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Daily News - 22 August 2002

Bear Stearns praises Dominican economy
In a 20 August Sovereign Latin America Update, the brokerage firm Bear Stearns reports that despite several developments that are worth monitoring, Dominican Republic bonds still look attractive relative to comparable credits. The brokerage firm continues to recommend them as a defensive holding. The firm recognizes the Dominican Republic economy as one of the best performing in the world over the past five years. “That performance appears to be continuing in 2002,” says the report from the Emerging Markets Sovereign Debt Research. The report says that while the central government is running a small fiscal surplus, the Dominican Republic still looks like a solid growth story where macroeconomic imbalances are relatively small. 
Bear Stearns mentions that gross foreign exchange reserves at the Central Bank have been on an increasing trend for two years. In June of 2000, gross reserves were US$681 million and were a preoccupation of the rating agencies. At the end of June 2002, they stood at US$1.1 billion.
Domestic investment and demand, and government spending are driving the growth. Bear Stearns mentions issues worth monitoring are export earning sectors that seem to be underperforming. The report says that domestic demand is picking up the slack left by the weakening external sectors, but then it questions its sustainability. It forecasts a slowdown in telecommunications sector, mentions that the construction boom is bound to taper off in the medium term. It also highlights that government consumption is rising by 19%. 
Bear Stearns stresses that it’s fairly clear that the fiscal expansion taking place is not sustainable in the long term. It says that because fiscal performance overall is solid, this is not as alarming as it would be in other Latin American countries. 
It says that the Dominican Republic has turned in a phenomenal performance in the context of the rest of Latin America and the Caribbean. It bases this on the current surplus (current revenues less current expenditures, excluding capital spending) having risen slightly in the first half of 2002, and even after capital spending the fact that the central government managed to run a moderate surplus. 
Areas of major concern are that the number of employees in the central government bureaucracy has increased 15.3% in the past two years. This is consistent with the fact that central government personnel spending rose 17.6% year over year in the first half. In addition, with interest costs rising this will lead to higher debt levels. Interest costs rose by 86.5% in the first half compared with the first half of 2001. 
Bear Stearns says that for the sovereign credit to continue to improve, they would look for a slightly better balance between growth in the foreign and domestic sectors in the future.

Profit repatriation hurting
Hoy newspaper reports that profit repatriations and interest payments by foreign companies rose to more than double the total paid by the government on the foreign debt. Foreign debt payments were US$326.6 million, while profit repatriation totaled US$729.6 million. Economists say this has a negative effect on the balance of payments. 
Profit repatriation in 2002 was US$1.135 million, increasing to US$1.172 million in 2001 and forecast to hit a record US$1.3 billion in 2002. The servicing of the public debt is expected to reach US$800 million. 
Business sectors have urged the government to encourage foreign investment only in foreign exchange generating areas.
Meanwhile, the Central Bank reported that the exchange rate increased to a record RD$18.54. 

New JCE judges?
The PRSC and PLD political parties, and several civic society organizations requested that the Senate appoint new Central Electoral Board (JCE) judges, and more importantly that they are chosen by consensus. Meanwhile, the president of the Senate Andres Bautista Garcia said there is no rush. Unless they are removed, the present judges remain in their posts despite their term having expired. The present judges were in charge of the 2002 congressional and municipal election. 

Travel agents protest elimination of commissions
The president of the Dominican Travel Agency Association (ADAVIT), Carlos Alonso announced that Dominican travel agencies would boycott the sale of airline tickets on 9 and 10 September to protest the elimination of the 6% commissions on tickets sold for travel to the United States. Diario Libre says that airline prices offered for ticket purchases on the Internet are considerably more attractive than those the travel agents are authorized to sell at. The airlines are offering special fares for Internet purchases to steer the customers toward the Internet and their own reservation centers as another cost-cutting tactic. 
The newspaper mentions savings of RD$349 pesos on an American Airlines Santo Domingo-New York flight, of RD$5,990 on a Copa Airlines Santo Domingo-Miami flight and of RD$7,694 on a Santo Domingo-New York flight. 
The Asociacion de Operadores de Turismo, Sociedad de Agencias IATA Autorizadas, agreed on the boycott on ticketing. In the DR, 194 travel agencies are IATA authorized to sell tickets, and another 700 have licenses to resell these tickets, employing 31,000 persons. Michael Espino, secretary of ADAVIT, told El Caribe that their associates write up 85% of the tickets. 

