Under the aegis of the San Jose Accords, Venezuela has agreed to a US$39-million loan that was first negotiated during the first Fernandez administration and will be used to finance the purchase of passenger vehicles and for the construction, re-construction and equipping of sports installations. By way of Presidential Decree No. 685-04, President Fernandez authorized the Dominican ambassador in Venezuela to sign the contracts for the modifications to the initial contracts with the Economic and Social Development Bank of Venezuela (BANDES). This bank has the facility to transfer money generated by the San Jose Accords between the Dominican Republic and Mexico and Venezuela. The accord permits the DR to finance as much as 30% of its oil bills with these two countries. The new loan will allow the government to obtain 60% of the financing costs of new mini-buses and 40% of the cost of the micro-buses. The units are made in Venezuela.
The reserve accounts of banks with dollar deposits have increased by 78% since 2003 and so far this year the Central Bank has US$368 million in its coffers. The increase in the legally-mandated reserves has helped the Central Bank overcome the steady decrease in hard currency reserves that was observed over the past year. Without these new deposits, the required international reserves would represent about US$400,000 in the red. According to the IMF accounting terminology, the international reserves are defined as the difference between the gross international reserves and the short-term international obligations or debits. In a different interpretation from the Central Bank, however, the IMF does not include in the net reserves the obligatory legal reserves of banks with dollar accounts. This means that even if the Central Bank has the US$367.9 million available for use in its monetary policy, it cannot be used to fulfill the goals set by the IMF in case the stand by agreement goes back into effect.
The Dominican Senate approved last night, after certain modifications and just one reading, a 30% increase in the minimum wage for public servants and private employees. Nineteen of the twenty senators present in the chamber voted affirmatively on the measure. The PLD's Senator Jose Tomas Perez (Santo Domingo) abstained. Perez had proposed that the legislation be sent to a joint committee that would work together with the Executive Branch to find a way to include more than just the minimum wage earners. The special commission that had studied the original bill, as headed by Tommy Duran (PRD-Puerto Plata), gave a favorable report to the full chamber. The new pay raises for government minimum wage earners will go into effect in January.
The CDEEE, the Dominican entity that participates in the electric sector, and AES-Andres, the independent power supplier located in Andres, Boca Chica, are fighting – again. The CDEEE says that it does not owe any money to AES, and that, in fact, AES owes the CDEEE a total of RD$1.852 billion. Nevertheless, the AES-Dominicana Group, the local parent company of AES-Andres, says in a press release that the government admitted to owing the power generator RD$3 billion. They also accept the RD$1.852 billion figures as being owed to the government. The press statement concluded that, in the end, the government should pay AES the sum of RD$1.2 billion. Last night, CDEEE administrator Radhames Segura confirmed to the Listin Diario that the accounts were being squared between the two entities and that, at the same time, the CDEEE was working to obtain a US$22-million loan to be used to extend the subsidy now being disbursed to the electric generators. He mentioned that the government would need US$7.2 million every month in order to do this. Segura also emphasized that the distributors would have to improve their collection rates. According to AES, the RD$3 billion is owed for service to those locations that must always have electricity and for the compensation that was agreed to under the deal to supply electricity to the poorest barrios.
Franco Uccelli, who covers the Dominican Republic for the Bear Stearns brokerage firm, reports on the trip of a high-ranking Dominican delegation to Madrid this week to negotiate with the Spanish government a US$250-million bridge loan that he explains would be used to offset part of the US$400 million in external debt service obligations it must confront before year-end.
He comments that if the loan is secured from Spain, it would demonstrate remarkable goodwill from one of the country's most important bilateral lenders, but points out that the loan would not enable the country to comply with the Paris Club's comparability of treatment principle, which must be applied by the DR as part of its efforts to cover its residual external financing gap for this year.
Uccelli states that the Dominican government has announced that in addition to negotiating a bridge loan from Spain it will continue to pursue a restructuring of its commercial debt, making specific reference to the country's global bonds.
"Bottom line: We believe that successfully negotiating a US$250-million credit from Spain would not reduce the likelihood of the DR doing a debt restructuring with bondholders. Indeed, the opposite may be true if Spain chooses to use a bond restructuring as a quid pro quo to extend the DR the requested bridge loan."
