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Iberoamerican Summit costs RD$1.2 billion The Iberoamerican Summit of Heads of State and Government,to be held at the Barcelo Bavaro Convention Center on the East Coast, will cost the Dominican government US$60-million to organize, or approximately RD$1.2-billion. Minister of Foreign Relations Hugo Tolentino Dipp defended the expense, saying that he is sure the summit will be a success and will benefit foreign relations and the international image of the Dominican Republic. The event will be held from 15-16 November and will include the participation of some 23 heads of state from Latin America and the King of Spain, Juan Carlos de Borbon. This is the 12th Iberoamerican Summit. The heads of government will discuss terrorism, governance, tourism, migration, poverty and economic cooperation. The Dominican Republic summit will focus on “Farm Development, Environment and Sustainable Tourism.” |
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The increasing cost of the sovereign bonds Hoy newspaper reports that the cost of the first issuance of US$500-million of sovereign bonds in October 2001 has increased by 21.5% due to the devaluation of the peso. The bonds were issued when the dollar was valued at RD$16.70 to one, creating an annual cost of RD$791.6-million in interest payments due. But if the cost of the bonds in dollars is exchanged at the current rate of RD$20.30, the annual cost soars to RD$962.2-million per year - 21.5% more. If the exchange reaches a rate of RD$25 to US$1, the cost for issuing the US$500-million bonds would increase by 49.6%, or to RD$1.2-billion a year. The Listin Diario, in its Sunday economic section, reports that by issuing the new placement of sovereign bonds and by using the dollars to restructure the short-term foreign debt, the government will have generated savings of RD$8-billion at the current rate of exchange. But another report in the Listin Diario explains that the previous sovereign bonds had a negative effect that overheated the economy and generated an increase in imports at a time when export revenues were down. This translated into an increase of the inflation rate and the exchange rate. The Central Bank proposes that, in the case of a new placement, the funds not be exchanged for pesos. The Mejia administration seeks to make a new placement of US$500-US$750-million in sovereign bonds before the end of the year. The money reportedly would be used to pay the debt contracted by the previous government with local banks, estimated at US$135-million. Other plans reportedly include making payments on foreign loans valued at US$215-million and to strengthen the international reserves by an amount of US$150-million. |
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Paying off short term debt with the bonds money Economists who oppose the new issue of the sovereign bonds say that such an endeavor could possibly contribute to an increase in the already high current spending of the government. Government spending has been on the rise in spite of the decline in export revenues. According to the Listin Diario newspaper, the short-term debt is made up of loans contracted by the Fernandez administration from 1996-2000 (estimated at US$952-million) in addition to the US$2.3-billion borrowed by the Mejia administration since August 2000. The funds secured from foreign commercial banks were used to pay for items such as vehicles for the AMET, buses for OMSA and public transport unions, traffic stoplights, and construction materials to rebuild homes in low-income communities, among other government purchases. Andy Dauhajre, governmental bonds advisor to the government, says that the foreign debt as of December 2001 was US$4.137 million, and that this has declined to US$4.128 million. Arguing in favor of the new placement, he says the country has been paying more cash than it has been receiving. The Center for Economic Research of the Antilles, the Pontificia Universidad Catolica Madre y Maestra think tank (Cenantillas), says that behind all this borrowing is the inability of the government to generate savings to finance its public investments. It is clear that the government is spending more on government jobs and other miscellaneous extravagances - such as equipping government employees with luxury vehicles - than it is taking in, and fiscal discipline has been practically inexistent. Minister of Finances Jose Lois Malkum says the government needs RD$14.5-billion to make interest and capital payments for 2003. |
