 1usd. The way the national debt grows in the DR is like preying Hyenas in the wild, 3 steps forward, 1 step back.
 

juancarlos

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Escott said:
"In conclusion, what is the economic outlook for the DR from an expat's point of view as a place to live and from an investor's point of view as an investments jurisdiction preference?"

I think that this is a great place to make money if you don't have to make a living. This economy is going backwards but there is money to still be made in that sort of economy especially if you have money.

Can you give us one or several examples of how to make money in the DR if you don't have to make a living or if you have money, like you say? Invest in what? for example. Just wanting to know, just in case.
 

johne

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juancarlos said:
Can you give us one or several examples of how to make money in the DR if you don't have to make a living or if you have money, like you say? Invest in what? for example. Just wanting to know, just in case.

You can BUY Esott's program to Making Money While Living In Paradise for 3 easy payments of $29.99 plus shipping and handling. He is on channel 47 each night about 3AM


JOHN
 

Criss Colon

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The "Consensus" is that the Dom.Peso is currently overvalued!

That means that it is at aprox.29 to 1 against the US Dollar,and it should be at 35,or 40 to one!
Being "overvalued" is in favor of the DR Government who has to buy US$$$$ to meet it's international debt payments.
The DR is in "Selective Default",("SD") vis-a-vi it's int.loans.
It has been "Renegotiating" many of it's loans inorder to get a better "rate" or improved ,"other", loan conditions.
The huge influx of "IMF" dollars will put the Country further into long term indebtedness.
The "Mega Projects" you see in the papers each day,are just ways for the politicians/businesses,/"Ricos" to steal money from the treasury at the future expense of the Dominican People/Economy!
Read the "DR1 Daily News" and review it's "Archives" if you want to keep up-to-date on how the People's money is being STOLEN on a daily basis!! :bandit: :bandit:
 
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Riu

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Heading south?

Will the dominican economy experience the same fate as Argentina? First, I think the dominican government is getting too much on credit. All this projects are megasize, is hard not to see a project in the DR under $100 million. The domanican economy output cannot match this level of indebtness to pay for it. Whenever a country sees the letter "IMF" is a country heading for trouble.

I would like to know what is the DR trade balance/deficit, the current debt of the country and the total output of the economy.

For those who think DR is a good place to make money, do you mean as a short term or long term investment?
 

Riu

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gsupa said:
back to 45 pesos / 1$ would be nice

Do you mean 45/1 as an expat having dollars or it would be the same for a local? At 45/1 would locals be better or will prices on goods would double like the past couple of years?

I spent the month of November in DR, I found the prices out of control even at 30/1. A lot of items were double what you would pay in US.
 

Criss Colon

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The RICH Make MONEY!,The POOR Make BABIES!

The last 1000 dollars I changed was at 56 to 1! Sometime near the end of July or early August.I was spending money like a "Drunken Sailor"(Which I AM,except I quit drinking!)The rebound of the peso means about 40,000 less pesos for me each month! The prices went way up.They have come down in a few areas,but not to their previous levels(Say Jan.04) The "Poor" are the ones that really hurt when the peso devalues! As I said,prices never really come back down,and the vast majority don't have US $$$$ to change! "Plantanos" at 8 pesos each! A small bag of "red onions" at 65 pesos!Five heads of garlic at $1.50?????? "Pork" at 3 dollars a pound and "up"!"Center Cut Pork Chops" advertised here on US cable TV at $1.99 a pound in New York !"Pampers" here,$9.20 for a package of 24!And these idiots want to put in a "Metro" at a "Starting Price" of 365 million?As "Boston" how much the "Big Dig" was over budget???Started out at 2 billion,just went over 14 billion!!!
Pampers
 
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my opinion

As long as the new govt needs to satisfy its clientele basis without being able to oust the former clientele basis.. you will see:

