Presidential Administrative Secretary Luis Manuel Bonetti revealed that the government has renegotiated the RD$1.1-billion debt owed to the propane import companies so as to resume the purchase of liquid propane gas (LPG) supplies. The financial debt is the main reason behind the acute scarcity of propane gas that began following the 16 May election in which former President Hipolito Mejia lost his bid for re-election. Bonetti said that the flow of 44 million gallons of LPG in shipments from Venezuela and Trinidad & Tobago should end the scarcity by October. New shipments are expected this Sunday, after dispatches that were suspended due to the storms in the area have been resumed.
Bonetti commented that the DR is especially vulnerable to hurricanes, as all its refueling stations are located on the southern coast. He said that in the future a North Coast terminal must be built.
Following meetings last week between a top-level Dominican delegation and the Paris Club, the DR's Presidential Technical Secretary Temistocles Montas announced the conditions necessary to maintain the agreement with the Paris Club and reschedule some US$193 million in bilateral debt (US$155 million in 2004 maturities + US$38 million in arrears). Compliance with these terms will enable the DR to secure a new stand-by program that would again give access to multilateral funds. In addition, Franco Uccelli of Bear & Stearns writes that the country must clear more than US$40 million in arrears incurred with the Paris Club since mid-April, when the debt relief agreement between the two parties was signed. Paying off such debts is a requirement for both the preservation of the Paris Club agreement and for the restoration of an IMF assistance program.
Another condition is that the DR must formulate a strategy to restructure its private-sector debt, while complying with the principle of comparability of treatment. The government must present these plans to the Paris Club by next month.
Uccelli writes that according to the Dominican government, the Paris Club believes that such a strategy should be market-friendly in nature and therefore must avoid incurring further arrears or an outright default on the country's debt. He explains that the Paris Club will reportedly not object to payments made to private creditors as long as the outlined objectives are met, nor would it object to any bridge financing that may be secured as part of the government's overall liability management program.
"Much like the IMF, the Paris Club is showing flexibility and a willingness to support the DR's efforts to recover from its current predicament," concludes Uccelli. "The new Fernandez administration, for its part, seems to have a good grasp of the issues at hand and of the inherent risks of non-compliance with the country's multilateral and bilateral agreements."
The head of President Leonel Fernandez's economic advisors, Julio Ortega Tous, announced yesterday that the government will seek to extend the expiration term of the first US$500 million of sovereign bonds issued for at least another three years. Making his announcement from the Presidential Palace pressroom, he said that interest rate payments would not be affected and that the country would avoid confrontation and seek a friendly settlement with bondholders. He said that prior to the talks with those bondholders, the country would adhere to the agreements and commitments undertaken with the Paris club in April of this year.
According to Hoy newspaper, the Central Bank's half-year report indicates that unemployment in the Dominican Republic is at 17% -- one of the highest rates in Latin America. Unemployment is particularly high in the south-western region of the country (24.4%), the municipality of Santo Domingo North, which is north of the capital city (21.5%), and Valdesia (21.1%). Of the jobless, 54.6% have at most only received a sixth-grade education. Of the employed, 45% work in companies with less than five employees, or micro-businesses. The report highlights that these jobs often lack any social benefits. Unemployment among women stands at 28.6%, compared to that of men at 9.8%. Of the total number of women in the work force, 47.3% are employed in the informal sector, compared to 56.5% of the men.
Unionized taxi drivers are refusing to lower the fares on city transport that is overseen by the governmental OTTT, the transport regulatory organization. CONATRA drivers rejected the reduction that would have seen fares of RD$8 instead of the current RD$10. CONATRA vehicle owners were strong supporters of the previous administration, which equipped them with a new fleet of vehicles at a fixed cost, with the government picking up the tab for exchange rate discrepancies and allowing their imports practically tax free. CONATRA's unionized fleets are now the predominant vehicles for transportation in the city and province of Santo Domingo after the cannibalization of the majority of OMSA bus units.
"The OTTT does not have storage capacity to retain the more than 71,000 CONATRA vehicles, and I challenge (them) to confiscate the vehicles," said Antonio Marte, CONATRA's president. Marte is the director of transport for the former ruling party, the PRD.
Another large union, FENATRANO, agreed to lower the fares from RD$10 to RD$8. Its leader, Juan Hubieres, said: "We will accept the price reduction, but if the problem is not resolved in two days, we will increase the fares to the past level."
Representatives of a third union, CNTU, said they would announce their stance today.
Deputy Pelegrin Castillo, whose minority party endorsed the PLD in the 2004 election, yesterday questioned whether Dominican members of Congress have any autonomy at all. He commented that legislators are subject to the circumstantial interests of the heads of the political parties, the President of the Republic, the special economic interest groups, and even the foreign embassies in the country. According to Castillo, most of the decisions made in Congress are externally imposed. Elias Serulle of the PLD said that for decisions to be imposed as such, there need to be easily-influenced legislators.
