In an interview today with Miguel Guerrero on CDN TV and radio morning talk show, Technical Secretary to the Presidency Carlos Despradel confirmed the completion of the technical phase of negotiations with the IMF. He said that he is optimistic the agreement would be signed in January, thus enabling the country to resume access to the US$600-million aid package agreed upon last August. In September 2003, the country received an initial US$120 million, but subsequent disbursements were suspended after the government took on comparable debt to buy back the power distributors. Despradel called the decision to repurchase the distributors without consulting the IMF a mistake. He said the Finance Ministry acted unilaterally, without the participation of his office or the Central Bank.
The Diario Libre newspaper reports this morning that the International Monetary Fund is indicating that the "technical level understanding" reached with the Dominican government (as reported in yesterday's DR1 news) is not yet a sealed deal. According to a communique issued yesterday, also published on the IMF's website, several conditions need to be met, including what is described as "efficiency and transparency" in the currency exchange sector. Only then will the next promised disbursement on the US$600-million support package be authorized. Marcelo Figuerola, the IMF mission chief, is quoted in the communique as saying: "The mission has reached a broad agreement with the Dominican authorities on the main elements of the Letter of Intent for the upcoming review under the two-year Stand-By Arrangement with the Fund. In the coming weeks, the authorities plan to move ahead with a number of macroeconomic policy and structural measures of critical importance to the success of the program. These include the adoption of a strong budget for 2004, a plan to improve the financial position of the electricity sector, improved monetary control, and steps to ensure the efficient and transparent functioning of the foreign exchange market. Once these key measures are implemented, and financing assurances from official creditors are secured, it is expected that the Letter of Intent can be finalized and circulated to the IMF's Executive Board for early consideration." For the full text of the communique, go to http://www.imf.org/
Technical Secretary to the Presidency Carlos Despradel said that the IMF now requires that Congress pass the bills legalizing new taxes prior to resuming the assistance program. While the general consensus is that the IMF is the bad-tasting medicine the DR needs to take, the unknown is how soon or whether the Chamber of Deputies will give its blessing to all the proposed new taxes. During the first three years of the Mejia government, Congress had shown itself to be most complacent to bills sent by the Executive Branch. With the popularity of the Mejia administration on the wane and the discord between the factions of the ruling party escalating, this strong support could falter. For instance, the Chamber of Deputies has been stalling on the 5% tax on exports, which was already okayed by the Senate. Contrary to the case of the Chamber of Deputies, the ruling party is almost an absolute majority in the Senate, with only two opposition party senators (one for the PLD and the PRSC) of the total 32 senators. Congressional approval is needed for the 30% increase to the luxury tax on tobacco and alcoholic beverages, the new levies on loans and savings borrowing, the 5% export tax, the 2% tax on imports and the US$10 increase in the departure tax being implemented at present, among other measures that are tied in to the IMF agreement. A 1.5% tax on gross revenues of medium- and large-sized business that expires this month also needs a Congressional endorsement to be reinstated legally. These revenues are also contemplated in the National Budget for 2004. The IMF also requires that the government "adopt steps to ensure the efficient and transparent function of the foreign exchange market." This requirement seems to contradict the present governmental pressure being exerted on the market to push the rates down. While exchange houses and banks may have available small amounts of foreign currency to the general public, for the credit card payments of their clients and for select customers, in general the demand transactions are not being met at the set rates.
If the president of the Chamber of Deputies Alfredo Pacheco's reaction is anything to go by, the 2004 budget will not get a smooth ride through Congress. Yesterday, the president of the Chamber of Deputies met with Technical Secretary to the Presidency Carlos Despradel and budget director Ernesto Perez Cuevas, who presented him with a draft document and asked that it be approved by the lower house of Congress as soon as possible. Pacheco complained that he and his colleagues had not been consulted in the budget's preparation process, and therefore he could not guarantee that it would be approved automatically by Congress. Those who failed to carry out the necessary consultations would be to blame if the budget is rejected by legislators, said Pacheco. He reassured that they would "exercise (their) Constitutional right, without losing sight of the fact that formalization of the IMF agreement depends on the approval of the budget." Nevertheless, Pacheco also protested that the budget was "strangling" the Chamber, which applied for a sum of RD$1.1 billion but was only allocated RD$600 million in the 2004 draft proposal. Despradel asked legislators to avoid "politicizing" the process. The Diario Libre's main editorialist is not impressed by the situation: "Next comes blackmail, negotiation of personal interests, the obscene spectacle of power exercised for advantage. Meanwhile, the country can go to hell."
