The Monetary Board has raised the commission rate charged by Customs on imports to 10%, from its previous rate of 4.75%. This is the latest attempt by the authorities to procure sufficient resources to make the agreement with the International Monetary Fund viable. The Monetary Board says that Customs' new rate is a temporary measure that would be lifted in February 2004 or "as soon as it can be done without creating a negative impact on macro-economic stability." In a communique issued yesterday, the Central Bank said that negotiations with the IMF aimed at putting the economic stabilization plan into action would begin once the study on the fiscal impact of the re-acquisition of the electricity distribution companies by the government has been completed. The Central Bank called on the civic society, directing its comments at the business sector and trade unions, to "find, in collaboration with the government and Congress, alternatives for income generation within the framework of the IMF agreement." The message warns that "the only - or least traumatic - way of re-igniting economic growth and achieving a reduction and stabilization of prices and in the exchange rate, is to comply with the program designed by the government and approved by the IMF."
Hoy newspaper observes that the increase in the exchange commission's rate from 4.75 to 10%, as ordered yesterday by the Monetary Board, contradicts Article 85 of the Monetary Law of November 2002. The Monetary Law had begun a procedure, due to have been launched this month, by which the commission rate would have been gradually reduced by 0.25% per month. In defense of the decision to raise the exchange rate commission, the Monetary Board stated that "under the current economic circumstances and in the framework of the Congressional consultation process to find alternative sources of income to reduce the quasi-fiscal deficit, the adjustment of the exchange commission is a reasonable measure for generating the resources needed to minimize the negative impact of the burgeoning costs of bank rescue operations." The Monetary Board justified the measure by saying that it would lead to economic stability and lower prices, and that although the Central Bank has succeeded in bailing out the collapsed banks and compensating depositors, a heavy price has been paid.
In a related development, the Senate yesterday approved the 2% surcharge on imports that is designed to remain in place until September 2004, as well as an increase in the tourist's departure tax from US$10 to US$20. Both measures were introduced by Presidential decree more than three months ago.
Elena Viyella de Paliza, president of private business association CONEP, has called on the government to restore its relations with the International Monetary Fund, which suspended its disbursements to the DR in September in reaction to the government's sudden announcement that it would buy back the power distribution companies previously controlled by Spanish company Union Fenosa. "It is important that the IMF process is resumed as soon as possible, as this will give us peace of mind as well as providing for the flow of fresh resources". Viyella also encouraged all relevant sectors to pull together in order to overcome the current economic difficulties. Speaking after a meeting with President Hipolito Mejia at the National Palace, she said that the country must create the conditions for investment confidence and find new ways of generating foreign currency, which is, according to her, the only way that the dollar-peso exchange rate could be reduced. She stressed the need for coherent policies and fiscal discipline on the part of the government, saying that CONEP's role was to collaborate with the authorities and to propose solutions.
Hoy newspaper quotes a business leader as saying that 400,000 private-sector jobs have been lost as a result of the economic crisis. According to the estimate of the former president of private business association CONEP, Marino Ginebra, stated while this was occurring, "the government was persisting in its efforts to sustain the peso artificially." Ginebra blamed the job losses on the increase of government appointees, the government's failure to tackle the Baninter collapse in time, and its excessive public spending bill.
The Listin Diario newspaper picks up on the latest analysis of the Dominican economic situation by the Economist Intelligence Unit, which contends that the gradual reduction of interest rates scheduled for 2004 will depend on the resumption of the IMF agreement, an improvement in investor confidence and greater fiscal discipline on the part of the government. The EIU focuses on the effects of the massive amounts of high-yielding certificates the Central Bank has issued to absorb excess liquidity created by the rescue of failed commercial banks. EIU calls the certificates "controversial", not only for their quasi-fiscal cost but also "because they will crowd out lending to the productive sector." It warns: "If the government does not generate substantial fiscal savings, eventually the Central Bank will have to print money to pay interest on the certificates, fuelling inflation." Another risk factor identified by the EIU is the short-term debt for which there are inadequate resources for repayment, due to the "critically low levels" of reserves. The 3.5% shrinkage in the economy projected for 2003 is not likely to let up in 2004, says the EIU. It does however predict a moderate economic recovery for 2005, but foresees the dollar-peso exchange rate standing at RD$31 by the end of this year, rising to RD$38 by the end of 2004 and RD$40 in 2005.
