| Daily News - Wednesday, 24 November 2004 |
Beat Siegenthaler of Commerzbank reports that a new IMF program is expected to be announced in Washington later today. He explains that the exchange rate to be used is the final point being negotiated. Technical Minister of the Presidency Temistocles Montas had said in Santo Domingo that the program was based on a rate of RD$37 to the US dollar. But the peso is holding to a rate of approximately RD$30 to US$1 over the last couple of weeks, reason for which Siegenthaler says the government is now pushing for a lower rate. This would make it easier for the authorities to reach certain targets under the IMF arrangement. Siegenthaler writes that the appreciation of the peso "has put the government in an unexpectedly strong external position, shaving off several percentage points on the debt-to-GDP ration, which may by now have dropped to below 50%."
Furthermore, he highlights that the economy has also recovered more quickly than expected, with the growth rate for this year projected at 1.8%, in contrast with an IMF projection of –1% as recently as August. On the other hand, bond prices have soared to 95.25 for the 9.5% $2006 and 85.5 for the 9.04% $2013, up from their lows of 65 and 60, respectively, earlier this year.
The Commerzbank Emerging Markets Strategy Team maintains its "overweight recommendation" regarding Dominican bonds, basing itself on the positive outlook after the anticipated restructuring. Siegenthaler writes that recent economic developments reinforce their belief that the DR can afford a debt restructuring with limited NPV relief. "In fact, the economic rationale for the restructuring has been further diminished by the quick recovery. We nevertheless expect the debt exchange to go ahead as planned, mainly due to pressure from the Paris Club requesting comparative treatment of private creditors."
He believes the terms of the exchange are likely to be announced after the IMF's board approves the new program, setting the timeframe for "possibly late December or early January," and the exchange to be implemented in February.
Six public institutions and six city governments agreed yesterday to participate in a technical and functional evaluation of the Duquesa garbage dump. The dump would be converted into a sanitary landfill with adequate management. The plan is to cover an area of a million square meters that is currently an open-air garbage dump within 60 days. Proposals are being sought for the sustainable management of the landfill and also regarding the serious environmental problems created by the dump that is located in the municipality of Santo Domingo Norte. The budget for the landfill will now be overseen by an inter-institutional commission.
Those who signed the agreement are Public Works Minister Freddy Perez for the central government; Nicolas Solano Aristy for the Consorcio Duquesa; Josefina Gomez for the Ministry of Environment; Norge Botello for the Airports Department; Andres Vanderhorst for the Civil Aviation Board; and a representative of the Dominican Municipal League's secretary general.
The mayors who use the dump for their populations' garbage disposal also signed the agreement. These included Roberto Salcedo (Distrito Nacional), Domingo Batista (Santo Domingo Este), Daniel Carvajal Lois (Santo Domingo Norte); Francisco Pena (Santo Domingo Oeste); Daniel Ozuna (Boca Chica) and Martina de Jesus Garcia (Guerra).
Furthermore, the Ministry of Public Works announced it would build the access road to the landfill at a cost of RD$110 million.
One of the problems with the garbage situation in the city and province of Santo Domingo has been the difficulty for the collection trucks to reach the Duquesa site given the major deterioration of the access road.
In addition to addressing the Duquesa garbage dump, the agreement signed yesterday between various government institutions and six municipal officials also entails a step forward for the opening of the Joaquin Balaguer International Airport (formerly named the Higuero and Isabela airports). The agreement establishes that once the landfill has been completed, the Herrera terminal operations are to be relocated to the new airport. Balaguer International has not yet opened because US aviation authorities have not given clearance for airplanes to land there, based primarily on the threat to air traffic caused by hundreds of birds drawn to the area by the refuse site and the La Isabela River area.
The Ministry of Public Works reached an agreement with the group of engineers to whom the Fernandez administration awarded the Herrera Airport grounds during its first administration in exchange for a debt for work on the Duarte Highway. These engineers have committed themselves to perform the work of covering up the garbage in Duquesa with limestone.
For his part, the director of the Airports Department, Norge Botello, said his role is to negotiate with Aerodom for the fair treatment for the aviation companies that must relocate to the new facilities, who had complained of high charges from Aerodom, the airport operator, especially compared to the contracts they held with the government-run Herrera International.
The National Hotel & Restaurant Association does not support the creation of a new tax on airfares to the Dominican Republic. In response to Tourism Minister Felix Jimenez' announcement while in Spain of a new US$5 surcharge on airfares in order to fund infrastructure works in Dominican tourism destinations, Asonahores issued a written note withholding its backing of the measure, even though Jimenez had said Asonahores favored such a move.
The association said that while the initiative is praiseworthy, the tourism sector cannot withstand any more taxes. Their position is that the government, before creating a new tax, should wait to ascertain the impact of the adjustments that have been made in the economy, including the imbalance created by the accelerated appreciation of the peso to the US dollar. In three months, the Dominican peso's value has risen from RD$47 to US$1 to RD$30 to US$1. This phenomenon occurred at the same time that the ITBIS tax was increased from 12 to 16%.
Asonahores says that hotels are now receiving fewer pesos while dealing with the increases in taxes, labor and other costs, such as energy and food and beverages, whose prices do not reflect any currency appreciation.
