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Andy Dauhajre’s good news Andy Dauhajre, economic advisor to the Executive Branch, highlights the following good news for the country. The cost of petroleum has fallen US$4 over the past five weeks, going from US$29.42 on 1 October to US$25.21 as of 4 November, 2002. The outlook is good for this winter’s tourism. As of mid-December, 186 flights a week are expected to arrive in Punta Cana, on the East Coast, and in Puerto Plata, on the North, with forecasts predicting occupancy rates of over 70%. New cruise ships will be arriving as of 9 December. Free Zone manufacturing companies say that orders are up, as their customers replenish their inventories for the first quarter of 2003. He said that many orders that had earlier been placed in Mexico are now being diverted to Dominican factories. Remittances from Dominicans living abroad are up from June to September. Since dollars are reaping more pesos as of late, this is expected to stimulate Dominicans living abroad to send money to their relatives. It is also expected to signify a boost in real estate sales. Dauhajre, who was the coordinator of the 2001 placement of US$500-million in sovereign bonds, regards the announced placement of US$600-million in sovereign bonds for later this year as a positive step. He says there will be improved external positioning of the country by increasing international reserves and by reducing the short-term and domestic debts owed in dollars to local banking instituitions. Finally, Dauhajre says that the expected recovery of the US economy will have a beneficial ripple effect on the local economy as well. |
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Free zone plant orders up Jose Clase, president of the Dominican Free Zone Association, says that the free zone sector will close the year with a positive balance compared to that of 2001. 2001 was a bad year with manufacturing plants affected by a large drop in orders. Clase forecasts a significant increase in manufacturing orders for the last two months of the year and the first quarter of 2003, as reported in the Listin Diario. He says the companies have received new orders, which means they are replenishing their inventories. Meanwhile, Jeanette Domiguez, director of the National Council of Free Zones, told the Listin Diario that the manufacturing sector is solid because 33% of the owners of the industrial park companies are Dominicans. She said that 51% are US investors and the remaining 16% are capitalists from other countries. Dominguez believes that these numbers bring much stability to the industry, when compared to Central America, for example, where she said 99% of the companies are foreign-owned. She said that 40% of the free zones are located in the northern area of Santiago and confirmed that the pace of orders from abroad seems to be recovering. |
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Government debt with banks is hurting Minister of Finance Jose Lois Malkum would favor new legislation to prohibit governments from borrowing in foreign currency from local banks, reports El Caribe today. Last week the newspaper criticized the government’s practice of taking on debt in US dollars from local institutions, as reported in DR1 Daily News on 7 November. Hoy newspaper reports that this government’s high level of borrowing from domestic banking institutions is the main reason the government now wants to make a new placement of sovereign bonds. Until 1995, Dominican governments had borrowed little with the local banks, but as of 1997, borrowing increased, and in 2001, leaped by 84% and rose to RD$12.5-billion. As of September of this year, the government owed commercial banks RD$13-billion, a large portion of which has been borrowed in US$ - a heavy burden on government finances. Mejia’s administration seeks to place US$600-million in sovereign bonds on the market. US$135-million of funds generated would be used to make payments on the foreign currency debt with local banks. This would be the first time the Dominican government borrows abroad to pay debt contracted with domestic banks. The flow of borrowing has been the following: 1997: RD$2.5 billion to RD$4 billion (Fernandez government) 1998: RD$4 billion to RD$4.5 billion (Fernandez government) 1999: RD$4.5 billion to RD$6.5 billion (Fernandez government) 2000: RD$6.5 billion to RD$6.8 billion (Fernandez-Mejia governments) 2001: RD$6.8 billion to RD$12.5 billion (Mejia government) |
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Sovereign bonds will not restructure debt Economist Vicente Bengoa of the PLD opposition party said that it is not true that the government has plans to restructure the foreign public debt with money from the announced US$600-million sovereign bond placement, as reported in Hoy newspaper. Bengoa says the government plans to borrow only to service its debt, which he says is not the same thing as restructuring. Bengoa was Superintendent of Banks during the Fernandez administration. He said that the government apparently plans to use US$350-million to pay its debts, because in the span of only two years the government has exceeded its borrowing capacity. He explains that the government plans to use US$215-million to pay foreign debts and US$135-million to pay back dollars borrowed from domestic banks. Minister of Finance Jose Lois Malkum has said that the country needs to pay US$745-million to service its public debt. Of that US$745-million, US$215-million would come from the new US$600 million sovereign bond placement. Malkum has said that the petroleum tax and the exchange commission will produce RD$10-billion to pay back the debt, but that this is estimated at RD$14.5-billion. [The peso is about 20-1 with the US dollar.] He criticized the government for spending RD$26-billion in salaries - primarily the result of political patronage. He said that if the government reduced its payroll by 17%, it would have sufficient savings to make up the RD$4.5-billion difference and the issuance of US$215-million in sovereign bonds would not be necessary. He said it is dangerous to borrow more because of the exchange risks. In an interview in El Caribe today, Malkum confirms that the government has an excessive payroll of 125,000 employees, most on what he described as the “little payroll” or “nominilla”. This is the list of people who are employed, but are paid with money allotted to government departments for other uses and thus the beneficiaries do not appear on the government’s official payroll. |
