| Daily News - 20 November 2003 |
There are reports that the domestic (propane) gas shortage has reared its head once more. Yesterday, most propane supply depots were closed, affecting many households dependent on the fuel, and public transport drivers who have converted their vehicles to run on this cheaper alternative to gasoline. The few depots that were open for business were overwhelmed by desperate customers' demand. In contrast to last week, this latest shortage is not being attributed to the government's failure to pay subsidies. Instead, it appears that consumers have been buying extra supplies to make up for last week's shortage, and possibly some are also hoarding the fuel in order to preempt future shortages. The government paid gas suppliers 50% of the RD$500 million owed to them in subsidies. The authorities maintain they are committed to keeping the price down to RD$25 a gallon, and have to pay RD$12.5 per gallon to compensate suppliers for the difference in market price, which stands at RD$37.50 per gallon. El Caribe reports that a ship is due to arrive in the country today with much-needed supplies of propane.
With the dollar at RD$41 to RD$1, the papers continue to focus on the toll this is taking on the consumer. Diario Libre reports that family budgets have been completely altered by the price rises. Chicken prices have crossed the RD$30-per-lb mark and in some supermarkets is selling for almost RD$34. The newspaper focuses on the cost of basic vegetables and baby products, also. In just one week, a pound of onions has increased from RD$21.95 to RD$31.95, for example. Between January and November, baby milk went from RD$345 to RD$588 for 100 grams of product. Disposable diapers have increased from RD$145 to RD$269 for a packet of 24. El Caribe looks at the increasingly unaffordable electro-domestic appliances, which have doubled in price since the beginning of the year, causing sales to fall by 50%. A basic washing machine has gone up from RD$2,000 to RD$4,200. A simple electric fan that used to cost RD$250 now costs RD$700. The peso devaluation has forced retailers to be more stringent in their credit allowances for customers, reports the newspaper.
Following the Senate's approval of the controversial 5% tax on export goods, the export sector has decided to suspend its voluntary fixed-rate monthly contributions to the government. The business community had agreed to make the contributions on 8 November, but now claims that the 5% tax goes against their agreement with the government, and that the so-called "solidarity contributions" had been intended as a substitute for the 5% tax, which was being proposed at the time of the agreement. Exporters had pledged to contribute RD$1 for every dollar exported, which would have come to a total of RD$80 million per month. Exporters' association ADOEXPO had said that "with the signing of this agreement, the state commits itself to abstain from introducing any surcharges or additional taxes on the export sector, such as the proposed 5% export tax". Their executive vice president, Horacio Alvarez, warned that as well as contravening the agreement, the tax would place an impossible additional burden on exporters already affected by the current economic crisis. "It is not just that we are refusing to pay this surcharge, we really cannot," said Alvarez. He explained that during the months of August, when the government imposed a similar surcharge, exports plummeted, leading to a sharp reduction in tax income for the authorities. Arturo Villanueva, executive vice president of hoteliers association ASONAHORES, stated that his organization would continue with their contributions until the 5% levy became law.
The Listin Diario reports that the next legislative stage to impose the 5% tax on exports could be difficult. The Chamber of Deputies could pose a challenge to the controversial surcharge with the stiff opposition of PLD and PRSC deputies, as well as a PRD faction opposed to the levy. PLD spokesman Teodoro Reyes said the tax "would only serve to discourage exports and reduce the flow of dollars into the country, as well as creating more unemployment." Reyes said that other sectors should not be made to pay the price of the government's economic mismanagement. The PRSC's representative said that the net effect of the 5% tax would be harmful for the country, especially the poor. The ruling PRD party's Ramon Agromonte said the tax should be imposed, however, so that it is not just the people who bear the burden of the current economic crisis. Nevertheless, it appears that several PRD deputies plan to vote against the tax. The Chamber of Deputies has 73 PRD members, 42 PLD and 35 PRSC.
The Insurance Superintendence announced yesterday that insurance company Segna, originally part of the ailing Bancredito group, is to be dissolved. Rafael Santos Badia, insurance superintendent, assured that all clients' funds would be guaranteed. The decision was made because the company has debts of RD$2 billion and a deficit of RD$1.2 billion, according to a government source. An interim committee is being set up to oversee the transition period, in which the companies' assets will be sold, under the supervision of the insurance sector associations to ensure the process is handled correctly. Segna was until last year the market leader, but with the announcement that its parent company Bancredito was in trouble, a potential buyer for the company pulled out, leading to the current situation, said Santos Badia. The Leon Group and its Banco Profesional announced earlier this year the takeover of the local banking operations of Bancredito. The new owners have said that a new name will be announced in two weeks time, with the completion of the due diligence period underway at present.