1) enormous increase in govt payroll without increase in output
2) all kind of crazy public works projects to skim off the top.. metro
3) restructuring of public debt for longer maturities, putting the DR in longer running debt... mortgaging the future of the DR
4) increase in debt position vis-a-vis gross national product.. making it more difficutl to pay off the debt
5) overvalued peso to buy dollars at discount to cheat lenders of returns.. good for the govt but at some point the other stakeholders will stop this practice
6) overvalued peso hit the export sectors, one of the only sectors to provide sustainable lt income to the DR.. it hampers investment in business because profits are down
7) overvalue peso hist the interest of the tourist sector because prices go up too much vis-a-vis other destinations.. 75 pesos for a beer.. can you say more than 2 dollars!!!

Do I really need to go on?

The DR is a complete bananarepublic where the elite try to grab as much for themselves as they can.. as a result the average population is worse off than in Cuba!!
 

Riu

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Criss Colon said:
The last 1000 dollars I changed was at 56 to 1! Sometime near the end of July or early August.I was spending money like a "Drunken Sailor"(Which I AM,except I quit drinking!)The rebound of the peso means about 40,000 less pesos for me each month! The prices went way up.They have come down in a few areas,but not to their previous levels(Say Jan.04) The "Poor" are the ones that really hurt when the peso devalues! As I said,prices never really come back down,and the vast majority don't have US $$$$ to change! "Plantanos" at 8 pesos each! A small bag of "red onions" at 65 pesos!Five heads of garlic at $1.50?????? "Pork" at 3 dollars a pound and "up"!"Center Cut Pork Chops" advertised here on US cable TV at $1.99 a pound in New York !"Pampers" here,$9.20 for a package of 24!And these idiots want to put in a "Metro" at a "Starting Price" of 365 million?As "Boston" how much the "Big Dig" was over budget???Started out at 2 billion,just went over 14 billion!!!
Pampers

Exactly, Mr Colon. I think this is not the time for that kind of project specially at that price tag. I think is a governing party ego trip. Why not invest the 365 million is the school system? If they invested 15% of that price tag in the school system they would be better off later.

But like other countries like DR, it is to the benefit of a small circle of wealthy politicians and business people to keep the population under control by illiteracy. A mostly educated public is dificult to control

During my stay I went to supermarket El Nacional, and another one in Kennedy ave. is a big one, don't know the name, all I have to say is how do dominicans feed themselves, it was highway robbery, the prices were an outrage.
 

Bartolomeo67

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gsupa said:
back to 45 pesos / 1$ would be nice

Keep on dreaming all of you!
If you have a look at a chart e.g. http://finance.yahoo.com/currency/convert?from=USD&to=DOP&amt=1&t=2y
converting 1 U$ into dom.peso over a 2yr period, you will see that the only time you got more than 50 pesos for 1 dollar was between mid January and mid February 2004. These are the facts (not July last year as Criss said).
Don't fool yourselves that these times are coming back anytime soon.
One year later, the Central Bank has got its currency reserves back up to reasonable standards, the Fernandez govt and the IMF agreement have brought back confidence in the DR to external institutional investors (look at how the DR peso bonds are booming), a lot of dollars that went abroad under Hippo are coming back into the country, add to that the remittences, the tourists that are flocking back to the DR after 9/11. Imo, the governments dollar position will not require any serious devaluation in the near future.
On top of that, in the next 2 years the IMF people will prevent that the government spends too much money on crazy issues that a poor country cannot afford. As for the big projects such as the Metro, we all know that a lot will be said about it first before they finally break ground so this won't affect the peso anytime soon.
By the way, I haven't heard anyone complain about the exchange rate when it was at 15/1 until 2001, so why can't you live with 30/1? Newbies on DR1 maybe don't even realize that the peso was that strong up to a couple of years ago.
I am not defending the DR government here, they are a third world government, a little less corrupt than the previous one I suppose, but surely filling their and their friends pockets. I just wanted to point out that the 50/1 dollar/peso rate was exceptional and due to the reasons above, it's not likely to come back soon.
Bartolomeo
 

Riu

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You are correct Bart. The peso has been gaining ground since it peaked in may 2004. Since then the dollar has steadily declined to its current levels. The international reserves are up. But this megaprojects are not being timed with the DR best interest in mind. There is a lot of money in these projects, and DR economy is in a recovery phase, administration should focus more in repairing the local economy first before comiting to other projects which are not a priority.
 