In its main editorial column, the Diario Libre newspaper comments that some explanations surrounding recent events are lacking. "Uncertainty is the worst of climates for investment," it declares, going on to say that while economic predictions can never be accurate, we do need some explanations to equip us for the near future. "It is necessary for the authorities to explain, sooner or later, what they are doing and where they think we are going."
While Finance Minister Rafael Calderon continues his search for an alternative to the unpopular 5% tax on exports, which was met with strong opposition by the business community and declared illegal by the Supreme Court and the Senate, Francisco Alvarez Castellanos, writing for Hoy newspaper, comes up with a few unusual ideas for new taxes. What the government needs, he says, is money to extricate us from the void created by the greed of others, and it is the public that must foot the bill. In view of this, his suggestion is a 20% surcharge on each cinema ticket. While this might lead to the closure of cinemas, the money has to come from somewhere, he laments. Other ideas included RD$100 surcharges on every television set, DVD and residential air-conditioning unit sold - excluding, of course, those bought by high-ranking government, army and police officials who all deserve a good night's sleep. Alvarez Castellanos also proposed a RD$500 tithe on each family car bought, as well as on its registration fee, regardless of engine capacity. In regards to clothing, the writer would like to see a 25% surcharge on each new outfit bought, seeing as those who can afford such a "luxury" could also afford the tax. In Alvarez Castellano's vision, hotel rooms would see a 10% tax on their rates, encompassing everything from five-star properties to the infamous "date motels". Alvarez Castellanos acknowledges that his measures may cause some resentment on the part of foreign tourists, but local consumers have a choice: pay up without complaint or remove certain "stress-busting activities" from your schedule. Instead of increasing the highway tolls, which, after all, could cause discontentment, why not set up more toll booths? Five or six more tolls on each main highway would greatly increase government income. With this, his musings turn to the more serious issues: while he understands that the Dominican government has to pay its debts, he suggests that the country do more to become self-sufficient, as a means towards financial stability, peace and a secure future.
"I am 100% innocent and I will prove it in court!" is the bold statement quoted in Diario Libre's "?Vaya perla!" section. These are the words of Radhames "Chino" Ramos Garcia, the PRD deputy for La Vega, who, in his capacity as Dominican Consul in the northern Haitian city of Cap Haitien, allegedly directed a lucrative smuggling operation involving illegal Asian immigrants. The Asians were using the DR as an intermediate stop prior to traveling on to their final destination, the United States. The elusive Ramos Garcia appeared before the Supreme Court yesterday and was ordered to return on 30 October, along with accused accomplices Chen Ngow Chai and Ng Con Seng, who are in police custody and have been denied bail. The upcoming legal session will determine the identities of the defense and prosecution lawyers and a trial is due to start on 3 December, thus allowing all parties time to assemble witnesses and notify the accused. Ramos Garcia has not been taken into custody and has said that he will not relinquish his legal immunity status.
Diario Libre reports that Frederick Chien Fu, president of the Taiwanese body Control Yuan, made an address to the Dominican Central Bank yesterday, in which he declared that "for a nation to establish corruption controls, it must have the cooperation of its citizens, through vigilance and the reporting of dubious activities committed against the interests of the State." He cited the Taiwanese experience in fighting corruption and attributed the progress made to citizen participation. The Control Yuan receives 18,000 annual complaints from the public concerning government officials at all levels - all of which are investigated. If the complaints are proven to be founded, the officials concerned are prosecuted. Chien Fu explained that the laws and penalties against corruption are stringent, ranging from permanent dismissal to custodial sentences. He suggested that Dominican anti-corruption measures be improved by increased public involvement and active follow-up of all grievances filed. Presidential Office Secretary Sergio Grullon said that the country was willing to implement similar measures with the aim of achieving better results. More information on Control Yuan can be found on http://www.cy.gov.tw/English/Home.asp
A Penn Schoen & Berland poll of 1,200 eligible voters for the 2004 presidential election, conducted from 24 September-7 October, showed former President Leonel Fernandez (PLD) leading with a more than comfortable margin. The Penn Schoen poll reflects a general rejection of the performance of the government of President Hipolito Mejia. As reported in El Caribe, the survey shows that Fernandez bested possible PRD presidential candidate President Mejia by 58% to 20%. The PRSC party and its official candidate Eduardo Estrella would reap 14%, according to those figures. If Vice-President Milagros Ortiz Bosch were the candidate for the PRD, Fernandez would receive 58% of the vote, while she would receive 22%, and Estrella would get 15%. If Tourism Minister Rafael Subervi were the candidate, Fernandez would still get 58%, Subervi would obtain 22% and Estrella would get 14%. The PRD has yet to hold its primary to choose its presidential candidate. The poll showed that 57% plan to vote for the PLD, 26% for the PRD, and 14% for the PRSC. To the question of who the person would vote for if a second round were needed (when none of the candidates received 50%+1 in the first round), 64% of potential voters said they would vote for the PLD, 23% for the PRSC and 12% said they would not vote. The Penn Schoen poll was funded by anonymous businesspeople. Douglas Schoen, a leading partner of the polling company, traveled to Santo Domingo and announced the results at a press conference held at the Hotel Jaragua yesterday.
