Henry Mejia, director of elections for the PRD, reported that 91% of the votes from 721 voting stations (of a total 3,800) cast during the PRD plebiscite on re-election were marked "No". This amounts to 318,817 individuals' negative response on the question of re-election for President Hipolito Mejia in the May 2004 Presidential election. Only 7% (23,448 people) cast a "Yes" vote. Diario Libre reported that Presidential legal advisor Guido Gomez Mazara, who is the spokesman for the PPH faction of the PRD supporting President Mejia's bid for a second term, belittled those PRD members backing the plebiscite. About 25% of eligible PRD party members participated in Sunday's referendum. Diario Libre points out that in the 1999 primaries to elect the PRD's presidential candidate, only 42% voted. While this week's plebiscite has received much attention, it is merely an opinion survey and its results are not enforceable. Despite playing down the results, Gomez Mazara remarked that the time has come for inter-PRD negotiations. Diario Libre mentions that Tourism Minister and PRD pre-candidate Rafael (Fello) Subervi visited the Presidential Palace yesterday, on the invitation of President Mejia. Subervi last week divorced himself from the Group of Seven and did not endorse the plebiscite, which was boycotted by the President's PPH faction of the PRD. Political analysts speculate, however, that the PPH could endorse Subervi as the PRD presidential candidate at the party convention that has yet to be held. The party's three strongest candidates are Subervi, Vice-President Milagros Ortiz Bosch and President Mejia. Orlando Gil, the Listin Diario's political commentator, says that the lukewarm PRD plebiscite participation should serve as a warning to the PRD that its members' indifference could also affect the convention.
Monsignor Agripino Nunez Collado urged the political and business leaderships to collaborate to resolve the serious economic and moral problems affecting the population. He mentioned high inflation, rising power rates and corruption as some of the ailments afflicting the country, and specifically referred to the Cibao region, where the power is on for very few hours a day. He lamented the uncertainty and internal crises affecting the PRD and PRSC. "This is a time when all leaderships should be seated together to examine how we are going to resolve the problems, because the population is suffering from anxiety," said the rector of the PUCMM, who is known as the country's leading arbiter of economic, social and political conflicts.
President Hipolito Mejia promised to turn the country into "a garden" if he is re-elected in 2004. The President said that aside from the four fundamental areas of national development - education, health, nutrition and housing - if he is elected, he would give priority to natural resources, environmental cleanups and the environmental conservation in general. He said that during his government more than 30,000 tareas of trees have been planted in the La Vega river basins. Speaking on the "Paradigma" TV show produced by Roberto Duverge and Luis Veras, Mejia highlighted the need to build all the aqueducts the country needs for the next 20 years and more sports facilities for the people. He called on those who are making money and generating profits in their businesses to think of other sectors, saying "That is what I call the real fight against poverty."
The Technical Secretary of the Presidency rejected the view that the Dominican government has no control over its spending. In a talk before the Association of Business Women on 17 October 2003 and as published in a paid advertisement in the Listin Diario today, former Governor of the Central Bank Carlos Despradel blames the present economic debacle on the high petroleum prices, the contraction of US sourcing of Dominican goods and services affecting free zone exports and tourism receipts and the collapse of Dominican banks. "Our people know, because they are intelligent, that the economic problems we suffer are mainly the consequence of adverse external and internal factors, about which we can do little," he stated. "Likewise, the people will appreciate the stringent austerity with which the public finances will have to be handled in the next months and thus will be less insistent in its demands," he said. Despradel said that proof of reduced spending is demonstrated by the fact that from January-September 2003, capital expenditures were 33.3% less than those for the same period last year. Despradel said that the only way to overcome the present situation is to maintain the fiscal discipline implemented in past months. Despradel said that the position of President Hipolito Mejia is "that what is necessary be done." He commented that very few Presidents would submit to the disciplinary demands of the IMF in a pre-election climate. Despradel advocates more taxes, which he said would be forthcoming in the "next few days." The government had been counting on RD$3 billion to be produced by a 5% tax on exports, which turned out to be difficult to implement and was boycotted by export sectors on grounds of it being in violation of the constitution that establishes only Congress can impose taxes.