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Explaining the lack of liquidity Hoy newspaper says that the aggressive placement of certificates of deposits by the Central Bank has contributed to the reduced money in circulation. The reduced liquidity is responsible for the high interest rates that are hurting productive activities in the Dominican Republic. This year, the Central Bank lured RD$4.1-billion in the first nine months of the year, going from RD$3.3-billion in December 2001 to RD$7.4-billion by September 2002. The impact of the certificates of deposit on the economy, combined with the injection of dollars to the international reserves, was so significant that authorities had to take extraordinary measures and be exceedingly flexible with their exchange reserve requirements with local banks. |
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President: I will not carry that dead man President Hipolito Mejia said on TV last night that he would not “carry the dead man” in the case of credit card fraud and Baninter’s accusations against his security chief, Colonel Pedro Julio Goico. Mejia said he is convinced that he must firmly demonstrate that he will not allow this type of conduct and lamented the existence of such a pathology in the minds of human beings that leads them to think they must become rich over night. “In this fragile case, and in any and all other cases, the investigations will be thorough at all levels. Personally, I will not carry the dead man because I am convinced that I have to show firmness and not permit this under any circumstance,” he said when interviewed on the Una Vez a la Semana TV program on Channel 4. He urged the people not to despair and await the results of the investigations. |
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Pepegate: More needs to be known Minister of the Armed Forces Jose Miguel Soto Jimenez has announced that today he will be sending the President his final report on the investigations on irregularities regarding the use of the jet and helicopter designated for the “advance team” and the credit card fraud linked to Colonel Pedro Julio Goico, the chief of the President’s security corps. Soto Jimenez says the report carries the results of 40 days of investigations. Diario Libre, however, speculates today that new evidence suggests that the investigating commission has not covered all the bases. According to Diario Libre, at the Herrera International Airport it was well known that large amounts of money would enter and leave the country on the aircraft used by the military aide corps for the advance team. Investigators, however, have not yet interviewed the people that work at the airport, nor have they investigated the use of the airplanes used to transport merchandise or money, nor have they even questioned the pilots that flew the airplanes or helicopter at the disposal of the advance team. The newspaper says that the mystery surrounding the airplanes is such that not even the Civil Aviation Board will specify which flights were carried out by the advance team. The Civil Aviation Board has not been part of the investigations, even though it has a record of all the departures and arrivals of the airplanes used, including those of the airplane and helicopter that have been confiscated. The investigations took off after US Federal Authorities detained the HI-772 used by the advance team on 29 October in Miami for investigation. At the end of September, a Caribair jet had been detained in Miami by a Federal drug agency, when a shipment of 455 kilos of cocaine was discovered. Up until that time, the advance team would use the airplanes of that same company for their team trips. Pilot Daniel de la Cruz was said to have committed “an abuse of confidence” such as the authorities are now saying is the case of military Alberto Torres and Pedro Julio Goico. Diario Libre today says that if the investigation limits itself to the credit card fraud, it will not have been of any use. It says that the credit card fraud is merely the tip of the iceberg. |
