In the first nine months of 2004, the Dominican government has paid out RD$21.3 billion in subsidies for propane gas and electricity. These subsidies accounted for 27% of all moneys spent by the government during this period, with total expenditures estimated at RD$79 billion. This year's subsidy numbers are 184.4% higher when compared to the same period in 2003. The figure is also a "budget-buster," as the 2004 Budget Law had assigned just RD$6.35 billion to such subvention. The propane subsidy consumed 22.8? of every peso that entered the government's treasury.
According to El Caribe, the government will now try and focus the financial assistance on those who most need it, meaning yet another blow to the middle class, but there doesn't seem to be any alternative.
The government council meeting of 23 August heard President Fernandez tell his ministers that the propane subsidy had to be eliminated for everything but domestic home use. This move would do away with subsidies for public transportation vehicles, as well as all industries and bakeries. Nevertheless, the commission that was designated to implement the changes agreed that the subsidy for vehicular use would be continued until December of this year. Current consumption of propane gas represents 22 million gallons a month. The government is also planning to issue a special card that will identify those who are eligible for propane and electricity subsidies. This arrangement will be called the Unique Beneficiary System, and will require a national census to establish precisely who receives the assistance. The IMF insists that electricity be paid for, particularly those consuming more than 200KW per month. The PRD government had created the PRA, the Program to Reduce Blackouts, and the CDEEE has accepted a continuation of these efforts, as they identify those areas most in need of assistance and establish fixed quotas for the payment of electric service. These payments are either RD$100 or RD$200 per month.
The Ministry of Public Health and Assistance (SESPAS) ordered the recall of 17 medications that are available in local pharmacies and that contain Rofecoxib (better known as Vioxx). These medications are usually prescribed for muscular or arthritic pain, but the ingredient rofecoxib has been linked to cerebral and vascular problems. The head of the pharmacy and drug department at SESPAS, Sandra Fermin, told reporters from El Caribe, that it was Merck Laboratories that sent the initial communication to the Ministry of Public Health. Merck told SESPAS that the secondary issues were incompatible with the benefits the patients received. Merck also said that it was closing all clinical studies involving the use of this ingredient. As a result of this information, El Caribe offers a complete list of the medicines on the local market that contain rofecoxib: Coxx, Deflamazon (in all its forms), Diex-25 Bussie, Diez 50 Bussie, Dol (not in its different forms), Fracoxib, INPA, Okacox (in different presentations), Roflash, Rorenax, Unicalm, Vioxx, Rofecoxib, Rofelac, Rofecixib-M and Rodesic.
Deputy Ramon Agramonte (PRD-La Romana) announced that a team of legislators will begin work on a bill that will modify the newly-introduced Penal Code. In his statements to support his proposal to adapt the Penal Code less than one month after its formal introduction, Agramonte told the Chamber of Deputies, "It is a good code, but not for Dominican society." Agramonte said that the newly-instituted Penal Code requires understanding, but it also has many "deficiencies." The legislator said that the tools given to the National Police and the Judicial Departments are insufficient to cope with the requirements of the new legislation. La Romana's deputy told his colleagues that they would "adjust the code to the Dominican reality" and adding, "This code can only be applied in a North American (US) reality, a French reality or a German or European country, because they have the resources." Agramonte pointed out that the DR does not possess a mobile crime lab to investigate crime scenes and establish a chain of possession of the evidence.
The sophistication of the new penal code hit home at the Chamber of Deputies. The PRD spokesperson in the Chamber of Deputies spoke up after chamber president Alfredo Pacheco complained to his colleagues that a judge, in compliance with the new code, had released the three suspects involved in the armed assault on his son last week near his home. The District Attorney of the National District, Jose Manuel Hernandez, explained that the three had not been identified by the victim, and therefore the judge could not allow them to remain in jail in preventive custody.
