The 2004 budget will be adjusted according to reality, President Hipolito Mejia said yesterday, although he did not comment on the report in yesterday's Hoy newspaper that predicted overspending to the tune of RD$45 billion for next year. The President joked that if he were to fulfill all his ministries' requests he would require the budgetary means of the United States. Declaring that this variance was a normal state of affairs, he went on to say the country would have to make do with what was available. "There is no other way. We have to get the money for the things we need, according to the reality of the situation." Hoy reported yesterday that it had seen an official document titled "Budget Projections for 2004" in which the essential government expenditures for 2004 was forecast at RD$153 billion, while the expected income was approximately RD$88 billion - a deficit of RD$45 billion. Hoy's main editorial column analyzes the situation and calls on the government to control its spending, promote savings, reduce the external debt and clean up the State's financial management. The editorialist says there is no other alternative, "unless of course the political interests of a few are put above the interests of the nation as a whole."
Electricity Superintendent George Reinoso explained that the intensifying power generation and supply problems - with a current deficit of 200 and 300 megawatts - are due to the withdrawal of credit facilities to the electricity sector. Power distributors owe US$100 million to the generators, and the anticipated US$200-million World Bank loan has yet to be disbursed. The generators' clients, in turn, owe RD$5 billion in unpaid bills. If this situation is not resolved soon, electricity prices will have to be raised by about 30%, warned Reinoso. The situation is particularly harsh in the country's second-largest city, Santiago. A localized flooding problem brought down six power pylons, further aggravating the power shortages of the area in which electricity cuts of epic proportions are nothing new. The International Monetary Fund delegation that has been reviewing the government's takeover of the electricity distribution companies known as the "Edes" has returned to Washington to prepare its report, and is due back in the country next Wednesday.
The PRD pre-candidates opposed to re-election have said they see no possibility of reaching an agreement with President Hipolito Mejia. The seven, who are now split into two camps since the departure of Rafael "Fello" Subervi Bonilla from the core group, are saying that the President and his PPH (Proyecto Presidencial Hipolito, promoting his re-election) have failed repeatedly to honor their agreements, starting with the President's promise to refrain from seeking a second term of office, a source close to Subervi Bonilla told El Caribe newspaper. The PPH faithful have been given most of the powerful government posts since the PRD came to power in 2000, he is quoted as saying, after having promised a greater proportion to political allies such as Subervi. The paper lists the PPH supporters who according to Subervi dominate the cabinet: Siquio Ng de la Rosa and Rafael Calderon, as well as non-aligned figures such as Sonia Guzman, who is nevertheless a member of the President's inner circle. Those opposed to re-election have been eased out, according to the source, mentioning the cases of Peggy Cabral, who left her post as head of Pro Comunidad to fight the Santo Domingo municipal election and then left Gabinete Social, ostensibly to engage in the internal reconciliation process. It is said, however, that Cabral resigned because she was not allocated the budget for the institution's social programs. Others like Hugo Tolentino Dipp and Virgilio Bello Rosa were replaced by PPH sympathizers upon their departures from their respective posts. Vice-President Milagros Ortiz Bosch and her supporters have also had similar experiences, says the article in El Caribe.
Jaime David Fernandez Mirabal, who served as Leonel Fernandez' Vice-President in the 1996-2000 government, said yesterday that he was confident the PLD would earn a decisive win in the first round of next year's Presidential election. In his view, the public, who are disillusioned with the current government's economic failures, will vote overwhelmingly for a return to economic stability and confidence in politicians. Fernandez Mirabal cited uncontrolled government spending, wasteful practices of government institutions and the authorities' economic mismanagement as the factors that are causing the greatest harms to the economy. Adrian Miguel Tejada, who writes the Diario Libre newspaper's back-page commentary, says that PLD candidate Leonel Fernandez is in an enviable position with his showings in all the recent opinion polls. "As far as some people are concerned, all the PLD Presidential candidate has to do is stand against the wall and wait for time to pass until 16 May (the election date). It is too good to be true." Tejada warns against complacency, however, reminding that it would not be the first time that over-confidence has cost someone an election victory. "Whatever the advantage, a candidate has to work hard," cautions the commentator, who continues to say that Leonel knows that he must "stick" the notion of his victory into the minds of the electorate, as if it were a tattoo. Leonel's only obstacle is massive electoral fraud and for that reason he is aware that international supervision of the upcoming elections is essential. "The biggest problem, however, is the possibility of forming a credible front, because it looks as if these elections will be one big market," concludes Tejada, who may be contacted at atejada@tricom.net
A team from leading global financial management and advisory company Merrill Lynch met with President Hipolito Mejia and Finance Minister Rafael Calderon yesterday, to offer advice on the current economic situation. The proposal will be made public soon, said Calderon as he left the meeting. The minister commented on the recent downgrading of the Dominican economy by a number of international risk assessors, saying that "just because this has happened it does not mean the country is on its knees." He told reporters that his job was to find ways out of the problems and to improve the country's economy.
