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Daily News - 28 October 2002

More sovereign bonds?
President Hipolito Mejia says he has authorized the Secretary of the Presidency, Sergio Grullon, and his economic advisor, Andy Dauhajre, to meet with the business sector and the press, with the intentions of creating a favorable climate for a new release of sovereign bonds on international capital markets this November. Technical Secretary of the Presidency Rafael Calderon says the new bonds could be worth as much as US$500-US$750 million, at a possible interest rate of 8-9% for terms of 10-15 years. 
The government says the money generated would be used to restructure the short-term foreign debt accumulated over recent years. Minister of Finance Jose Lois Malkum says the government is hard-pressed to meet its commitments in regards to the next year’s payment schedule for RD$14.5-billion owed in foreign debts. The total foreign debt stands at US$4.3-billion. 
President Mejia on his Channel 4 state television talk show defended the use the government has given the first US$500-million issued in bonds in October 2001. He said the government still has RD$3-billion of the funds from the first placement. 
The net proceeds from the sale of the first US$500 million in sovereign bonds was slated exclusively to finance the construction of high priority and productive infrastructure projects that would enhance the competitiveness of the Dominican economy. A commission consisting of the President, members of the administration and representatives of the business and labor sectors were to supervise the allocation of the money and the infrastructure projects to be financed with the proceeds would be subject to a comprehensive cost-benefit analysis. The government, nevertheless, was flexible in fulfilling this commitment. Journalist Carmen Carvajal, reporting in Hoy newspaper’s Sunday edition, says that at least US$135-million of the sovereign bond money was used to pay the Dominican Electricity Corporation (CDE) for energy-related arrears, instead of being spent on the infrastructure projects. 
Commenting on the plans for a possible new issuance, Elena Villeya, president of the Association of Industries, says that the business sector could support the new placement if the government would eliminate the 4.75% exchange commission.

Dollar climbs in Dominican market 
Dominicans purchased US$ dollars for up to RD$23-US$1 on Friday, as the Dominican peso plummeted to a record low. The Central Bank has injected approximately US$600-million in reserves this year to preempt a run on the dollar. The economists of Pontificia Universidad Catolica Madre y Maestra’s think tank Centantillas attribute the devaluation to the overspending of the government at a time when travel and the manufacturing export sectors’ revenues have declined by approximately US$400-million. Travel to the DR is down about 10%. 
The press today says that the commercial and exchange banks, in an attempt to contain the run on the peso, agreed to sell the dollar at a maximum rate of RD$20.15 to US$1 for the next 30 days. Freddy Ortiz, the president of the Association of Remittance Companies, said that the Central Bank would penalize any companies that do not comply with this agreement. Ortiz also said that the peso has devaluated more quickly as a result of the anxiety felt in the market and the expectance that the peso will continue to lose value. 
Former Minister of Planning, Rafael Camilo, blamed the government for the plunging exchange rate, as reported in Hoy newspaper. He said that while government revenues increased by 10%, government spending was up 26%. He urged the government to regulate its spending in order to bring stability to the exchange market.

Profits guaranteed for road concessions
Listin Diario reports on what a good deal the road and train concessions are for the beneficiary companies, most of which have been handpicked by the Mejia administration. According to the contracts signed by the Mejia administration and passed by Congress, if the ventures are not profitable, or if costs go beyond the original estimates, Dominican taxpayers will have to pick up the losses, as the contracts guarantee the earnings of the companies. This situation had been previously reported in El Caribe, which alerted the public to the dangers of these types of contracts, saying they could become excessively onerous - as many of those signed with the private power companies that today make headlines. 
In its Sunday Money section, the Listin Diario focuses on the case of the Samana highway, which is the only road construction granted with the concession model that seems to be advancing satisfactorily. A tender was held for that highway. The Listin says that the contract stipulates that 6,050 vehicles will use the highway in the first year, with 5% increases in traffic thereafter. If the traffic does not meet that minimum, the government will have to pay the company the difference. Likewise, the government is responsible for paying any deficits created by the devaluation of the peso, inflation and other cost-increasing components. Historically, roads have cost much more than their original budgets. The concession contracts signed allow the companies to increase their tolls as they see fit, however, should users resist the high tolls and decide to use alternative roads, the government is ultimately responsible for this difference also. 
President of the Senate Andres Bautista Garcia, despite having voted in favor of the concessions, told the Listin Diario that there have been major delays in the start-dates of several of the concessions granted by the government, and other projects that are progressing at a questionable pace. Among those mentioned are the Maximo Gomez-Hermanas Mirabal highway, Duarte-San Francisco de Macoris highway, Duarte-Navarrete-Puerto Plata highway, San Cristobal-Bani highway and the train from Haina to Santiago. 
Bautista commented that these concessions have been a fiasco and lamented that they were granted to companies that needed the approval of the Congress to then go out and seek the necessary financing. 

