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IMF accord will last two years The government will not embark on any sort of fiscal reform until after the 2004 elections, according to Central Bank Governor José Lois Malkum. The bottom line for complying with the International Monetary Fund’s requisites will be a total freeze on loans for a two-year period and strict fiscal discipline, said Malkum, who called on the public to be patient and understanding. With the IMF accord likely to be finalized next week, the monetary authorities are seeking ways to ensure that the impact on the nation’s poorest citizens will be minimal. The next six months will be, according to Malkum, a time of "restrictions", with close to zero growth in GDP, in order for the economy to recover. President Hipólito Mejía also spoke on the subject before embarking on his flight to Puerto Rico yesterday, saying that he would not sign the agreement if it was too hard on the poor. With or without the IMF agreement, he added, the government would promote a series of social policies aimed at helping poor people: "If we have to increase popular sales and help mothers we will do so." Finance Minister Rafael Calderón revealed that as well as the US$1 billion that the government hopes to obtain from the IMF, a further US$400 million is being sought from two other bilateral institutions, the Inter-American Development Bank and the World Bank. Of this, US$200 million would go towards paying debts in the electricity sector, and the rest would be spent on government debts in the private banking sector and social projects, according to the minister. Calderón also stressed that the intention was to cushion the blow to the poorest sectors. Business sector association CONEP has voiced its support of the forthcoming IMF accord, highlighting the importance of strict fiscal disciplines. In a communiqué issued yesterday, CONEP cautioned that the measures should not harm small and medium sized businesses or the poorest sectors of the population. |
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Mejía considers review of tariffs Speaking during an official visit to the neighboring island of Puerto Rico, President Hipólito Mejía agreed with a proposal from Puerto Rican Senate President Antonio Fas Alzamora that the two nations should review the existing tariff regime, with the aim of increasing and facilitating trade. Fas had said that products cultivated or manufactured in Puerto Rico and exported to the Dominican Republic are at present subject to very high import tariffs. President Mejía surprised those present by saying there should be "no problem” in achieving this and that he hoped the tariffs would be removed. Mejía, who is making this visit with the hope of "establishing Caribbean unity", also gave thanks to Puerto Rico for receiving over 200,000 Dominican migrants resident on the island. Other themes on the agenda will include the promotion of joint research and development of technology and cultural activities. Trade between the two nations was estimated to be worth nearly US$1.4 billion in 2002. The Dominican Republic is Puerto Rico’s fourth largest trading partner, importing US$633 million and exporting US$707 million worth of goods. |
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Mejía will prosecute Zapete Speaking to reporters before his departure to Puerto Rico yesterday, the President said he was planning to prosecute digital journalist Marino Zapete for writing "unacceptable things" about him. Zapete had alleged that a water supply system being installed in the Jarabacoa area using government resources was for the President’s private benefit because he is building a holiday home there. Mejía insisted that the aqueduct would serve a community of almost 400 families. Zapete reacted by saying that the President had a right to use the justice system if he felt his reputation had been harmed, but not to have him imprisoned. Zapete had been arrested and detained earlier this week. |
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Reform public payroll, says report The committee set up to study the public payroll has produced a report which recommends the government dismiss all special inspectors and civil assistants, and instead make these posts honorary. It also suggests imposing a limit on public employee spending in the national budget for the period of one year. Employees should be paid from one central fund, and not from various budget areas, as is the present case. This could be achieved by setting up a "Single National Register of Civil Servants". Also according to the report, the number of public employees needs to be rationalized and certain institutions currently carrying out redundant functions need to be merged. The importance of implementing Law 14-91, which states that public employees should be professionally qualified "Civil Service and Administrative Career" graduates, is stressed. Diario Libre’s editorial comment does not mince its words, citing the current unchecked practice of employing vast numbers of party activists as one of the reasons for the state of the economy. It labels many individuals on the public payroll as "parasites", who take advantage of their political connections without performing any duties, apart from drawing a salary. The writer, Director Aníbal de Castro, concludes that the only way out of the economic crisis is to reduce public spending, and asks, "What is the point of fiscal sacrifices, when the coffers continue to be drained by indifferent individuals who maintain loyalty to the party in power because it pays them?" But, of course, he adds with a note of cynicism, the elections are approaching and if the President wants to be re-elected he cannot afford to reduce costs by dismissing 20,000 or 30,000 "nominillados" or political appointees. El Caribe comments that there is no way of measuring exactly how many public employees exist, nor how many are worthy of a post, and that the situation has reached "absurd" proportions. It recommends that the numbers be reduced gradually, even during the run-up to the elections. |
