Both Hoy and El Caribe newspapers carried stories on the feasibility and advisability of dollarizing the Dominican Republic's economy. Mario Mendez, the editor of Hoy's economic section, reported that the IMF has done little to calm nerves in the money market and points to a report in the Wall Street Journal written by Mary Anastasia O'Grady, which quoted the arguments of economist Victor Canto. Canto favors converting the Dominican economy to a dollar base because the exchange rate could no longer be tampered with. According to data picked up from the Intelligence Unit of the Economist, "the (Dominican) government has raised taxes hoping to close the fiscal gap, but it is not clear whether it will have the political willpower to reduce expenditures. After a 3.2% contraction in 2003, the economy will undergo a further 0.7% contraction in 2004, while inflation eats away at the purchasing power of the peso and high interest rates and lack of confidence limit investments." According to Canto, the chief benefit of a dollarized economy would be to eradicate what he calls "money mischief" wrought by the politicians. El Caribe headlined the news that the United States would support a dollarized economy in the DR. Quoting John Taylor, a Treasury Department Undersecretary for Foreign Affairs, El Caribe says that if the DR wishes to move to a dollar standard, the US Treasury would be happy to lend a hand. El Caribe also points out that so far this year the Dominican economy has seen a 50% inflation rate and a 100% devaluation of the peso. The article picks up additional commentaries from leading business representatives who say their prices are indexed to the exchange rate for the dollar but are still shown in pesos.
Gasoline-price records were broken this week with increases as great as RD$5.00 per gallon of premium petrol. Current prices now stand at RD$70.15 for unleaded premium, RD$62.07 for regular unleaded and RD$44.80 for diesel. The prices signify an increase of over RD$20.00 for the year. Industry & Commerce official Federico Quezada stated that a 10% increase in transport costs could also be forthcoming. When the transport unions threatened a strike two weeks ago in the face of a new price increase, the price of fuel was lowered by an insignificant amount and the pressure tactics evaporated. With these historic highs, however, writer Asun Egurza of El Caribe asks "Now what?"
The Dominican government spent 41% of its income on wages last month, according to sources in Onapres, the national budget office. An amount of RD$1.934 billion of a total income of RD$4.758 billion went to pay the salaries of government workers. This figure, however, was RD$83 million less than the previous month's expenditure. The reasons for the reduction, according to reporter Idonelia Perez Blanco, are simple: The IMF requires the Dominican government to keep salaries and personnel expenses below RD$24 billion for the year, and that includes the Christmas "bonus" that is required by law.
Last Friday, there was a summit meeting in Santiago whose central theme was the energy crisis being felt in the northern half of the country. Last Wednesday, the president of the Santiago Chamber of Commerce and Production, Jose Bonilla Bojos, called for such a meeting because the Cibao area was experiencing the worst electric service in memory, riots were springing up all across the area and businesses were on the verge of closing down. By Friday, the summit became a reality and George Reinoso, the Superintendent of Electricity, Edwin Croes, the new general manager of EdeNorte and EdeSur and officials of the CDEEE met in Santiago to face the business community. Although some harsh words were exchanged, especially between Croes and members of the Chamber, in general, the meeting went well and the business community received some positive news. Perhaps the most disturbing news that emerged, as reported by El Caribe, was the fact that 41% of all electricity distributed, went unpaid. Croes warned his audience that if the new taxes are not paid, there will not be any electricity.
As reported in Friday's DR1 News, two Korean boats, part of the Korea Dominican Fisheries, were seized and fined nearly RD$2 million. Twenty-nine officers and crew were arrested and are being held until the fines are paid. The Caonabo I and the Enriquillo I were found to be fishing in Dominican waters without permits and were taken into custody by the Dominican Navy at the behest of the Ministry of the Environment and Natural Resources. The boats had caught 16 tons of fish and shellfish. The issue has created a debate between two governmental agencies, the Ministry for the Environment and the Cooperative Institute for Development and Credit (Idecoop). Idecoop and the Korea Dominican Fisheries were working on a new pilot program to promote a fishing industry for the Dominican Republic. The plan did not include any fishing in territorial waters. Nevertheless, the commodore of the Nautical Club of Santo Domingo, Armando D'Alessandro, denounced the fact that they were sweeping territorial waters between Cabeza de Toro and Bavaro with a type of net that is prohibited and had already caused irreparable damage to the ecosystem.
