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Unión Fenosa conditions exit In a proposal that some commentators have called a double-edged sword, Unión Fenosa has set a price for the Dominican government to take over their share of business. A payment of US$679 million was requested by UF for its 50% of the electrical distribution business operated by Ede-Norte and Ede-Sur, as well as the generating facilities in Palamara and La Vega that produce 40 megawatts each. According to El Caribe, UF is doing its best to dodge an international court of arbitration intervening in their dispute with the government. Reporters Mercedes González and Ezequiel Abiú López relate that President Mejía and his team met yesterday morning with Honorato López Isla, a vice-president of Unión Fenosa in Spain, where they discussed the conditions that must be met to permit UF’s withdrawal from the DR. Finance Minister Rafael Calderón and CDEEE top man César Sánchez led the team of government players. Reports say, however, that nothing definite has yet been decided and that the issue will be uppermost on President Mejía’s agenda next week when he travels to Spain, at the invitation of the Spanish King and Queen and Prime Minister Aznar, as well as Unión Fenosa executives. For its part, UF management has stated that if this solution to the energy crisis is to be discussed at all, it is because the Dominican government has threatened to interfere in the electricity distributor’s operations in the face of the constant blackouts and consumers’ endless complaints. When the reporters asked George Reinoso, the Superintendent of Power, whether there were ongoing negotiations that would have UF leave the country, he refused to confirm or deny. Diario Libre questions the role of one of the three spokesmen for the PPH movement seeking the re-election of President Hipólito Mejía, Hernani Salazar, in the negotiations with Unión Fenosa. His post in the government is supervisor of public works. |
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Treasurer on Baninter financing of PRD Diario Libre reports that National Treasurer Pastora Méndez visited President Hipólito Mejía yesterday to report that of the RD$30-million “loan” the collapsed Baninter bank made to help finance PRD candidates in the 2002 congressional and municipal elections, RD$9.2 million has been paid back. Diario Libre reported that the account “Cena pro Fondo” was closed on 18 May 2002, two days after the congressional and municipal elections took place. As reported in El Caribe, Méndez said they plan to pay back the remainder by holding fund-raising activities. |
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US$129.4-million loan from Mexico The Executive Branch sent a bill to Congress by way of the Senate yesterday, whereby Mexico would lend US$129.4 million. The funds would be administered through the Banco Mexicano de Comercio Exterior and would be used for “studies, projects, and the purchase of Mexican goods.” The loan would be made on funding accumulated through the San José Accord signed on 31 July 2000. |
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Fixing the exchange rate again? A report in Diario Libre tells that the Senate has passed a bill to modify the Monetary Code so as to allow for a fixed exchange rate to be set by the government. The proposal would modify Article 28 of Law 183-02, which establishes a regime of free convertibility of foreign exchange as agreed by the parties. The modification would read: “The Monetary Board, with the favorable vote of two thirds of its members, for a preset term that cannot exceed one year, and by express recommendation of the Central Government, will implement an exchange system based on a fixed exchange rate of the national currency with foreign currencies.” The modifications would also allow the Monetary Board to insist the Central Bank act as the only body authorized to buy and sell foreign exchange in the nation, when it is ascertained, based on market study, that there exist speculative actions on behalf of the economic agents that intervene in the market. The PRD-majority Senate passed the bill with 25 of its senators present at the session. The bill now moves on to the Chamber of Deputies. |
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Pedro Silverio talks about the budget The head of the Cenantillas economic think-tank, Pedro Silverio, publishes his Op-Ed piece in today’s El Caribe, in which he discusses the budget and the possibility or need for fiscal reforms on the part of the government. Silverio observes that the budget for 2004 will exceed RD$100 billion – a figure that the IMF agrees upon. Of interest to Silverio is the fact that this amount is nearly twice that of last year’s budget and that the gasoline taxes will only provide 40% of the resources needed to service the foreign debt. Silverio foresees a full 70% of the total funds going to foreign debt service and the government payrolls. In view of the income accounts, the economist from the PUCMM says that the government is projecting a 1.1% surplus of income over expenses, a goal that he feels will be difficult to reach. With government income projected at RD$82 billion for the year (below IMF projections in spite of the new taxes), Dominicans would be subject to a 10% tax increase for the coming year. Silverio also says that, despite the forecast national surplus, the 2004 budget will present serious problems for financing. Silverio advocates that the fiscal reform go beyond the increase in taxation. “This would bring us to evaluate government spending, in its composition and efficiency,” he says, while warning that “if this is not done, public spending would continue to metastasize tax income.” He concludes by saying that instead of waiting to create the reforms demanded by the IMF until the 2004 elections have taken place, it would be best to effect them now, as a new political agenda may be created as a result of the elections and may call for radical changes in the economic planning. Silverio explains that the IMF agreement only commits the government to present the fiscal reform to Congress by July 2004, after the electoral period is over, even if the election requires a second round. He says that it would be better if the reform be designed and approved in 2003, even if it is applied after the 2004 election. “The reason is very simple: once the electoral results are known, the political agenda of some of the players involved in the pact could radically change, and these could decide not to keep their word. This would not be the first time.” |