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Morel accused of hijacking JCE The Central Electoral Board (JCE) met yesterday without their controversial president Ramón Morel Cerda, who is engaged in a bitter dispute with his colleagues and has refused to appear at JCE proceedings for several days now. With Luis Mera Alvarez standing in for the absent chief, the JCE dismissed three officials, including Morel Cerda’s daughter and assistant, Mayra Morel. Two other employees said to be close to Morel Cerda, PR officer Xiomara Pimentel and security assistant Francisco Morel, were also relieved of their posts. Morel Cerda, however, said he would overrule any decisions made during his absence. Nelson Gómez, president of the JCE’s administrative chamber, said that these moves were not in "retaliation" against Morel Cerda, but rather a way of resolving the current conflict. He accused Morel Cerda of "hijacking" the post of president, and added that the JCE would carry out its business as usual with or without Morel Cerda. |
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Atallah questioned in Baninter case The latest person to be questioned in connection with the Baninter case is the administrative secretary to the Presidency, Alberto Atallah, who until 11 April had been the superintendent of banks. Atallah was accompanied by his brother Nazir and several bodyguards as he spent over four hours answering questions at case judge Eduardo Sánchez Ortíz’ office yesterday. When he emerged from the session he said he had "no secrets”, and that he had disclosed all information pertaining to the Baninter fraud to the case judge, which, he said, would be revealed "at the right moment". |
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Authorities appropriate Telecentro The judicial authorities took control yesterday of several more Baninter Group assets, including TV Channel 13, known as Telecentro, on the orders of District Attorney Máximo Aristy Caraballo. Other interposed companies include Medcom SA, Intercontinental de Medios SA, Ringo Records, RCC Records, Belleza Dominicana (operators of the Miss Universe franchise in the DR) and Deportes en la Cumbre. Sócrates Andújar, the administrator put in charge of TV Channel 27 (or RNN), when it was taken over on 14 May, has also benn named administrator of Medcom and Telecentro. The authorities are again citing Article 9 of Law 72-02 on money laundering as the reason for the takeover. Andújar’s first move was to suspend 12 of the companies’ vice-presidents – whose combined monthly salaries were said to total RD$2 million – while guaranteeing job security for remaining employees "as long as they were productive". The dismissals were challenged by some high-ranking personnel who claimed the purported estimates of their salaries to be exaggerated, and that in reality the executives earned an average of RD$150,000 a month. |
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Codetel correction A DR1 brief on the government intervention in the Aster cable company yesterday erroneously named Codetel as a leading Aster shareholder. The relationship between Codetel, a Verizon company, and Aster was of a strategic business alliance, through which Codetel supplied Aster with Internet access and fiber optic lines, for which Aster paid a fee. Patricia Zorrilla of the legal department of Codetel said that the contract formalizing the alliance was never signed, despite the relationship being amply publicized locally at the time of the launching of the service last year. Aster is a Baninter Group asset taken over by the authorities, under Article 9 of Law 72-02 of the asset laundering legislation. |
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Bancredito bought by E León Jimenes Central Bank Governor José Lois Malkum confirmed yesterday that the sale of Banco Nacional de Crédito (Bancrédito) to Banco Profesional, owned by the E León Jimenes group, would go through, with the Monetary Board’s endorsement of the deal expected later today. Malkum revealed that Bancrédito had been the victim of a "wave of rumors” in an "orchestrated campaign” that caused many account holders to withdraw their money. The Central Bank has injected RD$3 billion to Bancrédito to ease the situation. Malkum remarked that, after careful consideration by the monetary authorities, the sale would proceed, concluding that it was the only way of avoiding another banking collapse. Malkum stressed that Bancrédito was "a solvent entity" and that the takeover was a positive development to be carried out with transparency. This news comes two months after the announcement that Banco del Progreso would absorb Baninter, which was followed by the revelation one month later that Baninter had collapsed as a result of an unprecedented RD$55-billion fraud. Bancrédito was set up in 1980 and holds around 9% of the banking market share. Business giant E León Jimenes is one of the Dominican Republic’s most established companies, famous for its ownership of Presidente Beer and tobacco brands. |