The Central Electoral Board (JCE) is continuing its efforts to modernize the Dominican electoral process by signing contracts with three companies who will provide the platforms for electronic voting in the near future. With an investment of close to US$63 million and a deadline of November 2005, the Dominican-Puerto Rican-Brazilian consortium will provide the means to vote electronically in the next municipal and congressional elections in May 2006. According to Judge Rafaelina Peralta, a member of the JCE, the idea is to use the new machines in the party primaries as a sort of trial run for the municipal and congressional elections. Computers will carry a running count of the votes as they are cast. According to the report in the Listin Diario, there will be 12,000 computers used in the elections of 2006, one for each polling station across the country. The new system also envisions an accurate list of voters, as well as up to date birth and death records. The Dominican company is the Engineer's Society of the Caribbean, as headed by Daniel Saba Bodden, to work in conjunction with Samurai of Brazil, as headed by Carolos Rocha, and Softec from Puerto Rico, as headed by Julian Logrono. With the technology in place, the personal identity card called the "cedula," which is assigned to every person living in the Dominican Republic, will carry a direct link to the birth certificate and the fingerprints of the individual. This modality is designed to eliminate any mistakes at voting time.
The Dominican Armed Forces' contract for US$10 million in military equipment has soared to an astounding US$76 million, thanks to an amendment to the document. The Dominican Congress approved the first US$10 million and a contract authorizing increases in the financing of the military equipment bypassing the constitutional requirement of congressional approval.
Diario Libre points out that the inclusion of such a clause in loans passed in Congress is a first time. It indicates that the contract received a good and valid certification from the then president of the Chamber of Deputies, Rafaela Alburquerque. Diario Libre indicates it has a copy of this document that is dated 30 October 2002.
Former Minister for Technical Affairs for the Presidency Rafael Calderon (who later went on to be Finance Minister) authorized the US$10-million deal in 2001 in order for the Armed Forces to purchase equipment they claimed they needed. An amendment to the loan agreement, which Diario Libre says did not need Congressional approval, augmented the amount to US$76,415,464 on 12 June 2002. The deal was originally negotiated by Calderon in December of 2000 between the Dominican Government and the Eximbank, and represented by the firm of R.O. & G. International Trading. The first part of the arrangement would have supplied the Armed Forces with 11 helicopters and 140 vehicles, plus the necessary training of the personnel involved in the use of the new equipment. The agreement, in its third article, says, "The Armed Forces will have the right to amend the purchase order, with the written consent of the Minister of Technical Affairs for the Presidency, to increase the products and services under Appendices A and B, without having to obtain the consent, ratification or approval of the Congress of the Dominican Republic." The products and services referred to were the Bell OH-58 helicopters, the Robinson R-22 Beta II and their accessories, tactical vehicles Wolverine 600 and 450, dune buggies, fording equipment, heavy-cargo fork lifts and training of military personnel. The clause is unique in contracts discussed and ratified in the Congress, and received a certification as "good and valid" from the president of the Chamber of Deputies at the time, Lila Alburquerque, in a note dated 20 October 2002, of which Diario Libre obtained a copy. The entire loan is guaranteed by Eximbank, the US government export credit agency.
The Parador del Mar cost the Dominican government RD$573 million to equip the area with marginal access roads, according to a source quoted in the Listin Diario. The side roads were constructed by the firm of Constructora Go & Thesa out of San Francisco de Macoris, as headed by Hector Then and are rarely being used as the Parador del Mar is being ignored by those driving along the Las Americas Expressway. The lack of feasibility of the construction, had been pointed out repeatedly in the press when the millionaire construction was begun under the Supervisory Office of Public Works at the start of the Mejia administration. Authorities from the office of Bienes Nacionales (that manages government property) and the Supervisor's Office of Public Works only have found a contract for the construction of the side roads along the Las Americas Highway. They do not have documentation regarding the cost of the gasoline station and other road stop facilities. Sources close to DR1 News revealed that the fill station was the result of a government proposal to rent the area and build the station. At the time that the contract was signed, however, the exchange rate was RD$17 to US$1. The Coordinating Office of Public Works Projects told the Listin Diario that it was looking into the details related to the Parador del Mar road stop.
