President Hipolito Mejia departed on Friday for Madrid, Spain, on a tour that will take him to Israel and Jordan as well. According to reports, the President would not visit Iraq personally, but would send Minister of the Armed Forces Jose Soto Jimenez instead.
Governor Jeb Bush of Florida arrives in the DR today for a three-day visit. He is scheduled to arrive at Las Americas International Airport shortly before 2pm and will be received at the Presidential Palace by Vice-President Milagros Ortiz Bosch, who is acting as President during Hipolito Mejia's absence. Bush's agenda also holds for the same afternoon a 4:20pm signing of an agreement between the Florida Coastal School of Law and the Pontifical Catholic University Madre y Maestra (PUCMM). In the evening, he will attend a reception in his honor hosted by US Ambassador Hans Hertell at the US Embassy. On Tuesday, 16 September, the Santo Domingo Chamber of Commerce is hosting a working breakfast. From there, the brother of US President George W. Bush will attend the opening of Expo USA 2003 at the Dominican Fiesta Hotel. At noon, he will be the keynote speaker at the monthly luncheon of the American Chamber of Commerce at the Jaragua Renaissance. On Wednesday, he will participate in a workshop on Opportunities for Dominican Companies in Florida.
The Listin Diario reports that US$896 million has been deposited overseas over the first six months of 2003. According to reporter Hector Linares, the Central Bank is pointing to the capital flight that occurred due to the instability of the exchange rate and the depreciation of the peso. The Listin recently reported that according to the International Bank of Payments in Switzerland, Dominicans had deposited US$1.2 billion abroad during 2002, calling it an extraordinary increase over 2001. The Central Bank statement also says that the increase in overseas deposits is a reflection of the crisis caused by the bankruptcy of the Banco Intercontinental (Baninter). As possible causes for the outflow of money, the Central Bank cited a 9% reduction in foreign investments, as well as a slowdown in several projects to be financed with external resources. In another report on the same subject, Victor Grimaldi, writing for the Listin Diario on Sunday, said that the International Bank of Payments is reporting that until March of 2003, there was US$4.05 billion worth of overseas deposits. At the same time, direct deposits in overseas banks from the non-banking private sector increased from US$664 million to US$1.15 billion in the first three months of 2003. This represents a US$483-million increase from the private, non-banking sector during the first trimester. According to Grimaldi, during the latter part of 2002, when the problems of Baninter were merely rumored, overseas accounts received US$393 million in the third quarter and US$450 million in the fourth. As the banking crisis became public knowledge, the first three months of 2003 saw a sharp increase. This information is buried on Page 18 of the Central Bank report and is presented without the usual graphs. While an earlier report from the Central Bank described a US$464-million surplus in cash flow, the numbers are in sharp contrast with the figures released by the Swiss banking institution. On the campaign trail, former President Leonel Fernandez attributed the capital flight to the fear Dominicans have in the economic policy implemented by the Mejia government. He forecast that the capitals would return once the PLD regains power in 2004. Speaking in Higuey, La Altagracia province, Fernandez said there is a general distrust in the actions of the government.
As soon as it was published, the 2004 budget caused a rumble among economists who questioned the numbers. Economist Eduardo Tejera is doubtful that the budget criteria will be met. The article by Edwin Ruiz in Sunday's economic section of the Listin Diario says that the government will have to pay four pesos to service debt for every ten it collects. In what the reporter calls a "loose end", there remain serious misgivings that if the Dominican economy should shrink by 3%, s predicted for 2003, and then grows by a paltry 0.5% in 2004, where will the government find the money to fulfill its payment schedule? Tejera says that the value added tax (ITBIS), currently at 12%, will be increased to 15% or 16% and new taxes on consumer items will be increased. Even then, says the economist, "The money is not enough." He therefore feels that the 2% tax on imports, the 4.75% exchange commission on foreign currency and the 5% tax on exports will be extended past the six-month period announced last month. Tejera says that this is the "reality." Pedro Silverio, the lead economist at the PUCMM economic think tank Cenantillas, says, "There will be serious problems with financing the 2004 budget." He adds that given that the debt service is "sacred" and the mention of downsizing public payrolls is "taboo", any adjustments will have to come from investments to projects and social programs.
The Inter American Development Bank expressed its support of the buyback of Union Fenosa electrical distributors by the Dominican government. Moises Pineda, the local IDB representative, told members of Congress that the IDB would provide technicians to help the government during the re-acquisition process. Pineda believes the purchase of the electricity distributors would bring a halt to the deteriorating energy situation. The IDB representative also expressed concerns that the talks should make clear precisely how Union Fenosa intends to repay the IDB the US$150 million of a loan granted during the initial phases of the Union Fenosa acquisition process.