The news on the revised IMF agreement represents "a second chance", according to the main editorial in today's El Caribe newspaper. The revised package, says the writer, is laden with challenges for the government, the business sector and Congress. The government's main challenge is "transparency", in that it has to explain all measures being taken and their application, so that Dominicans will know what sacrifices they will have to make. The government will have to work closely with the business sector to tackle the quasi-fiscal deficit and to define reforms to taxation that ensure economic recovery without targeting the nation's poor. Congress has a "vital role", according to the editorial, in that the measures in the IMF agreement, as well as the new budget, have to go through the legislative process. The writer urges deputies to refrain from short-term considerations and "petty patronage" when tackling these matters. The editorial ends by saying that "this is our second chance and we had better not let it go to waste."
The second PRD convention, previously scheduled to have taken place this Sunday, will now take place in January, said Culture Minister Tony Raful, yesterday. This postponement followed meetings with President Hipolito Mejia and the three disgruntled pre-candidates who withdrew from the race earlier in the day. Milagros Ortiz Bosch, Rafael "Fello" Subervi Bonilla and Enmanuel Esquea Guerrero had refused to take part in Sunday's vote, alleging widespread manipulation of the voting lists and vote-buying by the President's supporters, the PPH faction. Agriculture Minister Eligio Jaquez, who is also a leading light of the PPH, attacked the three pre-candidates for their decision to exit, saying there were legal precedents for Mejia to run on his own. Hoy newspaper's "Que se dice" column says that for the PRD to take that route would be the "best way of ensuring (the party's) total and absolute destruction." The Listin Diario newspaper quotes the President as saying that no one could force him to "give away" the candidacy. Meanwhile, the PRD's official candidate, Hatuey De Camps, who was selected at the first convention of the splintered party two weeks ago, met with Ortiz Bosch and Subervi Bonilla. De Camps reportedly offered his help, saying his "door was open" to attempts to find a solution for the good of the party. According to PRD election director Henry Mejia, De Camps would even relinquish his candidacy if necessary. It appears that the deferred date for the primary is aimed at resolving the dispute between the participants, with a flurry of activity yesterday by the party's prominent mediation figures, such as Peggy Cabral and Raful. The exact date for the re-scheduled convention has not been set. Dominican electoral law establishes 16 March 2004 as the deadline for registering all parties' contenders in time for the 16 May Presidential election. A July 2003 Gallup-Omnimedia poll of 1,201 eligible voters split the vote for the ruling PRD's pre-candidates as follows: Hipolito Mejia, 8.7%; Milagros Ortiz Bosch, 7.7%; Rafael Subervi Bonilla, 5.7% and Hatuey De Camps, 2.7%. The same poll showed that 73% said that even if the President obtains the nomination from his party, he has slim chances of being re-elected. Mejia's opponents argue that only a candidate that can distance themselves from the present government holds any hope of retaining power for the party. Independent polls show that of the leading candidates, Mejia has the highest nationwide rejection rate.
Economist Celso Marranzini told Hoy newspaper that the political crises in general, and that of the ruling PRD in particular, only serve to harm Dominican exporters' credit facilities. He cited the recent analysis by the Economist Intelligence Unit, which recommended no further loans to the government because the funds could be diverted for political campaigning. Marranzini said the political disputes "sent worrying signals" abroad, and that the country's international image was affected by it. He also said that government officials were perceived to be spending more time on electioneering activities than on solving the country's economic dilemmas. David Alvarez Martin, writing in El Caribe, says that the PRD crisis can only serve to bolster the opposition challenger, the PLD, and support for its candidate, Leonel Fernandez. "Let's work towards this being the last "white" Christmas we have to live through (a reference to the PRD's party color), so that we can grow economically and live in a just state," said Fernandez.
Marco Mantovanelli, who represents the World Bank in the Dominican Republic, advised the government not to rush the proposed reprivatization of the electricity distribution companies, the "Edes", that were repossessed by the government from the private company Union Fenosa in October. Mantovanelli said that the authorities needed to look into Edesur and Edenorte's sustainability before taking any such decision. "We are not saying 'privatize tomorrow' - our position has been 'how are we going to maintain these companies, what is their sustainability' - that has been the question." The Bank's view is that there should be a consultation with all parts of the power sector in order to formulate a comprehensive strategy. Mantovanelli said that the state model had failed, as had the partial privatization, in the absence of a well-defined regulation capacity. As well as the IMF loans, funds from the Inter-American Development Bank and the World Bank itself, totalling between US$250-US$300 million, are due to arrive in the country in January. Mantovanelli said that part of these could be used by the government "for the sustainability of the electricity sector" and that the Bank was considering a further "social stabilization loan" of US$100 million, which he said could go towards "guaranteeing minimum sustainability" of the power sector or for social programs. According to a report in Listin Diario's economic section, 350,000 Dominican households have no electricity at all, while a further 800,000 are connected "informally".