The Central American affiliate of the Gallup polling company, Consultoria Interdisciplinaria en Desarrollo (CID), polled 1,204 eligible Dominican voters from 1-6 October. The company describes itself as "Latin America's premier market research and public opinion company". Their results showed that if the election had been held on the day of the poll, former President Leonel Fernandez would have won the election with 54%, if his contender for the PRD had been President Mejia. Mejia would have received 18% of the vote and Eduardo Estrella (PRSC) would have obtained 13%. The CID poll also showed that Mejia would outdo Tourism Minister Rafael Subervi as a PRD presidential candidate. In a scenario in which Subervi was the candidate for the PRD, he would receive only 15% of the vote. The poll did not present a scenario in which Vice-President Milagros Ortiz Bosch was the candidate for the PRD. When asked for political party preference, 43% said they preferred or belonged to the PLD, 22% identified with the PRD and 10% with the PRSC. Those who did not identify with any party accounted for 25%. The results of the poll were presented in a press conference held by poll company executive Frederick Benton. See the complete results of the poll at http://www.cidgallup.com/cgi-bin/estudios.fwx or write to cid@cidgallup.com
The CID-Gallup poll carried out during the first week of October revealed that 66% thought the Mejia administration is poorly managed, 24% felt its management was neither good nor bad, and 8% said it was well managed. On the question of the quality of performance of President Mejia himself, of those surveyed 38% said it was very bad, 23% bad, 24% neither good nor bad, 11% good and 5% said it was very good. CID concluded that it should come as no surprise that Presidential re-election has so little support. Only 15% back the re-election of President Mejia and 81% perceive a change of mandate to be necessary. The poll shows that 70% are likely to vote in the 2004 Presidential elections. Eligible Dominican voters identified the cost of living as the leading concern these days. Other significant issues are the rising levels of crime and violence. The polling company said that Mejia fared the worst when evaluated in comparison to other heads of state of Central America.
The PRD continues its wrangles in the aftermath of the plebiscite on the re-election issue. Rafael "Fello" Subervi Bonilla has denied the claims of Rafael "Fafa" Taveras, who said that Subervi had met with President Mejia. Despite the plebiscite results, leading PPH (Proyecto Presidencial Hipolito - internal PRD campaign for the President's re-election) activist Eligio Jaquez insisted that 60% of PRD members are in favor of re-election and that by persisting in his fight against re-election, PRD president Hatuey Decamps is committing political suicide. In Hoy's "En solo cien palabras" column, seasoned commentator Emilio Lapayesse makes strong statements against the question of Presidential re-election. "92% against, and an admirable 6% in favor," he writes. But even this conclusive result of Sunday's plebiscite of PRD members is not enough to bury the question, he says. What keeps the issue alive is "the passion to give orders on one hand, and the fear of legal persecution on the other... they use false excuses such as the right to be elected or the North American experience..." Lapayesse ends by asking if it could be a "fear of Leonel" that motivates the PRD factions wishing to resist public opinion. The writer can be contacted on e.lapayese@codetel.net.do
Despite the widespread pessimism regarding the economic situation, 90% of those questioned said they were proud to be Dominican. Interestingly, 81% of those polled said they were "very happy" or "somewhat happy" on a personal level. Also on the positive side, 7 out of 10 people were aware that Miss Universe was Dominican, and 46% felt her win was helpful to the country.
The contents of this webpage are copyright © 1996-2008. DR1. All Rights Reserved.