| Daily News - Wednesday, 20 October 2004 |
The Fernandez administration says it has plans for scaled wage increases for those public employees making less than RD$20,000 a month, as reported in Diario Libre. An initial raise of 15% would go into effect January 2005 and again in the middle of the year. The increases are included in the 2005 National Budget currently being prepared. Officials of the National Planning Office say they have met with the commission of deputies studying the overall wage increase.
While the Senate has approved a 30% minimum wage increase as of January, the business sector would rather that this matter be discussed in the proper forum, the National Wage Commission of the Labor Ministry.
The Chamber of Deputies is scheduled to hold a public hearing today where various proposals regarding the wage increase will be presented.
A recent diagnostic study carried out by international education consultant Andres Bernasconi shows that only 22 of every 100 university-age youths are attending college. Furthermore, the study reveals that 30% of the students who enter universities will abandon their studies within the first two years. The graduation rate averages at 20% of enrolled students. Radhames Mejia, the vice-rector of the PUCMM university, the largest private university, told Diario Libre that the statistics prove that a large number of students are not being enticed to further their educations due to course curriculums that do not meet their needs or their economic reality.
Furthermore, a workshop on superior education held at the Fundacion Global, Democracia y Desarrollo included the participation of Superior Education Minister Ligia Amada Melo, who voiced the need for more two-year programs. Melo said the labor market needs people with technical skills, especially in the fields of engineering, electricity, electronics and paramedics. She believes that community colleges offering two-year programs will fill this void and could attract those students who today only have the option of night study, and a course load that is practically the same at all local universities.
The minister says that student desertion is the main problem today and one that needs to be urgently addressed. She said the objective is to have the newly proposed community colleges prepare students for the work force in two years' time.
During a press conference yesterday, Presidential Technical Secretary Juan Temistocles Montas announced the successful negotiation of a EUR150-million emergency soft loan financial assistance package from Spain, to be disbursed as soon as the IMF agreement is resumed. According to the report in Hoy newspaper, he said these funds are intended for infrastructure projects and that Spain was making an exception to its usual condition that Spanish companies participate in the construction of such infrastructure.
In addition to Montas, Finance Minister Vicente Bengoa, economic advisor to the Executive Branch Julio Ortega Tous and Superintendent of Banks Rafael Camilo also traveled to Spain for the talks. Montas explained to the media that negotiations in Spain had included several Spanish government departments. He mentioned the high-ranking Spanish government officials who participated in drawing up the financial package, namely the chief of the economic office of the Presidency, Miguel Sebastian; the trade minister of the Ministry of Industry, Tourism and Commerce, Pedro Mejia, the director of international financing of the Ministry of Economy & Finance, Ramon Guzman; the director of trade and investment of the Ministry of Industry, Oscar Via Ozalla; the Latin American economic advisor to the Presidency, Jorge Blazquez Lidoy and the Ministry of Foreign Affairs' Emilio Fernandez Castano.
The Dominican government announced yesterday that the Paris Club has accepted the proposed strategy to restructure the DR's public external debt while complying with the Paris Club's comparability of treatment requirement. In a press conference at the Presidential Palace, Technical Secretary of the Presidency Juan Temistocles Montas, Finance Minister Vicente Bengoa and economic advisor to the Executive Branch Julio Ortega Tous gave an update on the latest round of financial negotiations.
Franco Uccelli of Bear Stearns reports on these in a release today where he points out that the Paris Club decision effectively allows the rescheduling of the agreement it reached with the DR last April, which afforded the country US$193 million in bilateral debt relief for 2004 and allowing the nation to remain on track.
In view of yesterday's announcements by the Dominican economic team, Uccelli reports that while the specifics of the government's proposal have not been made public, three key conditions to ensure the continued application of the Paris Club accord were disclosed. First, the DR must clear all existing arrears with Paris Club creditor nations. Second, an agreement with the IMF must be finalized. And third, the country must comply with the comparability of treatment requirement imposed by the Paris Club in exchange for its debt relief. To meet this last condition, the government announced that it has retained the services of UBS and Morgan Stanley to act as its financial advisors in the design of a strategy to renegotiate the DR's commercial debt with bondholders, private banks and suppliers, which in June represented close to US$2.3 billion.
Summing up reports from the Dominican press, Uccelli points out that the Dominican government must present the Paris Club with an update on its restructuring efforts by mid-November and preliminary results of the process by mid-December.