President Leonel Fernandez declared his total financial worth to be RD$16 million in assets. He declared a debt of RD$2 million owed to Constructora Pena, the company belonging to his former minister of public works, Diandino Pena. During his previous administration that concluded four years ago, Fernandez had declared assets of RD$11 million. His most recent financial revelations were made before the Attorney General, as is required by law. Included in his assets are his fourth-floor apartment in Condominio Denisse Caridad on Calle Presidente Gonzalez No 5 (RD$1 million), his fourth-floor apartment and prime residence in the Diandy XVIII on Avenida Mexico (RD$4.8 million), office space in the Edificio NPI, third floor, at Calle Frank Felix Miranda (RD$1.7 million), and his savings in the Asociacion Popular de Ahorros y Prestamos (RD$3.7 million) and Citibank (approximately RD$3.6 million).
There was no mention in his statement of his participation in the non-profit organization, Fundacion Global Democracia y Desarrollo.
The statements are symbolic, and never any action has been taken to verify how what government employees report at the start of a post compares to what they own up to at the end of their appointment to government.
It has only recently become public knowledge that the former Central Bank deputy governor, Felix Calvo, acted as president of a financial intermediary firm known as BONAOP and which is a subsidiary of Crediya, as reported in Hoy newspaper. A lawsuit filed by lawyers Jorge Lora Castillo and Gustavo Biaggi Pumarol, representing the Plaza Lama stores, suggests that Calvo had agreed to pay the debt BONAOP maintained with Plaza Lama for the collection on the financing, which he did not do. Instead, the financial intermediary firm was transferred to the Inmobiliaria Banco de Reservas, a government entity, and the debt was left unpaid. The lawsuit explains that Plaza Lama financed the sale of the items sold by the store with Crediya, as reported in Hoy newspaper.
The same newspaper carries Calvo's side of the story and his allegations that the legal action comes following a blackmail attempt on behalf of Mario Lama regarding the Baninter bank debacle. "The story is a short one: In Baninter, Mario Lama did what he wanted because of his family ties to Vivian Lubrano, his son Pedro Juan Lama's mother-in-law."
He added: "When I was deputy governor of the Central Bank, Mario Lama and his sons tried to get me to accept a swap of debt in their favor, a plan that I rejected." He explained how the Lama family wanted to exchange US$3 million of debt with Baninter for RD$8 million in accounts receivable that Plaza Lama had with the Financiera BONAOP, in which Baninter was the majority shareholder. He said the first debt had guarantees, while the second did not.
Calvo furthermore said that he held one share in BONAOP, his wife held one share and his son another. He stated that the company was liquidated and everyone received their money in a process that was authorized by the Monetary Board and the Superintendence of Banks and that is documented.
He announced that he would countersue the Lama family.
Listin Diario reports today that former President Hipolito Mejia's controversial chief of security, retired Colonel Pedro Julio (Pepe) Goico, left the country on Sunday headed for Paris after lawyers from the Castillo firm mentioned the possibility of bringing charges against him stemming from the accusations that Goico misused the Baninter credit card assigned to him to pay for the President's expenditures abroad. Mejia took Goico on for the prestigious position while he was on bail after having been indicted in 1997 in a RD$90-million case of fraud involving the National Lottery. Mejia even reinstated the man known popularly as "Pepe" to the military, promoting him from rank of major to colonel.
Goico also was mentioned in the press regarding the charges of the irregular use of a jet and helicopter assigned to the advance team of the President, which were later confiscated for transporting drugs.
At the time of the scandal, the local press reported on a RD$40-million credit card scam, while CNN reports quantified the fraud at an estimated RD$300-million on the basis of the goods and merchandise confiscated.
The United States went public with the notification that it had cancelled Goico's visa to travel to the US. Goico flew to Paris directly on board Air France.
Lawyer Pelegrin Castillo commented that Goico's departure could be for an indefinite period and with the "purpose of evading the judicial process that he will have to confront once the counsel of Ramon Baez Figueroa (former president of Baninter) presents legal evidence against him."
An investigation now underway in the National Police disputes the claim that officers who benefited from vehicles that had been recovered after having been reported stolen acted in "good faith," as Police Chief Manuel de Jesus Perez Sanchez has used to excuse the irregularity. Diario Libre reports today that an analysis carried out by the NP's chemical engineers shows that sophisticated methods were used to attempt erase the vehicles' chassis numbers. Police inspector Jose Luis Dominguez confirmed that they have analyzed 58 vehicles of the 118 vehicles that were returned to date. In 36 cases, the experts have not been able to determine the chassis numbers, causing the NP to request the assistance of the FBI, according to a report in El Caribe.
Alicia Ortega of El Caribe multimedia reports that agents of the Federal Bureau of Investigations have been collaborating in the investigation that was requested by the local chamber of insurance companies.
The police have not released the names of the officers that returned vehicles, despite several requests made by the press.
Tropical Storm Jeanne is forecast to brush by the northeastern coast of the Dominican Republic as it makes its way westward. DR1 Weather & Beyond Forum is monitoring the storm as it moves through the Caribbean. The distance it would be passing areas such as Samana could bring intense rains and winds. Weather forecasters say that it will be important to wait until around noon tomorrow to know what track the hurricane will be taking as it moves westward after passing Puerto Rico. To follow the storm, see http://dr1.com/forums/forumdisplay.php?f=34
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