Both Hoy and the Listin Diario featured extensive economic commentaries over the weekend. Hoy devoted its economic section to tax reform and had five celebrated economists express their ideas on the need for such reforms. The group of experts included Frederic Emam-Zade, Pedro Silverio, Eduardo Tejera and Isidoro Santana of Fundacion Siglo 21. In general, the five felt that tax reforms must start immediately. Alfonso Abreu Collado felt that any further delay would amplify the fiscal imbalance, and he urged the government to publish their proposals for public commentary. Abreu Collado said that it was important that government officials give indications as to just where the monies will go, before they try to implement any new taxes. Frederic Emam-Zade proposed a savings of RD$40 billion through a policy of austerity and showed how a "triple ten" plan would work. A 10% IVA across the board, a maximum of 10% duty on most imports and the removal of all duties on the rest, and a universal 10% tax on those incomes earned in the Dominican Republic. Emam-Zade does not feel a need to renegotiate the foreign debt, but he insisted on a 33% reduction in government expenditures. For Isidro Santana tax reform is not enough to resolve the problems of the fiscal and semi-fiscal deficits. These measures, however, in addition to the sale of government patrimony and the trimming and rationalization of government expenditures might help solve the crisis, he said. Pedro Silverio said that he likes the idea of a renegotiated foreign debt and feels that the tax reform measures must be done before 16 May (Election Day), as all the political parties would be otherwise occupied and this would help keep the agreements from being broken for political expediency. Eduardo Tejera called a postponement of the tax reforms until after the elections "an irresponsible act on the part of the government and the IMF." Among the measures that he favors are a crackdown on tax evasion and a reduction in public sector payrolls. Tejera also called for a deferral in the opening of the Dominican markets to globalization or a Free Trade Agreement with the United States.
According to Andy Dauhajre, the export sector stands to make RD$75 billion with the devaluation of the peso and he feels that the government should get at least 10% of that money. As reported in the Listin Diario, Dauhajre, the economic advisor to the President, had advised President Mejia to seek a 10% tax on exports in order to pay the energy bill and the outstanding foreign debts. According to the economist, the debts had been calculated when the dollar was at RD$17 to US$1 and repayment at an exchange rate of RD$35 to US$1 would require a substantially greater amount of pesos. While some had said that the exporters' bonanza had been overstated, Dauhajre said the calculations had been done based on Central Bank figures.
A small pod of dolphins mesmerized the entire southeastern coastline yesterday, as thousands watched the animals swim along the coast. Hundreds of cars stopped along the highways to allow their passengers to watch the show. From 9am until well after 6pm that day, the dolphins advanced along the shoreline and gave the people a spectacle to remember. In addition to the diversion, their presence might also be a good sign, as dolphins do not like contaminated water. The marine mammals, ten in number, went from West to East, from Punta Caleta towards La Romana.
According to El Caribe's economic section, US$100,000 worth of fighting cocks were exported from the Dominican Republic to Haiti, Saudi Arabia, Saint Maarten, Panama, and Surinam. Venezuela and Colombia are also listed as customers for the bloodlines from the Dominican Republic. Cockfighting, while outlawed in many places, is a legal activity in the DR and has a massive following. According to reporter Asun Egurza, the bloodlines have been better with imported birds from Miami and Puerto Rico. Hector Ortiz, a Puertorican with 30 years' experience in the sport, says that one egg from the right bloodline can cost as much as RD$10,000. "Galleros" are those who maintain flocks of fighting birds, such as Mario Corporan, who has as many as 220 birds under his tutelage at any given time. Another gallero is Manolo Polanco, who may have as many as 500 birds in his "machero", the male-only holding pen. Cockfighting in the DR is an all-inclusive activity and men from all levels of society and economic standing rub elbows at the fights. An important facet of the fights is the betting aspect. At the Coliseo Gallistico on Luperon Avenue, the minimum bet between owners is RD$5,000 on Saturdays and RD$3,000 on Wednesdays. During this past month alone, 7,000 birds were marked for fights at the Coliseo, speaking to the popularity of the pastime. In Santo Domingo there are a total of 65 arenas and in San Cristobal there are 40.