French Ambassador Jean Claude Moyret told reporters that a French bank was looking at establishing itself in the Dominican Republic. According to Adriana Peguero, the Listin Diario reporter, the ambassador said that the way in which the country handled the Baninter case had generated a climate of confidence for potential French investors. Interviewed on the Aeromundo TV show hosted by Guillermo Gomez, the French diplomat refused to name the bank, but insisted that more foreign banks would become active in the country and that the cost of financial services would decrease over time. The diplomat said that France has invested US$500 million dollars in various projects around the country, especially the port facilities at Punta Caucedo, Andres, Boca Chica. Moyret showed great ambassador also showed enthusiasm for a project near the border with Haiti ,where 20 hectares of grapes have been sown for a wine-making facility being contemplated.
Using the title of an old song, economist Bernardo Vega analyses the presidential trip to Spain in highly critical terms in today's El Caribe. The trip will represent the "first" visit of a Dominican President to Spain since that made by Trujillo to the Franco-era Spain, a historic embarrassment for both nations. A Spanish newspaper announced that Spain will absolve a $200 million euro debt owed by the Dominican Republic, Honduras, Nicaragua and El Salvador, in a gesture aimed at making the troop dispersal to Iraq more palatable. Vega warns, however, that the announced agreement for prisoners to serve their terms in their own nation's jail will be a heavy load for the country since there are many more Dominicans in jail in Spain than there are Spaniards in jail here. He hopes the transfer would be conditioned to the prisoner's acceptance since Spanish jails are more amenable than those of their Dominican counterparts. The economist also points out that this could set a terrible precedent, as the United States might seek similar treatment to thereby alleviate the financial burden of their prison system to the detriment of our local jails. An important point to be discussed in Madrid will be the Paris renegotiations of the current Dominican debts with Spain, with the Dominican Republic having become more indebted over the past years to Madrid than to Washington. The multiple loans from two private commercial Spanish banks with the endorsement of a semi-official insurance will produce enormous scandals in the near future, according to the former ambassador to the USA. Bernardo Vega also looks at the strong pressures that Honorato Lopez Isla, the No. 2 executive in Union Fenosa, exercised when representing the company in talks here, and asks why Lopez did not explain to the local Spanish press that outside auditors had found that the Dominican Union Fenosa subsidiaries had overvalued loans and services with sister companies in order to increase the book value of their supposed losses. Vega also comments that Lopez did not mention he met with former Chamber of Deputies leader 'Lila' Alburquerque to discuss the Electricity Law when being studied by the Chamber of Deputies [this resulted in considerable changes in favor of the company]. Vega closes his editorial by stating that a return to state control would be to go from the frying pan into the fire and that an immediate tender for other companies to control the distributors' operations is the only solution.
The decision by the Monetary Board to suspend the sale of dollars on the open market, taken last 17 June, will be abandoned this Wednesday. Unless an extension of this deadline is given, this news means that companies generating hard currency would be able to sell their dollars on the open market. Exchange houses and traditional intermediaries have opposed this measure, while some people at the Central Bank felt tht it would work to lower the exchange rate. Exporters and other producers of hard currency have fought to re-instate the measure as a way to force the exchange rate to a more equitable scale. Only dollars and euros produced through credit card sales, telephone bills, fuel sales to foreign vessels, service to airplanes and ships are obliged by law to exchange their dollars and Euros through the Central Bank.
The Emerging Sovereign Research Department of Bear Stearns recommends selling Dominican bonds in its 15 September update on the Dominican Republic. Franco A. Uccelli, vice-president, reports today that the only positive economic news coming out of the Dominican Republic is that foreign-exchange generating sectors have benefited from the country's misfortunes. He reports that "uneasiness about the country's economic outlook, the ongoing energy crisis and the current electoral race appear to be driving local market sentiment again." Uccelli refers to the peso's appreciation after having settled in the RD$30 to US$1 range last week, and then reverting to its former volatility. Banks were buying pesos at RD$32 to US$1 today.