The timing of the talks with the United States aimed at securing a regional free trade agreement in conjunction with the Central American nations could be disadvantageous for the Dominican Republic, warned economists from CIECA (Caribbean Center for Economic Research), in a report in Listin Diario. Miguel Ceara Hatton, Pavel Isa Contreras and Federico Cuello opined that the three-month period set out for the bilateral talks was too short, and that a multi-lateral negotiation would have been preferable. Speaking at a seminar organized by CIECA, Ceara Hatton said that negotiations would be limited to market-access lists, which would limit the Dominican Republic's capacity to implement development policies. Isa Contreras said that these treaties, though necessary, did not take into account the varying sizes and capacities of participating countries. What is important is that countries are able to implement development policies, according to the CIECA economist. He warned that the DR may be in danger of being "left behind" with the signing of the agreement, and that the free trade zones may be excluded from the treaty, thus forcing the country to change its policy for this sector in 2008. "Basically, we are signing a blank check," said Isa Conteras. There are some areas that will not be covered by the proposed Free Trade Area of the Americas (FTAA), including agriculture and development policy, which will probably lead to an additional treaty named "FTAA plus", in which the government may have to renounce some of its preferential trade terms as well as some of its policies. "All that is going to be discussed is market-access lists. The DR could be left with decreased access." According to Ceara Hatton, the theme of development has been absent from the reform process. He feels what is needed are systematic policies, because there is no automatic link between growth, trade and development, and that policy makers have forgotten that these days it is development, not trade, that counts. For more on the agreement, see http://www.businessweek.com/magazine/content/03_47/b3859087_mz015.htm
El Caribe newspaper reports that the capital city is facing a serious shortage of funds. Inflation has reduced the value of its RD$680-million budget, of which 90% currently goes to refuse collection and salaries for its 4,700 municipal employees. Mayor Roberto Salcedo told the newspaper that some of these costs used to be covered by the central government, and that he has had to seek additional funds to bridge the gap. The city is facing a debt of RD$50 million as a consequence, said Salcedo. The mayor announced his latest clean-up initiative, which is to remove the prostitutes and street vendors from the Centro de los Heroes area in the capital's La Feria district, home to the National Congress, the Supreme Court and many other government institutions. He listed future challenges for his administration as street lighting, repair of sidewalks and improved drainage systems. The newspaper's main editorial calls for more citizen involvement in the improvement of the capital, ranging from those who "sponsor" green areas, parks and traffic islands, to simple civic responsibility. "Remember that 'clean' is not just about cleaning, it is about not dirtying," said Salcedo.
A delegation of church, community and trade union leaders met with Technical Secretary to the Presidential Office Sergio Grullon yesterday, to beseech President Hipolito Mejia to abandon his alleged initiative to have radical priest Father Rogelio Cruz transferred to the Vatican. They claimed that Father Rogelio, who is an outspoken civil rights activist, has not breached any law or compromised public peace and order. In a letter addressed to the President, they said the real threat to peace in the country was "the dollar cartel, which, under the disguise of market forces, has made the exchange rate soar." All that Father Rogelio has done, according to his supporters, is defend the rights of poor families, especially those from his parish, the Santo Domingo neighborhood of Cristo Rey.
Yesterday's papers published a paid full-page advertisement consisting of a letter from prominent PRSC member and president of the municipal league (LMD) Amable Aristy Castro. The letter was addressed to Monsignor Agripino Nunez Collado, who has distinguished himself as a mediator in several national platforms, such as the Dialogo Nacional. Aristy Castro sought to have Monsignor Nunez Collado mediate in the crisis that is threatening to split the PRSC. The papers are reporting today that the Rector of PUCMM University met with PRSC leaders yesterday and declined to act as a mediator for both the PRSC and the PRD parties, on the grounds that it would be inappropriate for him to intervene in the affairs of a particular political party. In his opinion, the PRSC has a greater chance of reconciliation than the ruling PRD, which according to Monsignor Nunez Collado, is in a state of "irreversible" crisis.
The Yaque and Yuna river basins in the north of the country are still on red alert following the heavy rains and flooding of the last few days. The emergency zone stretches from Cotui to Samana Bay in the northeast and from Santiago to Monte Cristi in the northwest. The authorities say they have rescued 22,000 people from the affected areas and estimate that a total of 65,000 people have been affected by the flooding. The emergency response teams were able to distribute over 14,000 ration packs containing basic foodstuffs to some of those stranded by the rising waters. They are also sending blankets, drinking water and medical supplies to the victims. People are being advised to boil river water before drinking it. No more casualties have been reported after the initial count of four dead and two injured, but the toll has been high. El Caribe reports that in Monte Cristi alone, over 15,000 people have been left homeless. Many communities have been cut off, and 100,000 tareas of agricultural land is under water. The meteorological forecast is reassuring: the low pressure has weakened and the cold front has moved eastwards, meaning the worst should be over. Diario Libre's main editorial comments that while nature was responsible for the disaster and nothing could have been done to prevent it, now is the time for the authorities to mobilize aid, food and medical supplies to ease the victims' suffering. It is also a time for solidarity for those who are able to contribute towards rebuilding what was lost.
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