Spotlight on Judge Pujols
The media spotlight is on Judge Doris Josefina Pujols, after she released Wilvio Medina Cuevas for lack of evidence against him in a major drug shipment case. The Drug Control Department arrested former Dominican vice consul Ornis Freddy Peña, confiscating 42 kilos of cocaine found in his vehicle. The drug reportedly would have been delivered to Medina Cuevas and Victor Contreras, but the DNCD arrested them prior to delivery. Diario Libre says that the judge had released two other persons the DNCD had arrested for being part of a major drug trafficking ring only eight months ago. 
Diario Libre points out that the judge is married to an officer of the Supreme Court of Justice, who directs the liaison unit of that court with the National Planning Office of the government.

Is Hertell partial to the government?
Listin Diario political analyst Orlando Gil criticizes recent actions of US Ambassador Hans Hertell and for his lack of neutrality in local politics. Gil writes in his Saturday column that the US Ambassador convened the PRSC leaders and those of the civil society to discuss the selection of the judges for the Central Electoral Board. Gil questions the ambassador’s motives in seeking to mediate the matter without the participation of the other leading political party, the PLD. The PLD also debates the unilateral selection of the judges that will decide the 2004 presidential election by the ruling government party.
Gil comments that Hertell acted without the impartiality that should be expected from one who exercises friendly colonialism, and instead showed himself to be partial to the same government that thought it had made the master political move of the century, showing little regard for the consequences. PRSC and PLD deputies are not attending congressional sessions in protest for the selection of the judges.

PRSC men have a price
Political analyst Orlando Gil, writing in the Listin Diario, says that the return of the PRSC deputies to Congress is merely a matter of money. He says that the opposition front, composed of former Vice Presidents Jacinto Peynado and Carlos Morales and PRSC senator Josecito Hazim, has been successful in keeping the PRSC deputies away from congressional sessions but their spell should be broken any day now. He forecasts that the government is now in the midst of individual negotiations with some PRSC deputies in order to reach their price. “The reformistas have the country in their pocket, but are always willing to sacrifice themselves if the price is convenient,” Gil explains. He says that the Mejia administration needs the deputies to get back to work so as to approve the increased taxes in time for the 2003 budget and a new placement of sovereign bonds.

Air France direct flights to Punta Cana
Be prepared to brush up on your French if you will be traveling to Punta Cana. With the start of the direct Punta Cana-Paris flights set to begin on Monday, 28 October, many more French tourists will be discovering Punta Cana. Benoit Desouches, general manager of Air France in the Dominican Republic, says that the company will be using a 747-200 with a capacity for 471 seats on the new non-stop PUJ flights. For starters, there will be three direct flights a week on the route (Monday, Thursday and Saturday). Air France also has four weekly non-stop flights from Santo Domingo (Sunday, Tuesday, Wednesday and Friday). 

60 experts to debate travel outlook
A forum of 60 tourism industry experts, which includes Fernando Rainieri from the Dominican Republic, will meet in Thessaloniki, Greece on 1-2 November for a brainstorming session. It will be their goal to assess the current situation of world tourism and the challenges in surmounting the combined effects of the economic downturn and the terrorist attacks of 11 September 2001 and Indonesia this year. 
The World Tourism Organization Leadership Forum of Advisers is described as a meeting of wise and knowledgeable people from tourism’s private sector. The results of the meeting are intended to serve as useful inputs into the preparation of the next program of work for the World Tourism Organization for 2004-2005. 
A former Minister of Tourism, Fernando Rainieri says that what is important about the meeting is that through discussion and brainstorming something positive may come about to maintain tourism development, in the hopes that countries that depend on travel be less affected. He explained that the tourism experts will especially look into where the European travel flows will be directed and the effects of the increase of cruise ship travel on the market. He highlighted that the debate will focus on the most recent world tourism statistics with an aim to draw conclusions for what sort of an impact a war with Iraq could have on long-term travel. 

Winter ball wrapup
tThe Estrellas Orientales and the Aguilas are tied for first place in the first two weeks of the Dominican Winter Baseball League with 6 games won and 2 games lost apiece. News reports say that the fans have turned out in droves this year to support the baseball stadiums. 
The standings, as of Monday, 28 October, are:
Estrellas 6-2 (.750)
Aguilas 6-2 (.750)
Licey 4-4 (.500) –2
Escogido 3-5 (.375) –3
Toros 3-5 (.375) –3
Gigantes 2-6 (.250) –4
 
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