Business consultant Jose Baez Guerrero comments on Page 2 of the Listin Diario, saying "…The country pays little attention to the desperate insistence of certain officers of the government who stick a knife in the backs of the people by levying more taxes. They want the business sector to 'sacrifice more' or 'contribute more', but those sacrifices and contributions always end up coming from the pockets of those least able to make them. Also, the private sector (including the poor) already pays more taxes than ever before. The business sector accepted a tax reform in 2001 and the 1.5% advance tax on sales and the temporary exchange commission have been maintained, they backed the agreement with the IMF, have been hurt by devaluation and inflation without precedent, and endure unending blackouts. This sector did not ask the government to indebt itself up to its neck nor to buy back the power distributors; it backed the judicial trials over the banking skirmishes, but has seen how justice is not so blind. They have begged for fiscal equilibrium, and with their patience and silence they have backed the administration. But before the official fiscal voracity and the difficulties the government representatives have in transmitting confidence, anyone would ask, are businesspeople and politicians speaking two different languages?" To address the author, write to j.baez@codetel.net.do
The Dominican Liberation Party (PLD), as the leading opposition party, has published a paid advertisement in the press highlighting the two sides of government policy. On one hand, it quotes Jose Lois Malkum, Governor of the Central Bank on 16 October, who, speaking before the Senate, said: "The government is compelled to revise the budget to conform to the recommendations of the IMF, which will imply increased sacrifice, more austerity and discipline of public spending for 2004." Malkum admitted, as reported in Hoy newspaper, that "government spending has more than doubled." According to a report in Hoy newspaper commenting on the above statement, President Hipolito Mejia, said on Sunday, 19 October during his appearance on the "Una Vez por Semana" TV show: "I do not agree with that. Economists tend to believe the best way is to paralyze everything, but there are a thousand public works that have to be finished, and I will finish them - I cannot make any more sacrifices." On the TV broadcast and as reported in Hoy, President Mejia said that while over the past three years he has followed the recommendations of the monetary authorities, it is now time for them to tighten their belts. The Political Committee of the PLD highlights that the contradictions between the head of state and the person responsible for the monetary policy of the country make evident the chaos and lack of coherence of public policies that are so necessary to confront the economic problems. "The country needs a coherent government that inspires confidence and pulls the country out of the crisis," states the advertisement. "But this is not possible with a government in which the President of the Republic is pulling one way and the Governor of the Central Bank another."
Exotix Limited, a London-based specialty broker in illiquid bonds and loans with a special emphasis on emerging markets, expressed its concern for the Dominican external debt, which it said is "rising rapidly and unsustainably." Despite this, the firm did state that the public-debt-to-GDP ratio remains a tolerable 45%. At the start of the Mejia administration it was a mere 20%, primarily with multilateral lending organizations. In its just-published sovereign research report on the country, Exotix gave the Dominican Republic a vote of confidence. "In our view, the incentives clearly favor keeping up the good work," said the publication. And even though the political and negotiation psychologies work in the opposite direction, the report attested to a belief that "this factor marginally supports continued engagement by foreign bondholders." Exotix concludes that the tensions between the government's economic self-interests and the perceived political interests of various parties will continue. But it believes that pragmatism will prevail. "Policymakers have more to gain by implementing orthodox policies which avert a bond restructuring than by opting for populisms or seeking nominal financial gains through a rescheduling," reads the report. "As a result, Dominican Eurobonds - with no amortizations until 2005 - remain good value at current levels," says Exotix, also noting that "… those without confidence in the Mejia administration's pre-election leadership or who feel a forced bail-in would be an implicit condition of further IMF assistance should stay away." To read the full report, see Dominican Republic - October 2003.pdf or refer to http://www.exotix.co.uk
The Diario Libre's editorial today urges the authorities to focus on the economy and less on politics. The Page-4 perspective attributes the slide in the peso's value to the nervousness evident in the market, in connection with the uncertainty over the IMF's suspension of its standby arrangement program. The US dollar was bringing in RD$36 on the free market yesterday.