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Buying political patronage with the bond money Jacinto Peynado, the highest-ranked politician within the PRSC opposition party, said on Saturday that the government proposal to launch the US$500 - US$750-million in new sovereign bonds is nothing more than part of a plan to re-elect President Hipolito Mejia. As reported in Hoy newspaper, Peynado said that the plan began with the reformation of the Constitution in order to allow Mejia’s bid for re-election in 2004. This was followed by the appointment of a group of judges to the Central Electoral Board who are perceived to be partial to the PRD faction and who would presumably support a re-election of the incumbent president. Peynado says that the next logical step is for the PRD to secure the necessary funding, which would be achieved with the placement of the new sovereign bonds. Peynado speculates that the money would be used to purchase political patronage, regardless of the high cost of the placement and the fact that the nation would be saddled with these debts for many years to come. Senator Jose Hazim of the PRSC also opposes the new placement, arguing that the country has reached its limit of borrowing. He suggests instead that the government implement fiscal discipline and reduce its spending in order to have money left over for construction projects. He said the President has to govern for all Dominicans, not just for those of his political party. He criticized the government policies that have led to double-digit inflation rates, the steady devaluation of the peso over the past two months (from RD$17/US$ to RD$20+/US$) and the major increases in the power rates. All these factors, he says, have resulted in a loss of confidence among the members of government. |
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Esquea opposes the bonds PRD presidential candidacy hopeful, lawyer Enmanuel Esquea Guerrero, told Hoy newspaper that he also opposes the issuance of the sovereign bonds. “Our country has to enter into a process of fiscal discipline, of austerity and savings. We cannot continue to import goods if we are not generating the revenues to pay the interest rates,” he said. He added that the country could be falling into a vicious circle, with no guarantees that next year the government will not want to make another placement of US$500-million. Esquea concludes that the proposed placement will not solve the problems that have brought about the present crisis. |
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What’s going on at the Mejita Dam? Why did the Unidad Corporativa Minera order the drainage of the Mejita Dam? Deputy Minister of Environment Rene Ledesma had been notified by the UCM that the water level of the dam was increasing due to frequent rains. Studies were ordered but, in a unilateral decision, the UCM ordered the drainage of the toxic waters of the dam. Ledesma explains that the situation in the dam is the result of inappropriate management of the Rosario Mining gold mine. The government contractually assumed all responsibility to repair any ecological damage caused by past or future exploitation of the Rosario sulfide deposits releasing Canadian company, Placer Dome from this responsibility. Peña says that the government seeks a US$50-million loan to resolve the environmental problems in the area. Assisting the Dominican government, is the SRK Consulting firm. |
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New ambassadors Venezuela: Francisco Belisario Landis. Thailand: Sakthi Krairiksh Paraguay: Jose Feliz Fernandez Portugal: Manuel Marcelo Monteiro |
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US ambassador: DR pays highest power rates Hoy newspaper page-two commentator, Emilio Lapayesse, comments on what he calls the wit of US Ambassador Hans Hertell. He mentions how Ambassador Hertell recently criticized the price of power in the Dominican Republic calling it the highest in this hemisphere and emphasizing how it takes away from the competitiveness of Dominican companies. Hertell spoke at a business meeting of the American Chamber of Commerce in La Vega, where he recommended that Dominicans discuss this problem with their leaders and demand an improvement in the power situation. But Lapayesse finds irony in this remark, especially because he says that the Ambassador forgets that Enron is not a Vietnamese company. The US Embassy has lobbied on behalf of Enron’s operations in the Dominican Republic and the matter is on the agenda of the ongoing bilateral talks. The Smith-Enron plant contract is an example of how onerous a power contract can be for consumers and is one of the main reasons why Dominicans pay so much for the service today. |
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Tragic Sunday outing A small, motorized rowboat, the Michel 39, with nine passengers out for a Sunday cruise in the Ozama River, met with tragedy over the weekend. Luis Vargas, a fisherman who makes a living catching shrimp in the river, invited his family and friends for a routine ride along the river. While they were making their way back home the motor died, causing the two women aboard to panic and alarming the children passengers. In the hysteria the boat capsized with Pedro Antonio Peña, Vargas’ friend, losing his wife and daughter Michel in the accident. Vargas’ daughter also died and the two women remain missing. |