He also comments on the EUR150 million loan the Spanish government has agreed to grant the Dominican Republic. "While the purpose of such credit is to fund infrastructure projects, we believe that at least part of the hard currency funds will be used to service the DR's external debt, possibly including the payment of arrears to the Paris Club," observes Uccelli in his analysis of the announcement of the Spanish funding.
Uccelli also highlights that in granting the loan, the Spanish government shows remarkable good will and expresses its commitment to actively support the DR in its negotiations with the IMF and the Paris Club.
"Bottom line: While the Paris Club's acceptance of the DR's proposed private debt renegotiation allows the agreement reached between the two parties to remain on track, it also indicates that a bond restructuring is a virtual certainty (some market participants had speculated that a bond restructuring may not be necessary after all). Moreover, the sizeable credit from Spain should help the DR make ends meet in the near term, assuming that an agreement with the IMF can be quickly finalized. While the recent news suggests that DR's near-term prospects have improved, the country must still face the challenge of executing a successful market-friendly debt restructuring, not an easy feat by any measure."
The Social Christian Reformist Party (PRSC) came forward yesterday to oppose a RD$500-million disbursement of taxpayers' money to the Central Electoral Board (JCE) for the organization of the political parties' primary elections, as per a modification to the Electoral Law pushed through Congress recently. The PRSC called this a disservice and an affront to Dominican society at a time when the country is undergoing a severe economic crisis.
The JCE has requested a RD$2.46-billion budget from the Executive Branch for 2005. Of this, RD$487.3 million would be used to fund the primaries of the nation's political parties.
The president of the PRSC, Federico Antun Batlle, and the parties' political delegate to the JCE, Sergia Elena Seliman, concurred that what the country needs is austerity. They said that the disbursement cannot be justified and that the money the JCE is demanding to organize the primaries would be put to better use by funding a general wage increase for workers or in social programs that tackle the problems currently being faced by the Dominican people.
The law will be debated in a workshop at the Mariott Courtyard today, with the participation of senators, representatives from the Central Electoral Board and the Foundation for Institutionalism and Justice (FINJUS), and Participacion Ciudadana civic group, political parties, among others.
The US International Trade Commission (ITC) released a report yesterday that assesses the proposed DR-CAFTA trade agreement's impact on the US economy, specific industrial sectors and the interests of US consumers. The agreement was signed this summer between the US government and five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua) and the Dominican Republic. The report, which was issued following a request from the United States Trade Representative Office, looks into the potential economy-wide and specific sectoral effects of the US and DR-CAFTA agreements.
The report is available at ftp://ftp.usitc.gov/pub/reports/studies/pub3717.pdf
AES EdeEste says it has not breached the legal limit placed on authorized generation, as set forth in Electricity Law 125-01, because the company that generates power is a separate entity from AES EdeEste. The law in question specifies that no company may supply more than 15% of the national demand for electric generation. A spokesman for the distributor addressed the story published in Diario Libre yesterday that claimed that an AES affiliate was generating 50% of the supply.
AES's interpretation of Paragraph I, Article 11 of Law 125-01 is that the legislation prohibits the distributors from owning the generators' operations. By their understanding, this does not apply if a separate company operates the generation business, regardless of its affiliation to the same parent corporation.
AES EdeEste confirmed that it purchases power from Dominican Partners (the AES Los Minas affiliate), but stated that it also buys power from other generation companies as well. As reported today in Diario Libre, Radhames Segura, the CDEEE administrator, complained that AES is selling power to itself for resale through its affiliate distributor.
The Customs Department reported it had reached an agreement with the Plaza Lama department store. As reported in El Caribe, sources representing the store told the newspaper that a mutual agreement had been struck and that they had always been willing to fulfill the law and taxes.
Customs issued an official communique to advise that a deal had been reached with Sociedad Comercial Plaza Lama. Customs Director Miguel Cocco urged other companies to follow suit with regards to the scrutiny on tax payments by the new authorities.
The Lama conflict revolved around a claim made by the Customs Department that the retailer had evaded paying RD$72 million in import taxes. Customs also demanded that the company pay RD$170 million in fines for evading the taxes.
Dominicans will be glued to their TV sets tonight and the final Red Sox-Yankees game – one that seemed implausible after Boston lost its third straight game last Saturday. The winner of tonight's game will win the American League pennant and a place in the upcoming World Series. Regardless of the results, however, fans in the DR have thoroughly enjoyed this series, especially watching David Ortiz make a hero of himself in games 4 and 5. Tonight's showdown will be televised on Cadena de Noticias (Channel 37 on the Tricom cable network).
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