The dollar-peso exchange rate fell 100 points (one peso) to RD$36 to US$1 yesterday, but there are still no dollars available for purchase in the currency market. This is an unprecedented situation for the month of December, which usually sees a large amount of the US currency flooding the market as Dominicans residing abroad return for the holidays. The fall in the exchange rate is attributed to the announcement earlier this week that an agreement had been reached between the government and the IMF. Some currency exchange agents were buying dollars for RD$35.50, according to the papers.
The Economic Commission for Latin America and the Caribbean (ECLAC) has calculated that 2003 has been the worst year for the Dominican Republic in the last decade. The Latin America-wide economic think-tank lists the 1.3% contraction in the economy, an inflation rate that topped 40%, the crisis in the banking sector, the increase in international debt, the quasi-fiscal deficit and the banking crisis as the main ingredients that have led to this dismal situation.
Disgraced Baninter President Ramon Baez Figueroa, in jail awaiting his trial for massive fraud charges, has said that he is being blamed for everything from the price surges to last September's earthquake in the north of the country. "I would say that I have even increased the price of flour, not to mention caused the Santiago earthquake, even though that's an atmospheric thing, but I have been blamed for that, too." He added that he hoped the matter would be clarified "in time", in reply to questions from reporters as he made his way to the court for his latest bail application. Baez Figueroa has maintained complete silence on the issue since his arrest in May, and all public statements have been issued through his legal team. A decision on the former banker's bail application is due on Friday.
The European Union donated 290,000 euros (RD$13.34 million) for the reforestation of the Bahoruco Mountain Range. The National Office for the European Development Funds (ONFED) and the Environment Ministry signed the protocol that seeks to recover areas that were damaged by the bauxite mining activity of the Alcoa Exploration Company in the Pedernales province. The donation is part of the Sysmin Program of the European Union and represents the second phase of a program already underway. Area studies were carried out during the first phase, financed by a first 190,000-euro donation from the European Union received in 2000. The current phase calls for the planting of 20 hectares of a previously mined area, in addition to a nursery for the production of 120,000 plants a year and installation of communication services, watch towers and vigilance services to prevent deforestation and fires in the area. The donation is in recognition of the Environment Ministry's work in handling this program.
Haitian ambassador to the Dominican Republic Guy Alexandre has announced his resignation. He visited President Hipolito Mejia yesterday and explained the reasons for his decision, saying it was a result of internal issues in Haiti and nothing to do with the relationship between his country and the Dominican Republic. Alexandre is said to have been frustrated by President Jean Bertrand Aristide's increasing practice of handling Dominico-Haitian affairs over his head, and has criticized recent actions by his government in suppressing protests. He is the fourth Haitian ambassador to resign in reaction to Aristide's policies. It is reported that Alexandre has no immediate plans to return to Haiti, the scene of recent instability and widespread protests.
Only 16% of male inmates in the country's prisons are aware that HIV-AIDS can be transmitted through sexual contact, according to a study by DIGECITTS, the body responsible for monitoring contagious diseases. A significant percentage believed that HIV-AIDS could be contracted from caring for or bathing someone with the disease. It also found that a large proportion of prisoners are sexually active, 67% of males admitted to having sexual relations in prison, yet only 16% said they knew how the disease was transmitted. Female prisoners showed a slightly higher awareness rate of 26%. A third of those questioned said they had had "11 or more" sexual relationships in the last three months, yet less than half said they used condoms. The study concluded that prison crowding was a main factor in what it described as "sexual promiscuity" between inmates. Men comprise the overwhelming majority of prisoners in Dominican jails, accounting for 96.5% of all inmates.
The Dominican Republic, ranked 14th in the world, is on a winning streak in the NORCECA Women's Volleyball Olympic Qualifier Tournament. The DR has defeated Mexico, Canada and yesterday Puerto Rico. The team needs to win Cuba, though for a berth in the Athens Olympic Games. The match against Cuba is set for 8 pm tonight at the Juan Pablo Duarte Olympic Center's volleyball pavilion. For more information on the tournament, see http://www.fivb.ch/
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