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Daily News - 4 February 2002

Tax exemption on wages increased
Wages up to RD$10,438 a month (RD$125,256 a year) are now tax exempt in the Dominican Republic. This is up from RD$10,000 a month last year. The Tax Department (DGII) adjusts the tax-exempt wages every year for inflation. Inflation last year was 4.38%. 
Now, wages from RD$125,256.01 to RD$208,760 will pay 15% on the difference. 
RD$208,760.01 to RD$313,140.00 will pay RD$12,526 plus 20% of the difference over RD$208,760. 
Those making RD$313,140.01 and more will pay RD$33,402.01 plus 25% of the difference. 

President Mejia: no more raises in government
President Hipolito Mejia said there will be no wage increases beyond the 6% hike included in the 2002 National Budget. The President was responding to the public teachers’ union, which is asking for a much higher wage increase. 
“Under the circumstances, I cannot add another cent or percentage beyond the budget: this is clear. The first responsibility of the physicians, the teachers and the agronomists, of everyone who works, is to work their contracted hours,” he said. 
Commenting on the need to maintain stability between spending and investments, he said, “It is not true that I am going to change my position and dedicate all the budget to pay wages, that cannot be.”
“If all the money of the budget is swallowed by the bureaucracy, you won’t have the possibility of investing in the school breakfast plan for the children, nor in the needy sectors, nor to benefit those who do not have jobs. I have to be a serious person, I cannot be a big talker (charlatan).”

Propane gas frauds will be tried
National Treasurer Pastora Mendez says the government plans to charge those involved in propane gas fraud against the government. She said the government had budgeted RD$900 million for the 2001 propane gas subsidy and by June had paid RD$1.4 billion, or RD$500 million beyond what it had planned to spend. As a result, an audit was ordered that showed the stations were reporting more sales than the gas they were receiving. The subsidy program was later eliminated. It was run under the Ministry of Industry and Commerce, with Angel Lockward as the Minister at the time.

Listin: Government made inappropriate use of bonds money
The government had to resort to spending RD$4.3 billion of the sovereign bonds money to cover the deficit between internal revenues and current expenditures. The Listin Diario says the government only collected RD$57 billion last year, and had expenditures of RD$61.3 billion. The newspaper attributes the lag in revenues to the economic reforms implemented in January 2001. 
The Listin says that of the RD$8.3 billion (US$500 million) bond placement, the government has spent RD$2.8 billion. 
Louis Malkum, economic advisor to the President, explained that the government had estimated it would receive RD$3.7 billion in foreign revenues and RD$61.3 billion in internal revenues. The result was that the internal revenues were a little over RD$57 billion and the other RD$7 billion came from the sovereign bonds money, as reported by the Listin. 
The government has yet to publish a detailed list of its use of the bonds money. 

Leonel Fernandez: PRD is mortgaging the country
Former President Leonel Fernandez, during the political event in which he was sworn in as president of the Partido de la Liberacion Dominicana (PLD), lashed out against the Mejia government. Fernandez announced that the rally marked the start of the PLD offensive against the government. The municipal and congressional electoral campaign is officially scheduled to begin in March. 
President Fernandez said the Mejia government is mortgaging the future of the country and that his party will make strong opposition from now on. 
He said that in the last year and five months, the government of Hipolito Mejia has set a new record, having contracted international loans for more than US$2 billion. This is in addition to RD$5.2 billion borrowed from commercial banks, which he said represents 80% of the total of the public debt contracted by previous governments.
“The time for the truth, fellow party members, we will see this coming March when in addition to the RD$1 billion in payments on interest and capital mortgage payments, we will be obliged to extract from the budget RD$446 million to meet payments on the sovereign bond placement,” he said. 
The former statesman criticized the government for hiring 25,000 new public workers without any purpose (botellas), and the deterioration of public services, which has made it difficult to get a driver’s license or to renew registration stickers for vehicles, he said. 
“This administration of the PRD is so incompetent, so inefficient and so unbridled that it has made the country, its development and stability, dependent on an escalating spiral of public indebtedness that is mortgaging the future of the new generations and puts at risk our survival as a nation.”
Fernandez criticized what he called the insatiable appetite of the PRD, which after having used all the budget, discovers that it is left with its hands empty and its pockets with holes and then launches its patriotic hero act: the issuing of the sovereign bonds and other borrowing.
Fernandez shared a comment of a Dominican who said that the present government was “like a chunk of sticky rice (concon) because it is difficult to chew and more difficult to swallow.”

Government borrowing could force interest rates up
The Dean of the School of Economics of the Pontificia Universidad Catolica Madre y Maestra (PUCMM) told El Caribe that government borrowing is a serious problem for the country and it could force interest rates up. 
Jose Luis Aleman said, “The problem is that as the government borrows from national banks, there will be less money available to lend to the private sector, and interest rates could again go up.” He also said this would affect inflation and the balance of payments. 
Aleman has for months been critical of government overspending and its habit of borrowing to meet the deficit. In his opinion, the government has exceeded the country’s indebtedness capacity. He estimates the government will have to dedicate 20% of its budget to meet debts, or RD$14 billion of the RD$73 billion budgeted.
Aleman urged the government to reduce its own spending. 
He also was critical of the management of the budget, saying projects included in the budget need to be more complete and detailed so the government institutions that receive funding follow the specifications. 
For example, he said the Ministry of Public Works has programs for highway construction that don’t specify which roads the funds are for. “All that appears is the amount of money that is required, and this is broken down into material, work force and property purchase.”

35% decline in La Romana free zone jobs
Fernando Ceballos, President of the La Romana Association of Industrial Free Zones, confirmed that in recent months 6,000 employees, or 35% of the total payroll, have been fired. The job losses are attributed to the decline in orders due to the slowdown in the US economy. The free zone in La Romana employed 17,000 in December 2000. As of last month, the payroll had declined to 11,000. Ceballos says that if the present situation continues, another 2,000 could be laid off.

Remittances expected to decline
The President of the Association of Remittance Companies (Asociacion de Empresas Remesadoras de Divisas), Freddy Ortiz, told El Caribe that he expects the volume of remittances to start declining in March of this year. Ortiz says that in 2001 remittances were already showing a downward trend, with only a 3% increase over the previous year. Remittances had grown 7 and 8% in the two previous years. 
Money sent from family living outside the DR is one of the country’s most important sources of hard currency. El Caribe reports that remittances in 2001 were US$1.75 billion. 

Gasoline station owners want to sell liquor
Listin Diario reports that the local association of gas station retailers (Anadegas) plans to fight the ban on gas station liquor sales. The Metropolitan Transport Authority (AMET) announced it will no longer allow these sales. Juan Espaillat, president of Anadegas, said the director of AMET, Major General Pedro de Jesus Candelier, cannot adopt measures that break the law. Nevertheless, he said that the rules regarding the sale of alcoholic beverages are not clear. 

Licey vs. Mexico today
Licey/Dominican Republic, with Odalis Perez as pitcher, won its first game of the Caribbean Series Saturday in Caracas, Venezuela. The Dominican Republic defeated Vaqueros/Puerto Rico 9-5. Vladimir Guerrero batted two home runs. The DR is so far tied with Mexico for first place in the series. Today the DR plays Mexico. The Baseball Page
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