Who will collect the tolls?
Fabio Herrera-Miniño, writing in Hoy newspaper today, questions who will collect the money from the new tollbooths to be stationed on Dominican highways. Herrera says that the government has authorized several conflicting parties to collect the funds. They’ve been allotted to the Banco de Reservas up to the RD$8 billion debt with the Ministry of Public Works, but at the same time to the companies chosen to build highways under concession contracts, and also to the company that will be building 10 new tollbooth stations. 

4 out of 10 graduate from 8th grade
Only 40% of Dominicans graduate from 8th grade. That is, of every ten Dominicans registered in first grade, only four move on to high school. 
The highest school desertion takes place in 6th and 7th grade, when the students enter the work force. 
The Ministry of Education released data from a survey of Dominican education. 
The same poll showed that 46.7% of students in middle school are over 17 years old. Only 3% are less than 14 years old. 

New mayors, new garbage companies
Listin Diario reports that the new city governments have hired new garbage collection companies. Santo Domingo North Mayor, Daniel Carvajal contracted Aseo Urbano. Mayor Daniel Ozuna, of Boca Chica, will be working with Soinca. Mayor Francisco Peña will be working with Higiene Integral. 
Meanwhile, the Listin reports that the Duquesa waste disposal site operated normally yesterday, with hundreds of garbage trucks coming to dump their loads. Santo Domingo Mayor North Mayor Daniel Carvajal took over the operation of the site on Monday, expelling the company that had the contract from the Municipality of Santo Domingo. 
Mayor Carvajal said that Rafael Troncoso, who received training in Japan from the original builders of the site is in charge of the operation. He said they receive 3,800 to 4,200 tons of garbage a day. He told the newspaper he had reached a satisfactory agreement with Mayor Roberto Salcedo of the Municipality of Santo Domingo. 
But El Caribe says that because Salcedo is abroad the Municipality of Santo Domingo has not participated in the negotiations to decide on the operation of the waste disposal site. It’s the lone site that can service the needs of the Province of Santo Domingo and the National District and city of Santo Domingo. 

Colors for Ciudad Nueva
Ciudad Nueva, the downtown city area nearest to the Colonial City, is getting a new look. Listin Diario reports on the Paseo del Color project promoted by Procomunidad, a government organization that is assisting residents to improve the façade of their homes and businesses. 
Elizabeth Decamps of Procomunidad said that the program’s objective is to have the owners of the apartments sprucing up their fronts with bright colored paints, a cheerful change from the drab hues of the past.
The project has brought color to homes along Palo Hincado, Las Merceedes, Jose Gabriel Garcia, Miguel de Cervantes, and Carlos Garden, Ruben Dario and Independencia parks and plazas. 
The residents also receive decorative plants for the exterior and advice on how to maintain these. In addition, residents are being encouraged not to hang their laundry from their balconies. “We want to create a visual impact, so that the people identify with their community and protect the area,” she explains. The program is funding the painting and overall improvements.

Alburquerque owed 60 months
The president of the Chamber of Deputies, Rafaela Alburquerque made 60 past due payments yesterday on an apartment in her name in the Residential Los Tres Ojos de Santo Domingo. She’s now up to date after her name appeared on a list published in the press by Bienvenido Brito, administrator of the Bienes Nacionales, the government property department. 
Bienvenido Brito said that her ownership of the apartment is irregular, because the sale conditions oblige the owner - or direct descendents - to live in the property. 
Brito has begun a campaign to get those who were sold the apartments in the past to get up to date with their payments. Government apartments are sold well beyond their market value, but throughout the years beneficiaries see these as gifts for which they do not have to pay. 
Alburquerque had threatened to request the presence of Brito in the Chamber of Deputies to answer to questioning because he wanted to evict low income persons from apartments to which they have signed contracts with the government. 
When President Mejia was asked on the Una Vez a la Semana TV Sunday program on Channel 4 his opinion, Mejia said that the deputy should dedicate herself to her own work because she is meddling in areas that are not her business. 
Brito, who has a reputation as an honest government employee, was appointed to the job on 19 April after TV journalist Nuria Piera did an expose on corruption in the department. On 20 July, Decree 452-02 established conditions for the payment of past due debt with the government apartments.
 
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