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Hipolito believes in giving a second chance President Hipolito Mejia gave Army Mayor Pedro Julio Goico a second chance in 2000 when he made him his chief of security. Goico was free on bail after having been indicted for a RD$90-million fraud case in 1997 involving the National Lottery. Case records show that Goico, along with Manuel de Jesus Antun Batlle (Tete), was the key person in the scandal in which the winning numbers were fixed. Goico was then head of security at the Lottery. The case against him indicated that he negotiated with Haitian Frederick Mazourka the installation of the machines that made the scandalous fraud possible. Despite the fact that the case was still pending in the judiciary, shortly after assuming the Presidency President Mejia re-instated Goico to the military, promoting him from rank of major to colonel, and handing him the position of chief of security. Goico is now being investigated for major credit card fraud involving the unethical use of a credit card designated for presidential trip expenditures. The press has also focused on the trumped-up charges for the use of a jet and helicopter assigned to the advance team of the President. Local press stories say that RD$40-million is involved in the credit card scam alone, with CNN reports quantifying the fraud at an estimated RD$300-million on the basis of the goods and merchandise confiscated. When President Mejia was asked on Saturday whether he felt let down by his chief of security, he said he was not. “Here we give anyone a chance - anyone. However each person is the owner of his acts,” he stated. “I do not have those problems and I give a chance to everyone. I name anyone because I do not have those problems. He who puts his foot in however will not be given a chance by me and that is his problem, regardless of who he is,” he is quoted in the Listin Diario. Pepe Goico has always been a controversial character and made few friends in the press and among the people for his brusque and arrogant ways. |
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Pepegate: the double life of Alberto Torres Also arrested in the Pepegate scandal, Alberto Sebastian Torres Pezzotti and his double life are raising many questions. An accountant and economist by profession, his official title at the Baninter commercial bank was Supplies, Fixed Assets and Telecommunications Manager (Gerente de Suministros, Activos Fijos y Telecommunicaciones). He was the Baninter officer who okayed the credits made on the card issued to Pedro Julio (Pepe Goico) for presidential expenditures. Torres was at the same time an officer in the Navy assigned to the Military Aide Corps of the President (Cuerpo de Ayudantes Militares). The Chief of the Navy, Rear Admiral Euripedes Uribe Peguero, told Hoy that Torres Pezzotti did not come up from the ranks of the Navy. He said he entered because of his profession as an accountant. El Caribe newspaper says that Torres was part of the fraud network and had been enlisted to the Navy personally by Goico and made a Captain. Similarly, another suspect being held in the case, Pedro Diaz, had been enlisted to the Army with the rank of captain. As reported in El Caribe, Goico again used his influence to get Diaz into the military. Pedro Diaz is in the spotlight as the leading shareholder of Latin Aviation, the company that leased the plane for the transport of the advance team of President Mejia. Diaz is said to be a partner to Goico in several propane gas businesses established in the province of Santiago. |
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Pepegate: Overbilling for the airplane? Diario Libre reports that Latin Aviation Management C. por A. leased the plane HI-772 to the Executive Branch for use of its advance team and for a fee of US$4,000 per flight hour. According to sources in the Herrera airport however, regular rates range from US$800 to US$1,200 per hour. The plane has been confiscated and sent to the San Isidro Air Force after reports of illicit operations were received. Likewise, the newspaper reported on Saturday that irregularly high volumes of fuel consumption were recorded for the flights leased by Goico for the military aides corp. The Gulf Jetstream jet was reportedly purchased in July in the United States for more than it was worth - US$800,000. Diario Libre confirmed that the airplane had made several flights from Herrera to Puerto Plata, then detouring to Jamaica, when no presidential travel itinerary for the period included Jamaica as a destination. The newspaper says that Goico had very close ties to the main shareholder of Latin Aviation, Pedro Diaz, who is also being held in connection to the Pepegate scandal. There have been no reports on what the government was billed for the use of the helicopter that is also confiscated at the San Isidro Air Force base. |
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UNESCO-Jaragua Biosphere Reserve El Caribe reports that the Jaragua-Bahoruco-Enriquillo Biosphere Reserve was one of 18 new sites in 12 countries that were added to UNESCO’s World Network of Biosphere Reserves. The Ministry of Environment proposed the new site and UNESCO made the announcement on 8 November. Jaragua-Bahoruco-Enriquillo Biosphere Reserve is the Dominican Republic’s first biosphere reserve. It covers almost half a million hectares in the southwest of the country and is composed of a complex mosaic of ecosystems ranging from marine and coastal areas to various forest types, summits up to 2,300 meters, and a unique lake that lies below sea level. The new biosphere reserves and extensions were approved by the Bureau of the MAB International Coordinating Council at its meeting on November 6-8 at UNESCO Headquarters in Paris. The World Network of Biosphere Reserves now consists of 425 sites in 95 countries. Unesco also approved sites in Algeria, Argentina, Australia, Brazil, Canada, China, Ecuador, Guinea, Italy, Mongolia, Korea, Russia, Spain, and the United Kingdom. Membership in the World Network of Biosphere Reserves entails official UN recognition of local and national efforts to meet global concerns on environmental sustainability. It also represents a "label of excellence" which helps secure funding and promote tourism and the local economy. Membership in a structured network facilitates the exchange of experience on how to make it work. http://www.unesco.org/bpi/eng/unescopress/2002/02-90e.shtml |
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