Wall Street investment bank J P Morgan's latest report on the Dominican economy states that the government has no coherent strategy to put the agreement with the International Monetary Fund back on track and face the 2004 Presidential elections without debt repayment problems. J P Morgan sees no end in sight to the power-supply crisis in the medium term and regards the current political climate as "extremely divisive" for the country's stability. The report also comments that the government shows no signs of reducing public spending in the run-up to the next election. The US government's support for the Dominican Republic remains stable, however, and the report points to the fact the DR has sent troops to Iraq. The prospect for debt-repayment is daunting, according to the pundits, and it is likely that the Dominican government will fall behind on its repayments in the near future, with US$192 million due in the next three months. The report reveals that a recent attempt by the Dominican Central Bank to renegotiate the terms of repayment with the Paris Club was met with the advice that their requests would only be considered once the IMF agreement has been finalized. Turning to the banking sector, the report states that it appears there are "no more skeletons in the closet". The IMF's stipulations to contain public spending will be difficult to achieve, says J P Morgan, who also looked into the question of the Central Bank certificates that are being held back for one year, having been offered originally on a one-, three- and six-month basis. The current economic uncertainty makes it difficult to provide reliable predictions, says the report, and until the IMF stand-by agreement is back on track it will be impossible to cite concrete figures.
The Dominican Republic is now the sixth largest exporter of clothing to the United States, according to US Trade Department statistics. This year's sales were worth over US$1.4 billion, a slight increase on figures for 2002. Jose Manuel Torres, executive director of Free Trade Zone exporters' association ADOZONA, said that although the growth had not been significant, at least the sector had maintained the previous year's volumes. He warned that the removal of the quota systems may give the Asian garment-exporting countries "a larger slice of the pie", which would entail a threat to Dominican suppliers. They would have to rely on more flexible marketing and concentrate on niche products that are not faced with such fierce competition from Asian producers, he said.
The engineering contractors who pulled out all the stops in order to have their projects ready in time for the Pan American Games in August are on the brink of ruin. The 39 companies involved called on President Hipolito Mejia to pay up the RD$1.1 billion owed to them by the government. The engineers and contracting companies say they are under pressure from their suppliers, because they were forced to take out loans in order to purchase the materials needed to complete the projects. "We fulfilled our obligation, President Mejia, but now we feel helpless, with our hands tied and without any possibility of saving our credit and our companies, which are being boycotted by those we cooperated with so that the country would triumph," said Garibaldy Bautista, who was responsible for the renovation work on part of the Olympic stadium and who is owed over RD$25 million by the government.
"We are not using Dominican children as guinea pigs," declaims Dr Luis Rivera Mejia, the pediatrician in charge of the anti-diarrheal vaccine trials currently underway in Santo Domingo. He explained that 1,000 children have already been inoculated out of a target figure of 4,000. Commenting on the risks, which have led to some criticism of the initiative, he told El Caribe newspaper that "there would be no medicines in the world if we thought of possible side effects." The vaccines have already gone through animal testing and controlled human testing, so that much of the risk has been precluded. "The country is lucky to have been selected in finding a solution to a problem that causes the death of half a million children worldwide every year," said Rivera Mejia. He explained further that this vaccine is different from that which was withdrawn from the US system. The pediatrician conceded that there was a danger that Latin America could be used as a testing ground for risky medications, but that in the case of the DR all procedures were being conducted openly and rigorously, and that there was no danger to the children involved. The newspaper's main editorial argues that, notwithstanding all the benefits, there are still aspects of this trial which merit some criticism. It states that a similar vaccine being tested in laboratory experiments in the US displayed side effects requiring surgical intervention. "Now, the trials are being done in the Third World," forewarns the writer. He also asks why these clinical trials must be performed on Dominican children. "Why not Swiss, Japanese or German children? Perhaps because those countries' authorities would not allow their children to be subjected to risky situations…" The columnist accepts that research is necessary for the advancement of science, but not, he says, with Dominican children. "The authorities here should ensure that only tried and tested medications are given to our children and that they should not be used as guinea pigs." The editorial ends with the question, "How many of the government officials who approved the trial would allow their own children to take part?"
The steep rise in interest rates has made it impossible for most Dominicans to fulfill their fantasy of owning a home, according to an article in El Caribe's economy section. What appeared to be an affordable proposal less than one year ago is now well beyond the reach of most people's pockets. To support this statement, the newspaper cites the case of a couple who took out a loan for a low-cost home, with estimated monthly repayments of RD$5,900. In spite of these estimates, they are now faced with a bill of RD$8,000 per month, meaning that the so-called low-cost housing is no longer low cost. Rates of 16% have now shot up to as much as 26% on the purchase of a RD$500,000 dwelling. As a result, house sales have slumped, according to Francisco Gonzalez, president of the housing construction and development association Acoprovi. Gonzalez also said that although the situation was difficult, there was a case for persuading people to invest in property as a means of maintaining the value of their assets against a devaluing currency. House prices and rents have also gone up considerably in recent months: the price of a mid-range apartment in a middle class Santo Domingo neighborhood has almost doubled, from RD$800,000 in 2000 to RD$1.5 million now. Many landlords link their rents to the US dollar, meaning that a rent of US$800 (RD$13,000 at the old exchange rate of US$1 to RD$16), which has increased to US$1,000, now signifies that the tenants have to come up with RD$36,000 a month. It must be pointed out that people are still struggling to make these payments on salaries that have not experienced anywhere near that sort of increase.
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