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PLD requests Lila tell it all Diario Libre reports that the spokesman for the PLD, Teodoro Reyes, asked that former president of the Chamber of Deputies Rafaela Alburquerque disclose the names of the political party leaders who benefited from Chamber resources. “I challenge her to tell all she knows. Her worst defence is to call on Pacheco [the new president of the Chamber] to go mute, because if she does that, it means there is something hidden.” he said. Former spokesman for the PRD, Ovi Saldivar, also implored her to name names Alburquerque’s fellow PRSC member and spokesman for that party, Luis Emilio Reyes Ozuna, said, “I have the names of the party leaders that have benefited,” but he did not reveal any names. Yesterday, DR1 reported on the threat posed by Alburquerque, who urged silence in order not to expose exactly who benefited personally from congressional funds. This is not the first time irregularities in her management of Chamber of Deputies has gone in the open. Earlier, press stories have focused on millionaire funds she allotted to non-governmental organizations presided by her relatives. |
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The “7” to choose one El Caribe reports today that the seven PRD presidential hopefuls will get together and agree on a single candidate to go forward. Milagros Ortiz Bosch, Rafael Suberví Bonilla, Hatuey De Camps, Ramón Alburquerque, Enmanuel Esquea Guerrero, Luis Abinader (who signed for his father José Rafael Abinader) and Ramón Flores Estrella signed a protocol that promised “one candidate” for the PRD and also promised to carry out a national plebiscite to settle the controversial question on the principle of re-election as part of PRD dogma. The Listín Diario reports that the seven anti-re-electionists are aiming for 12 October as the date for the plebiscite, at which time it will be determined whether or not the PRD’s members are prepared to amend the party doctrine, which, as it currently stands, is clearly against presidential re-election. The group also requested that the party executive convene the XIX Special Convention of the PRD on 2 November where a candidate would be named. The method to be used to choose the candidate has not yet been explained. While Suberví is said to be the strongest candidate within party representatives (he was Hipólito Mejía’s runner-up in the primary that led to Mejía’s presidential candidacy in 2000), Ortíz Bosch has outdone him several times in independent popularity polls among PRD candidates. |
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Venezuela denies break in relations The Venezuelan government has denied any break in relations with the Dominican Republic. According to the lead story in today’s Listín Diario, the Venezuelan Foreign Minister, Roy Chaderton, is quoted as saying, “No, no!” when asked about a possible rift between the two nations. Chaderton said that Venezuela had to act with firmness and prudence, in view of their request that the Dominican government look into the conspiracy charges leveled by President Chávez. Venezuela recalled its ambassador earlier this week for “consultations”, a diplomatic term frequently equated to saying “We are angry with you”. Chávez has publicly accused Dominican officials of being involved in a scheme against his regime. The Venezuelan foreign minister said that while relations between the two countries are very close, the Dominican government must take a serious look at the possibility of a plot to assassinate Chávez being hatched on Dominican territory. Observers in Venezuela admit the claim may in fact be a smoke screen to conceal other problems concerning Chávez in Venezuela. |
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Ecological disaster waiting to happen According to the former administrator of the Duquesa landfill garbage disposal site, the area is “an ecological disaster waiting to happen” and that the situation places the Isabela River in environmental jeopardy. Environmental specialist, José Contreras from the INTEC University, pointed out that refuse meant to be covered with dirt is instead left in the open, little compacting is being done, and massive garbage heaps lie in various areas. According to Contreras, there is no reason for so much trash to be so visible. René Ledesma, the vice-minister for Environmental Management, told reporters Veri Candelario and Alicia Ortega from El Caribe that Duquesa was being handled as a garbage dump, rather than as a sanitation landfill. Ledesma said that it is probable that there has not been sufficient investment made to maintain the ecological integrity of the landfill project. Formed with the assistance of the Japanese Cooperation Agency at a cost of RD$100 million, the landfill seems to have been abandoned. Yet 3,150 tons of trash arrive there daily. The current administrator admits they lack the resources to cover the trash as required. Professor Contreras closed by saying that he was shocked by the degradation the landfill had experienced over the past year, and attributed the problem to the removal practices of the private company that controlled the site and the inability of the new local authorities to handle the problems correctly. |