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Acrobatic pilot dies US acrobatic pilot, James B. Rossy, who had come for the Sunday Air Show benefit, died of head injuries when his plane crashed into the sugar cane fields of San Luis, north of the city of Santo Domingo. His F-86 plane, a USAF’s jet fighter dating back to the late 40s, crashed at around 8:30 am, after having taken off from San Isidro on its return to Miami. The 60-year old pilot had reported a failure in the motor of his aircraft. Hoy newspaper reports that Rossy was found with his unused parachute on, as he apparently tried to save the plane by maneuvering it to a forced landing. Rossy was described as a very experienced pilot, having been in the US Air Force and commanded transatlantic commercial jetliners over the course of his career. |
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Colombian pilot dies In another weekend crash, Miguel Angel Cadena, a 42-year old Colombian pilot, died when his plane, en route from Nassau to Port au Prince, crashed in Cambita, San Cristobal. Two passengers, Colombian Jaime Rueda and Bahamanian Alexander Lewood, survived and were hospitalized at the Military Hospital in Santo Domingo. This accident supposedly occurred when the pilot attempted to land in Herrera International after his plane ran out of fuel. |
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13 young adults die in Jarabacoa bus crash 13 young adults died, two severely injured, and many others remain hospitalized as the result of a bus crash on Sunday. The group was on a Colegio Duarte school (of Los Alcarrizos, Santo Domingo province) excursion to Jarabacoa mountain area. The accident occurred when the driver lost control of the vehicle on the perilous Jarabacoa-La Vega highway descent. News reports say the driver had been drinking and that the bus was not in good condition and was overcrowded with rowdy students. |
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Heliports in fashion in the DR The Listin Diario Sunday edition highlights the boom in the construction of heliports in the Dominican Republic. According to the report, there are 24 heliports in operation and four more under construction. The Department of Airports is currently evaluating the possible creation of another 12, while there exist 24 heliports presently not in use. This is in addition to the nine international airports located nationwide, and two others under construction. The newspaper says that the government will soon have a new heliport for its official use located on a lot in front of Metaldom on the Malecon. This new heliport will serve visiting foreign statesmen, government officers and emergency rescue operations. It will have two runways and will cost RD$5-RD$6 million. |
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Presidente beer to Texas and California Rafael Menicucci, president of the Cerveceria Nacional Dominicana, the Presidente Beer brewery, told El Caribe newspaper that the company has new plans to export to Atlanta, Chicago, Washington, California and Texas. He said that the manufacturing plant in Santo Domingo will be able to produce 6 million barrels of beer annually within 10 years - almost double its present capacity. In the interview, Menicucci expressed his support of the proposal to reduce the ITBIS sales tax while expanding its scope, at the same time eliminating the 1.5% tax on gross sales and the exchange surcharge. |
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Windmill energy and power company success story Chief executive officer Rolando Gonzalez announced that the Consorcio Energetico Punta Cana-Macao will install a windmill park to generate an additional 20 megawatts. This would raise the capacity of the company to a total of 92 megawatts. He said they have been studying the feasibility of doing so by taking advantage of the winds at the point known as Cabo Engaño on the East Coast. The company would offer the power to the hotels and new residential developments along the eastern coastline. The announcement was made on the occasion of the 10th anniversary of the company. CEPM is said to provide reliable service at reasonable prices across the East coast district. Company general manager Carlos Martinez de la Escalera highlighted that the power company is an example of what can be accomplished in the power sector. He said that the secret to their success is keeping slightly ahead of the demand. With a collection rate of 99%, he said that they are proof that when there is quality in service, people will pay. |
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Pan Am Committee needs RD$1.3-billion more Hoy newspaper reports that Jose Joaquin Puello, president of the organizing committee of the Santo Domingo Pan American Games, says that the government is deliberating over the disbursement of a RD$1.3-billion budget for the Pan Am Games. The money would be used both for the organization and the construction of 15 venues going up for the Games. Puello said that so far the government has disbursed RD$305-million. Puello referred journalists interested in the pace of work of construction of the venues to the Ministry of Public Works, the body of government in charge of the construction. Journalistic reports cite the delays in construction, pointing out that major reconstruction necessary at the Juan Pablo Duarte Olympic Center has yet to begin. The Games are slated to open 1 August. |
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