The Customs Department ordered the transfer of 126 of a total 129 customs employees at the Las Americas International Airport (AILA). The personnel shuffle came after several reports of extortion were received from travelers. The director of Customs, Vicente Sanchez Baret, explained that he had received a report from the Security Department of Aerodom, the private company that operates the airport. Aerodom's statements linked Customs personnel and the military stationed at the airport to incidents of blackmail. The government delegate at AILA, Carlos Cota Lama, applauded the measure but said the extortion could continue regardless. "It is true that there is extortion of travelers at the airports. Some customs agents could be involved, but it is evident that people attired in suits without any official identification have free mobility in the customs hall and it is necessary to determine who is behind their presence there," he said to Diario Libre.
The Seaboard Corporation is proposing to install a 100-megawatt power plant in the Cibao region. The company would sell power directly to the Santiago Free Zone Corporation, which demands approximately 30 megawatts. In the interim, the plan is to send Samana a power barge, presently docked in Santo Domingo, to supply energy to the North Coast and Cibao areas. Negotiations are being conducted by Felix Garcia for Santiago businesspeople and Armando Rodriguez for Seaboard, as printed in the Listin Diario. The newspaper also reported that the power situation in the Cibao was critical yesterday. Smith Enron's 180-megawatt capacity was out of service, as were the two 65-megawatt units of CEPP and EGE's Puerto Plata I and II, which supply another 67 megawatts combined.
The Listin Diario reports that banana exports could generate US$55 million this year, as a result of the 4.5 million cases exported. Bananas are primarily shipped to Europe and the United States and the shipments are split 75%-25% between organic bananas and those conventionally produced. The Dominican Republic is the leading supplier of organic bananas to the European Union. According to the Instituto Nacional de Investigaciones Agropecuarias y Forestales (Idiaf), a governmental farming research center, 713 farms produced for export; 321 (8,666 tareas) in the south and 392 (70,275 tareas) in the north. Banana producers complain that the devaluation of the peso has increased their costs by 500% this year.
Arturo Peguero, president of the Dominican Free Zone Association, warns that, contrary to expectations held at the start of the year, the second half prospects for 2003 are not good. He said that during the first quarter of the year, orders were up 6%, but during the April-June quarter they declined, and demand has since slumped. He told El Caribe that while there was a 4.2% growth during the first half of the year, when including the results of the third quarter, there has been only a 0.7% growth for the year as a whole. Peguero forecasts 0% growth by year's end, crushing the prospects for growth evident in January. This is despite the devaluation of the peso, which make Dominican exports more competitive compared to those of Central America, where labor costs are lower. "…Imagine the closings of businesses if there had not been a devaluation," said Peguero. According to data from the Department of Commerce, the first eight months of exports brought in US$1.409 billion, compared to US$1.399 billion for the same period last year. Peguero attributed the sluggishness of US demand to the situation in Iraq. Peguero does not expect the situation to change because of market crowding caused by China, whose exports have increased 50%.
Police ordered the shutdown of businesses selling alcohol near universities yesterday. This decision came after the president of the Federacion de Estudiantes Dominicanos (FED) was assaulted following his comments that the colmadones operating near the state university were affecting the academic work of the campus. Diario Libre reports that the director of the Foundation for Justice and Institutionalism (Finjus) said that the closing the bars is illegal. Jose Alfredo Rizek said there is no law that prohibits the sale of alcohol to adults (18+ years of age). The dean of the Law School of the UASD, Franklin Garcia Fermin, was not of the same opinion. And Porfirio Diaz, Rector of the UASD, told El Dia newspaper that while he is not against the bars' right to do business, the operations were affecting the academy. Hoy newspaper's "Que se dice" column recommends the FED instead begin an awareness campaign, in conjunction with the university authorities, so that students stay away from such vices. The newspaper says that to complete the effort, the student body and university authorities should seek out a legislator or the National City government to ban or regulate the installation of alcohol-vending businesses around universities, whether public or private.
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