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Bad news for depositors The Listín Diario reports that interest rates for CDs and financial certificates are falling. While the banks are blaming market factors as the cause for the lower rates, there is still no evidence that interest rates on outstanding loans have been similarly lowered. The declining rates come at a time when the appeal of the Central Bank’s offerings is also on the wane. During July, the Central Bank offered RD$20 billion in investment certificates at interest rates of up to 36% (APR). It was this move that pressured the commercial banks to elevate their own interest rates for depositors of certificates and CDs. Financial institutions resisted, however, any move to compete with the Central Bank, as it maneuvered to rebuild a system shaken by the series of advances and rediscounts doled out to Baninter. The first two releases of Central Bank certificates caused turmoil within the banking system, as people removed money from low-interest accounts to place it with the Central Bank at APR interest rates varying from 32% to 36%. Pressure from banking and financial organizations forced the Central Bank to alter their policy for the third issuance, and the amount of RD$10-billion was instead auctioned. Nevertheless, the market is apparently becoming saturated and interest rates for the latest emission are far less than their predecessors. This, in turn, has allowed the banks to lower their rates on fixed deposits. |
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Employers warn 20% wage increase is max While unions are asking the National Committee on Salaries (CNS) for a 35% wage-increase package, employers are warning that 20% would be the maximum granted. The Employers Confederation of the DR (COPARDOM) has said that a 20% increase will be difficult for industries to accept, as certain sectors fear that employees would have to be let go. Virgilio Ortega Nadal, the president of COPARDOM, said that their best hope is for the situation to improve over the coming months, at which time any laid-off employees could be returned to their jobs. Ortega Nadal reminded the union delegates that so far this year over 64,000 people have lost jobs because of the economy. |
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Credit card fraud escalates Both El Caribe and the Listín Diario are reporting that credit card fraud is on the rise. According to reports, close to US$15 million in such purchases has been reported for the first four months of the year. According to Cándida Acosta, one of the Listín Diario’s economic reporters, bad checks valuing RD$30 million have also been reported. The most interesting part of the article, however, says that the perpetrators of these scams are from Venezuela, Colombia, Thailand, Taiwan and Mexico, and that they use the Dominican Republic because it is harder to prosecute credit card fraud in a third country. Apparently, credit card numbers and electronic strips are duplicated in Curaçao and the actual plastic work is done in Venezuela, from where the cards are sent for use in the Dominican Republic. The Dominican Association of Commercial Banks (ABCRD) carried out the research on credit card fraud and bad checks. |
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Poultry producer break quotas According to Wilfredo Cabrera, the head of the Poultry Commission, the major poultry incubators have broken the quotas established to stabilize the industry. Prior to the quota system, the prices for live poultry had fallen below the cost of production and many of the smaller producers were forced out of business. Cabrera said that farm prices for poultry could fall to as little as RD$8 a pound for live birds. On the other hand, the head of the Poultry distributors Association (ASOPOLLO), Luis Espaillat, alluded to a 25% shortfall in the supply of poultry and a 40% decrease in overall demand. He blamed excessively high prices at both the farm and retail levels for the decrease in demand. The Poultry Commission maintains that the quotas were broken about a month ago, when three or four of the major producers left the system. Cabrera says that within a month there will be a sharp drop in the price of poultry. |
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Hurricane Isabel on the move Hurricane Isabel has begun moving westward, as was expected. As of 11am AST today, the hurricane was located at 21.3N and 50.9W, which is 1,930kms (1,200 miles) east of the Samaná Peninsula. The storm remains strong at category 4 on the Saffir-Simpson scale, as it packs winds of 215kph (135mph) with higher wind gusts. The system is growing rapidly in size as well. Forecasters expect Isabel to maintain this general intensity and westward motion through to Monday, when the storm should find itself just off the DR’s North Coast. Although subject to a fairly large margin of error at this time, the best estimates as of Wednesday would have the storm's eye passing between 250-300kms (155-186 miles) offshore. At this distance, residents in the northern coastal areas would likely experience tropical storm-force winds of 55-80kph (35-50mph), potentially very heavy rainfalls that may cause some flooding, and beach erosion from the large swells pushed out from the center of the hurricane. If the hurricane tracks shift slightly north, the main effects would stem from mostly the ocean swells alone. As Isabel approaches, stay informed on the latest developments from our weather watchers and experts on the DR1 Hurricane Watch Forum. See, http://www.dr1.com/forums/forumdisplay.php?s=&forumid=34 |
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