In spite of the attention the Senate's approval of the 30% increase to the minimum wage received in the national press and media, the process is not yet finished. Yesterday, the president of the Chamber of Deputies, Alfredo Pacheco, told reporters that the chamber had yet to even read the legislation and that they would be examining the Senate version. Nevertheless, the deputies' version envisions an even larger increase, according to El Caribe. Pacheco said he did not see any problem in the fact that the Senate had passed a wage bill, but the intention of the Chamber of Deputies is to ratify a bill that will include a general wage increase, not just an increase in the minimum wage. The chamber leader said that as his deputies study the proposals from the PRSC and the PRD, if the Senate gives final approval to a wage increase, a decision will rest on the Chamber of Deputies and the three different proposals will be worked out. The PRSC project is aimed at bringing about a 30% wage increase for all employees, not just minimum-wage earners.
At the same time, the National Council of Business (CONEP) organization, headed by Elena Viyella de Paliza, is trying to call the National Commission on Salaries into session. The business community wants to review just the minimum wage, and requested that Labor Minister Jose "Monchy" Ramon Fadul convene a meeting of the commission. CONEP wants to review the possibility of increasing the minimum wage in the private sector as a measure to counterbalance the lost purchasing power suffered by the Dominican peso.
The government's accounting office is questioning sums of RD$137 million and US$61,838 of the funds used to build the airport at La Isabela. The government invested RD$957.5 million and US$4.7 million in the airport facility, which has never been used and is now useless, making it the costliest white elephant in the Dominican Republic. As a result of the audit, the accounting office has requested the District Attorney for Santo Domingo to investigate 13 former officials and contractors of the airport. The audit spanned the period from April 1999 to March 2004. Among the individuals who have been subpoenaed are former officials of the Ministry of Public Works in the administrative, financial and supervisory areas. In the construction of the project, according to the accounting office, the government was bilked in various ways: higher than normal payments for various jobs; payments made in dollars by incorrect means, and payments made to bogus creditors. The office also pointed to discounts that exceed the legal limits for supervisory work, excessive prices for the land and payments for insurance and bonds that were never contracted.
National Energy Commission chief Ruben Montas told reporters that the government would pay AES-Dominicana US$5 million today in order for them to purchase fuel for their generators in Boca Chica. Montas said the payment was agreed upon after a meeting between officials of AES-Dominicana and the National Energy Commission, together with Finance Minister Vicente Bengoa. According to reports, it was a long meeting. Julian Nebreda, the president of AES-Dominicana, told reporters that he felt a positive first step was taken by the government, and he hoped there would be a more permanent arrangement to keep the generator supplied with fuel.
Beat Siegenthaler reports that the emerging markets team of Commerzbank Securities has upgraded their recommendation on the Dominican Republic to overweight from marketweight based on a number of positive news it received on Wednesday that confirmed their previously cautious optimism. Amongst the positive news is the fact that the government confirmed the payment of a late US$23.7 million coupon payment on the 9.5% 2006 bond that had been in grace period since 27 September. Also that the government expects to obtain a US$250 million bridge loan from Spain and use the funds to service government debt. Furthermore, also seen as positive is that Temistocles Montas, spokesman for the economic cabinet of the government, reiterated again that the bond restructuring will be market-friendly and not create any problems for the bondholders. The securities firm is also pleased with the announcement from the Central Bank that international reserves had climbed to US$368.3 million on 6 October up from US$276.9 million at the end of July.
Siegenthaler writes that the news confirms their view that the Dominican Republic can afford a friendly restructuring, consisting solely of an extension of maturities (possibly by five years for both the 9.04% $2013 and the 9.5% $2006 bonds but without any haircut on interest and principal. Also confirmed is that the Paris Club has given its approval in principal to a friendly restructuring proposal, to be presented after securing a new International Monetary Fund program. Moreover, he indicates that a new IMF program (possibly amounting to US$800 million – US$1 billion) could be announced by early November. He highlights that an IMF mission is scheduled to arrive in Santo Domingo next week and is likely to take around a fortnight to negotiate a letter of intent.