Both today's Listin Diario and the El Caribe carry headlines that tell of a new initiative and possible meeting of presidents Mejia and Chavez in the near future. After three months of tense relations, which saw the Venezuelan ambassador recalled to his country and the flow of Venezuelan oil to the Dominican refinery curtailed, this is the first positive news. Although the Venezuelan ambassador has since returned and announced that the oil would soon begin to flow again, it has yet to resume and the topic of oil was not touched during this weekend's exchange of polite messages. Chavez sent Mejia a "Hello, Mr. President" from his television address and President Mejia confirmed the possibility of meeting with Chavez, telling his TV audience that he had spoken with the Venezuelan head of state and that they had considered four possible sites for a meeting: Panama, Bolivia, Dominican Republic or Venezuela. In his television talk, Chavez said that he was sending "his affection, his friendship and, above all, his admiration of the Dominican people." Apparently a meeting held earlier in the week between President Mejia and the Venezuelan Minister of the Interior, Lucas Rincon, and the Venezuelan ambassador, Francisco Belisario Landis, worked to smooth the situation.
El Caribe reports that the electricity was slightly better in the East and South of the country, but the Cibao region continued to suffer prolonged blackouts. A 190-megawatt deficit was reportedly the cause of the situation in the Cibao. El Caribe reported that the energy supply fared somewhat better in the East and South because the major consumers were not working over the weekend and thus demand was reduced. La Vega, Santiago, Montecristi and Puerto Plata continued to endure protracted power outages, provoking protests, loss of foods and extraordinary expenses for "emergency" generators. Some businesses in Puerto Plata have reported an 80% decrease in their activity. Meanwhile, the Listin Diario today reports that Eligio Jaquez,Agriculture Minister and head of the PPH faction of the PRD party, announced in Boca Chica that the government would have the electric problem solved by the end of this month. Jaquez promised that a RD$2-billion payment would be made to the generators, after which the lights would remain on for 24 hours a day.
The Municipal Council of the National District of Santo Domingo began the clean-up process along Duarte Avenue, removing the gigantic signs that loomed over the street, creating a visual nightmare of garish signage. Headed by Santo Domingo's Mayor Roberto Salcedo and Alberto Diaz Gonzalez, the president of the Duarte Avenue Business Association, the eyesores were dismantled. The Fire Department also helped bring down the commercial announcements. This is the first stage of a program that was approved last 23 October between the Municipal Council and the Business Association. The idea is to rescue Duarte Avenue, by removing the small stalls that line the street and relocating them to Caracas Street.
Bernardo Vega, the distinguished economist and historian, joined forces with five other economists in urging a faster pace towards tax reform. Vega says that there are some members of the current administration who wish to shun the IMF accords and substitute a new sovereign bond issue for the funds that would have come from the IMF and the other international lenders. This would prevent having to face limits on government spending and contracted debts as per the IMF's stipulations. Vega calls this idea "a mirage", saying it would create more problems than it would solve and in the end would lose more votes than the party could hope to gain. The former ambassador suggests that the only solution that makes political, economic and even party sense for the PRD and the PPH would be to negotiate a new agreement with the IMF, no later then by the end of December. The new agreement would have to be more flexible than the one signed in August. Since new income is needed immediately, we have seen the "patches" of a higher exchange commission and "voluntary contributions" from other sectors. Nevertheless, according to Vega, the real solution is the urgently-needed tax reform, which he says will alleviate some of the problems without scaring off investments.
A warning from the Transportation Safety Administration in Washington apparently caused a marked tightening of security measures at the major airports in the Dominican Republic. The Airport Security Forces and the Armed Forces were doubly vigilant after alerts that possible operatives from Al-Qaeda would use Dominican airports to infiltrate the United States. Oriental and Middle Eastern passengers were especially thoroughly checked and several were invited for interviews with security personnel. Dominican authorities received an extensive list of suspected terrorists' names from the FBI and Interpol. During a recent conference in Cartagena de Indias, Colombia, intelligence officers received information of a network of Al-Qaeda that might be infiltrating its members into Latin America, and in the case of the Dominican Republic, university students from the Orient and the Middle East were mentioned as possible agents.
The Net International Reserves (RIN) were up over 25% during the first two weeks of October, reaching US$121.7 million. The RIN had fallen to all-time lows during August and September and the rebound is being attributed to the unification of the dollar market and the transfer of all dollars directly to the exchange markets. After reaching a year's high of US$430.4 million in February, the RIN fell to just US$97.3 million in September. In October the Monetary Board approved the government purchase of dollars on the open market to meet its payments for oil, diplomatic service and the debt service charges.
The contents of this webpage are copyright © 1996-2008. DR1. All Rights Reserved.