Lambada

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I agree, Bartolomeo..........I was about to ask CC where he changed $ last July at 56........since everyone else was getting 44-46! I did 2 mammoth exchanges in Jan. 2004, one at 49 & one at 54. I wish people could get it in their heads that that rate was aberrant, fine for those with dollars while it lasted but not fine for everyone else. And I don't think those days are coming back either..........I think at very minimum this government understands the need for exchange rate stability...........even if it doesn't understand the meaning of austerity, particularly as applied to Government spending.
 

Criss Colon

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I am NOT exactly sure of THAT DATE!

But I began changing 1000 US when the peso hit around 40 to 1,and changed another 1000 each time it went up 4 or 5 pesos.Last 1000 I changed was at 56 to 1.I am "saving" now,not "changing"!
 

Bartolomeo67

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Riu said:
You are correct Bart. The peso has been gaining ground since it peaked in may 2004. Since then the dollar has steadily declined to its current levels. The international reserves are up. But this megaprojects are not being timed with the DR best interest in mind. There is a lot of money in these projects, and DR economy is in a recovery phase, administration should focus more in repairing the local economy first before comiting to other projects which are not a priority.

I fully agree with you Riu that these megaprojects come at the wrong time. This president seems to want to make a lasting visible mark on the country and on Santo Domingo in particular. Remember Leonel was also the one behind getting the Panamerican Games to the DR, another project the country could not afford. Hipolito could do nothing more than take that project to the finish and spend more money on infrastructure, buses, etc.

I only wanted to point out that from a monetary point of view, the DR has recovered a lot of ground since 12 months ago and that it's unlikely to see the peso around 50/1 again.
Posters are correct that 'in the field' the economic situation is not good, peso affecting the export business, tourism, etc but currency reserves are up, inflation seems to be under control. I don't think Leonel will let the peso slide off again. He would lose all his credibility.
Bartolomeo
 

Escott

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juancarlos said:
Can you give us one or several examples of how to make money in the DR if you don't have to make a living or if you have money, like you say? Invest in what? for example. Just wanting to know, just in case.
You can live like a pig on the interest you can make here both with the bank and privately.

2-3% a month isn't uncommon.
 

Riu

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I think you are correct Bart

Bartolomeo67 said:
I fully agree with you Riu that these megaprojects come at the wrong time. This president seems to want to make a lasting visible mark on the country and on Santo Domingo in particular. Remember Leonel was also the one behind getting the Panamerican Games to the DR, another project the country could not afford. Hipolito could do nothing more than take that project to the finish and spend more money on infrastructure, buses, etc.

I only wanted to point out that from a monetary point of view, the DR has recovered a lot of ground since 12 months ago and that it's unlikely to see the peso around 50/1 again.
Posters are correct that 'in the field' the economic situation is not good, peso affecting the export business, tourism, etc but currency reserves are up, inflation seems to be under control. I don't think Leonel will let the peso slide off again. He would lose all his credibility.
Bartolomeo

I don't think we will see the peso at 50 or above anytime soon. At least not until a new administration is in power. For the time being I think they will try to keep the peso stable at current levels. Besides you have GOD (IMF), with its hands in the cookie jar, so they will not allow the kind of rampage for the moment. I am a little concern though about the Central Bank, how do we know that the data they publish is correct? Is their reporting creditable?
 

Riu

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Escott said:
You can live like a pig on the interest you can make here both with the bank and privately.

2-3% a month isn't uncommon.

Scott, I trust you are saying 2-3% for dollars ? What is the current interest rate range for peso, do you have info on that?