"We believe that for a potential new 9.04% $2018 (exchanged for the old 9.04% 2013) the market currently assumes an exit yield of around 12%, which would be the highest yielding asset among Latin American credits," he writes.
Moreover, he says that once the new IMF program is secured and the friendly restructuring announced, Dominican bond prices should start to move in line with its regional peers. He points out that also to keep in mind is the fact that the DR's debt-to-GDP ratio is below 60% compared to 130% in Jamaica and 100% in Uruguay, reason why he expects the DR to outperform already in the first half of next year.
The Economic Commission for Latin America and the Caribbean (ECLAC) warned yesterday that the Dominican Republic had better "take more care of the coastlines and watershed areas in order to avoid natural disasters such as those that struck Jimani and the DR's East Coast following Hurricane Jeanne. Ricardo Zapata, the head of the Disaster Unit at ECLAC, will be visiting the Dominican Republic next week to look at the damage caused by Jeanne, and told El Caribe by phone that his team was extended an invitation by President Fernandez through the good offices of the United Nations. The ECLAC team will work with technicians from the ministries of the environment, agriculture, public health and tourism.
The delegation will also look at Haiti, where 2,400 people died in the area around Gonaives as a result of mudslides and flooding. They will visit Jimani and Mapou to evaluate the damages there and take a hard look at the Soliette (or White) River.
Zapata said in his telephone discussions with the newspaper that ECLAC is convinced that the disasters in Haiti and in Jimani are the result of poor ecological and environmental management that affects the whole island, with Haiti being in worse condition than the Dominican Republic. Zapata referred to the watersheds of the Yuna and the two Yaque rivers, both north and south, as being in need of much better environmental management and pointing out the disaster in Tamayo after Hurricane Georges.
On the bright side, Zapata pointed out that once the ECLAC report on the situation has been submitted, the country will have the option of seeking international financing to reconstruct the affected areas and to manage its shorelines and watersheds.
Three rice cultivators are dead following an incident that evoked the Wild West and that centered around the water rights for crops. The three deceased men, Fausto Cruz, Manuel Emilio Bautista and Braulio Valdeyaque, drew their weapons and shot at each other, as they argued over the water that passes over their lands, all sown with a new rice crop. Late last evening the three corpses were still lying by the roadside on the highway that connects Villa Vasquez and Monte Cristi. Cruz and Valdeyaque were shot in the head with shotgun pellets and Bautista was shot with a handgun. This is just the latest incident in the wave of violence that has shaken the country over the past weeks.
The Brugal Foundation announced last night that the Salesian Technological Institute in Santo Domingo was awarded the grand prize in their XIII Award Ceremony. The prizes total RD$4 million, with RD$1 million going to the winner of the "Brugal cree en su gente" award. The ceremony took place at the Casa San Pedro in Santo Domingo, where the jury was composed of leading humanitarians such as Bernardo Vega, Jose Israel Cuello Marienne de Tolentino, Freddy Ginebra, Soraya Heredia, Hugo Gonzalez, Jose Puig and Damaris Defillo, with Geroge Arzeno Brugal and Franklin Baez representing the Foundation. The organization gives out yearly recognition to Dominican institutions dedicated to helping the social, educational and physical well-being of the people. Other institutions that received honors from the Brugal Foundation were the Madelae Girls' Home. In the area of education, the Salesian Technological Institute was selected and in social services, the Dominican Association of the Sovereign Order of Malta was chosen. The Community Development award went to the Community Relations Agency of La Cabirma in Cotui, and the prize for the defense and protection of the environment went to the Ecological Society of the Cibao in Santiago de los Caballeros. The guest of honor at the ceremony was Ana Alvarez de Lara Alonso, the president of Manos Unidos (United Hands), an NGO based in Spain. First Lady Margarita Cedeno de Fernandez also attended the event. George Arzeno Brugal gave the keynote speech, in which he emphasized the fact that the foundation has served to "stimulate social service and place dignity and development within the reach of more and more people."