According to the comments made by the head of the Dominican Federation of Retailers (FDC) Ivan de Jesus Garcia, the coming months of October and November will be the hardest for the small and medium sized retailer or business. In his comments at the Economic Meeting at Hoy, Garcia said that most of the smaller businesses have not absorbed the full impact of the financial crisis generated by the Baninter collapse and the efforts of the Central Bank to restore confidence in the local economy. According to Miguel Sang Ben the executive director of the FDC, most merchants do not collapse overnight, but, rather, take up to six months to realize that their business is going under. Because of the currency devaluation and the lack of purchasing power in the peso, many businesses are seeing a 50% reduction in sales and have been forced to reduce personnel to the bare minimum. According to Sang Ben, many of the medium and small businesses have been reduced to a subsistence level of family business.
El Caribe reports that 27 taxi companies, members of the Federation of Taxi Operators (Fenotaxi), have opted to install veriphones to enable the clients to put the taxi rides on their credit cards. According to Jose Miguel, an administrator for Millenium Taxi, the new system was installed to give better service and to make service more accessible. Leonardo Mella, the president of the taxi federation says that the new system will allow more people to travel without having to worry about making change. Beside, this is the only business that caters to over 70,000 clients a day that did not use credit cards. Each taxi requires an investment and training. Soon, according to Leonardo, everyone will use it, except those that can't read.
Hoy newspaper highlights the depredation of removing gravel and sand from the Haina River by trucks that are under the custody of military. The newspaper said that while the extraction of the construction materials is prohibited, more than 15 trucks were seen transporting truckloads of sand. A soldier interviewed by the reporters said, "There are so many trucks, we have lost count." He added, however, that he could not do anything "because a general is involved, and I do not want to be fired." Hoy reports that construction companies backed by the support of high-ranking military members have been extracting the materials. In the community, the Ministry of Environment prohibited the removal of the materials, which did not appear to hinder the influential companies. Hoy newspaper reported that mechanic shovels work rapidly to load the 14-16 cubic-meter trucks. Reporters said they observed more than 15 trucks leave in less than 20 minutes. Witnesses said that when an Hoy photographer was detected, one person, driving aboard a pick-up truck with official license plate OCO-2224, left the site, where eight trucks remained behind waiting for their cargo. The construction company has allegedly extracted considerable construction materials, under the guise of using it to repair a stretch of highway between Hato Nuevo, one of the affected communities, and Km 22 of Duarte Highway.
The headlines called it "deadly speed" on the streets of Santo Domingo, and the participants are the scions of wealthy families. The victims are sometimes innocent bystanders. Avenues such as John F. Kennedy, Anacaona, Churchill and Lincoln are converted into dragstrips and raceways in the late night and early morning hours. Shortly past midnight, Carmen Delia Martinez was struck by one of four cars racing down Lincoln Avenue. She survived, although scarred for life, but Andres Rojas was not so lucky. Leaving his job at 5am on his motorcycle, he was hit by one of three speeding cars at the intersection of Fantino Falco and Tiradentes. Only an eye-witness who fired warning shots avoided all of the cars from fleeing the scene. "The kids were very drunk and tried to leave. One of them escaped but I fired a couple of shots in the air and forced them to take [Rojas] to the hospital," testified the witness. While street racing used to be clandestine, it is now a popular public event, with spectators hanging from trees and the crossovers to gain a better view of the races. The National Police used to patrol the areas but now say this duty belongs to AMET. Reporter Petra Savinon interviewed sociologist Claudetter Rivas to find out why. According to Rivas, it appears to be a case of "poor little rich kids" and reflects the inability of the government to do anything to put an end to it.
Today's unfortunate headlines tell of a family tragedy in which a man took the lives his two children, his wife, his sister, and left one child in critical condition, before ending his own life as well. Jose Anibal Polanco gunned down his family members and then committed suicide in the doorway of his house in the Ivan Guzman section of Santo Domingo. Polanco, a former employee of the Bohemia beer company who had been gainfully self-employed, was distraught over the death of another son in a traffic accident in Santo Domingo. No other comments were given by his neighbors beyond the fact that he was a quiet man who served as the vice-president of the local Neighborhood Watch Committee. The surviving son is listed in serious condition in the local hospital.
The Dominican women's team won its first challenge in the Norceca volleyball championship that opened in Santo Domingo yesterday. The Dominicans defeated Puerto Rico by scores of 25-23, 25-16 and 25-16. The event continues today at the Volleyball Pavilion of the Juan Pablo Duarte Olympic Center. News sources say that access to indoor parking at the Olympic Center was banned yesterday, causing many fans to turn around and head home, which accounted for the less-than-expected turnout for the event. The two winners of the event will compete in the Grand Prix World Championships scheduled to be held in Japan. The Dominican Republic won gold in volleyball in the August Pan American Games, Cuba took home silver and Canada bronze.
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