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Tricom update Tricom, the second largest communications service provider in the Dominican Republic, revealed yesterday that its majority shareholder, GFN Corporation, Ltd., will make an equity contribution to finance a cash payment of the exchange offer and consent solicitation made by the company. Tricom says that the exchange offer and consent solicitation is subject to the fulfillment of several conditions, including the receipt of tenders of at least 85% of the company’s outstanding US$200-million aggregate outstanding principal amount 11-3/8% Senior Notes that are due in 2004. Tricom offers local, long distance, and mobile telephone service, cable television, broadband data transmission and Internet services. Tricom is a sister company to Bancredito, the financial institution that Central Bank Governor Malkum has said will be sold to Banco Profesional. http://www.prnewswire.com/ |
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Baninter to be dissolved next week Baninter’s assets are to be sold to the Canadian Bank of Nova Scotia (Scotia Bank). Central Bank Governor José Lois Malkum said that the process of liquidating the collapsed bank’s assets is at an advanced stage and would be finalized at a meeting with Scotia Bank as early as next Monday. The takeover, which will include the Baninter credit card, was described by Malkum as the most appropriate way of "salvaging" what is left of Baninter. He added that Scotia Bank has the experience of similar situations in other parts of Latin America. "This is the only way out of this…to restore confidence and grow with stability…there is no alternative". Hoy’s main editorial welcomes both developments. |
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Dollarization spreads More and more traders are “dollarizing” their businesses, according to a report in Hoy. Companies like Ferreteria Americana, Distribuidora Universal, Sang Datared and Multi Lock Interactive are quoting prices in dollars and charging the equivalent peso amount according to the daily rate of exchange, says the newspaper. This is in reaction to the volatility of the ailing peso, which continues to plummet against the US dollar to such an extent that yesterday some exchange houses were offering as much as RD$36 to US$1. In the newspaper’s editorial column the commentator expresses concern at the situation and warns that the nation had best be prepared for some difficult months ahead. Finance Minister Rafael Calderón conversely expressed optimism yesterday, saying that he hoped the exchange rate would go down in the next few days. He had reproachful words for speculators, calling them "miserable souls" and accusing them of taking advantage of the situation for their own profit. Listín Diario columnist José Báez Guerrero comments that the Baninter collapse is not the only reason for the plight of the peso, however convenient it might be for the government to lay all blame a single factor. |
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300 Dominican soldiers headed for Iraq The Dominican Republic will send 300 soldiers to Iraq as part of an "international brigade" to help with the reconstruction efforts, it was announced yesterday. The troops will spend six months to one year working alongside soldiers from Spain, Honduras, El Salvador and Nicaragua. President Mejía had originally offered a 250-strong force when he met with US Defense Secretary Donald Rumsfeld in Washington last month. |
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New victory for Féliz Sánchez Dominican world champion Félix Sánchez ran the fastest 400-meter hurdle race so far this year, with 48.10 seconds on the clock and coming in first at yesterday’s Ostrava Gran Prix in the Czech Republic. The 25-year-old hurdler, nicknamed "Super Sánchez", is expected to be one of the star attractions at the upcoming Pan American Games, to be held in Santo Domingo in August. |
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Pan Am Games facilities will be ready in time Public Works Minister Miguel Angel Vargas Maldonado has promised that the Pan Am Games facilities will be completed by 20 July, well in advance of the official launch date of 1 August. This assurance comes in reaction to multiple concerns about construction delays and budgetary problems. In Hoy’s sports section, the Central Bank governor is quoted as saying that an additional RD$1 billion needed would be provided from the national reserves, bringing the total cost of the event to RD$5 billion, according to Hoy’s calculations, and in contrast to the figure to the RD$4 billion quoted by President Hipólito Mejía or "less than RD$2 billion" as claimed by Vargas Maldonado. |
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