The Mejia administration requested and received RD$4 billion in pre-payments on taxes from industrial and commercial entities, a detail that will affect the Internal Revenue (DGII) department's final numbers for the year, according to Juan Hernandez, the DGII boss. The official pointed out that Verizon alone advanced the government RD$2 billion in anticipated taxes. According to Hernadez's statements in the Listin Diario, "The government is going forward, but it is chained from behind" because so many entities have a credit balance in their tax standings. Hernandez told the Listin reporters that the former government depended on contracting loans and seeking tax payment advances from the major companies in the Dominican Republic. He also complained of a 38%-39% tax evasion rate, especially with regard to the payments due from the VAT or ITBIS taxes. The Internal Revenue director said that the case is serious as the government faces its obligation to return nearly RD$7.0 billion in tax credits to the companies that had pre-paid funds to the government.
The Diario Libre is reporting that as many as 65 Dominican truck drivers are currently en route to Jordan, where they will begin transporting fuel trucks for a salary of US$1,500 a month. Some observers consider this wage a pittance, not even enough to cover funeral costs. In an article written by Cornelio Batista, Diario Libre says that these men from the Cibao region left last Tuesday for the Middle Eastern country. Nicolas Abreu, an engineer from La Vega, tested the drivers and told Diario Libre that the WTT organization was contracting them to carry petroleum from Iraq to Jordan. Another group of 65 drivers is scheduled to leave next Saturday. The contracts, which, according to Batista, were authorized by the Dominican Chancellery, include life insurance and health insurance for four months of service. The drivers come from Santiago, Constanza, La Vega, Bonao, Moca, Sanchez Ramirez and other localities in the Cibao region. While the salary is huge by Dominican trucking standards, it is a meager allowance when compared to contracted personnel from the United States or the UK.
Hidden in car washes, cafeterias and bars, prostitution often involving minors is a problem in the Cibao Valley. This news comes on the heels of the discovery of a pornographic Internet site that featured more than 50 local young women, many of them under-aged in highly explicit poses. One cabaret was shut down and the prosecutor for the Children's Court in Santiago confirmed the presence of juveniles in adult settings. Disguised as beer parlors or night clubs, according to the district attorney, these centers of prostitution employ or "offer" the services of under-aged girls and women. In the barrio of Barracoa in the eastern part of Santiago, more than 50 under-aged girls were induced to pose nude in exchange for promises of visas to travel and sums of money, often as little as RD$600. When the website became public knowledge and because barrio life is so close-knit, many of the girls are now ashamed to leave their houses. As a result of the furor, the infamous "night club" Casa Blanca was closed by the DA. Other towns, such as Esperanza and Mao, suffer much the same problem.
The police opened fire on a chaotic mass of people clamoring for part of the food and supplies being disbursed in Nagua yesterday. The patio of the Holy Trinity church in Nagua was the scene of this catastrophe. According to El Caribe, hundreds of people were trying to get some of the relief supplies being distributed by parish officials.
The chaos started when people started grabbing charity clothing from the parish officials. At once, the police started shooting, down, not into the air as is usual in these circumstances. As a consequence, five police agents are under arrest. The intended recipients of the donations are people who lost nearly everything to Tropical Storm Jeanne last month. Eligio Baez, the parish priest, said that he and his people would continue to assist those who had lost their possessions in the flooding.
Pedro Martinez disappointed his fans in the Dominican Republic and the US when he was unable to restrain the New York Yankees from winning the second game of the best-of-seven American League playoffs. Boston lost 2-0.
But Albert Pujols, batted a home run in the bottom of the first inning to tie the game. The Cardinals eventually pushed ahead for good in the sixth to defeat Houston 10-7.
The Major League Baseball web site highlights that for the second straight series, a Pujols long ball -- this time of the two-run variety -- provided the Cards' first runs of the round. The story highlights how Albert Pujols went deep for the third time this postseason, reaching base four times.
See the DR1 Forum for local discussions on the National and American League playoffs.
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