"In this scenario in which costs continue at high levels, the appreciation of the peso becomes a non-declared and selective tax on generators of hard currency, who are also the principal productive entities of the nation," states the release.
Asonahores believes this situation is unmanageable for the short term, especially considering the increased taxes, which will only translate into economic losses and a weaker ability to compete.
They furthermore point out that hotel rooms are sold several months in advance, reason for which an increased charge of US$5 to every tourist will mean less revenues allocated to the hotels.
The tax might not stand a chance in Congress. The president of the Social Christian Reformist Party, Federico Antun Battle, told El Caribe that his party would oppose the new surcharge on airfare recently announced by Tourism Minister Felix Jimenez. "The position of the party is not to approve any more taxes. It does not make sense. What the country needs is to instill new dynamism to the economy so that it can grow. We cannot establish more taxes and deepen the recession the economy is suffering," he stated.
The Association of Small and Medium Sized Hotels of Santo Domingo alerted that if the dollar continues its present trend they would have to increase their rates. Mario Torroni, the vice-president of the association, says that it is difficult for them to tell a tourist who paid US$30 last year that they must now fork over US$50 for the same services. He said that the situation is made worse by the larger hotels that sell their rooms for US$70, a fact he says is forcing them out of business. "Nobody would hesitate about adding on US$20 more and staying at a larger hotel with other facilities, instead of paying US$50 at a small one," he said, as reported in El Caribe. Torroni said that his members have had to confront increasingly more expensive energy bills, plus the increases in the cost of labor.
"We are not asking for an expensive dollar. What we want is, if [the exchange] is going to be at a rate of RD$27 to US$1, then all other costs should reflect that cost," he said.
The association groups 42 of nearly 100 hotels operating in the city with 75 rooms or fewer.
The National Council of Business has re-elected Elena Viyella de Paliza to remain at the helm of its organization. The board for 2005 will be: Elena Viyella as president; vice-presidents Fernando Armenteros, Mauricio Hache and Carlos Guillermo Leon. Other members are Rafael Blanco Canto, Jose Clase, Rafael del Toro, Irving Redondo, Yandra Portela, Francisco Garcia, Manuel Diez, Campos de Moya, Manuel Brugal, Lisandro Macarrulla and Ruben Reynoso. Their term begins in January 2005.
The government of the United States has revoked the B1 and B2 visas of former Mejia government officials and businessmen accused of defrauding the state of more than RD$1 billion through the Plan Renove transport program. The government contracted a US$159-million loan to finance the purchase of vehicles ostensibly to enhance the DR's public transport service. Since its start, the program has been criticized for irregularities, and with the change of government the audit carried out by former Controller General Federico Lalane is serving as base for the case prepared by the Attorney General Francisco Dominguez Brito's office.
The US authorities are justifying the cancellation of the travel documents citing the potential risk of flight, given the serious court cases pending, as reported in Hoy newspaper. The Listin Diario says that the decision is based on the 12 January proclamation issued by US President George Bush, whereby the US announced it would deny entry to the United States of corrupt foreign officials, their dependents and those who corrupt them. Listin Diario reported that the visas of the dependents of the accused have also been revoked.
El Caribe newspaper says that 11 visas were revoked of this group. Nevertheless, the list of the names was not released by the US Consulate.
Those who were formally accused of irregularities in connection with the program by the Attorney General office are the former administrative secretaries of the Presidency, Pedro Antonio Franco Badia and Siquio Ng de la Rosa and the former minister of the Armed Forces, Ramon Emilio Jimenez Reyes.
Others accused are the former director of the Oficina Metropolitana de Servicios de Autobuses (OMSA), Diogenes Castillo; former supplier to the government, Johnny Morales; and transport entrepreneur and head of transport for the PRD party, Antonio Marte (Conatra).
On the list also is Fabio Ruiz, the former president of Renove; Milciades Amaro Guzman, a businessman and former treasurer of Renove; Gervasio de la Rosa, Francisco Perez Castillo and Angel Rondon Rijo. Another listed in the case presented to the Attorney General's office is Sam Goodson, the president of the Miami-based Hyundai Vehicles American Corporation, and whose extradition from the US is being sought by the attorney general.
Appearing on TV yesterday, District Attorney Manuel Hernandez Peguero criticized the fact that a dozen high-ranking PRD party members were present in the court room as Judge Victor Martinez reviewed the Plan Renove case. The DA also was critical of Senator Hernani Salazar, who passed a piece of paper to the judge while he was studying the case. Salazar is a former supervisor of Public Works and a close collaborator of former President Hipolito Mejia during the previous government administration. Despite Salazar's not being elected to the Senate, he was able to negotiate for the seat for the province of Duarte.
On the other hand, Listin Diario's political commentator Orlando Gil points out that politics has also prevailed in the Renove case being prepared by government prosecutors. He points to the absence of Juan Hubieres and Amadeo Lorenzo from the case file, supposedly because of their close ties to Mejia's vociferous re-election opponent, Hatuey de Camps, according to a source close to the PRD.
Gil says that politics should not permeate this case. "The truth is that the crimes mentioned in the case files are not political, but of common law, and they should be considered as such," he writes.
The political analyst is furthermore critical of the government's timid handling of the case, especially when making the exception of releasing the accused, so they would not spend the weekend in jail, even when the taxes had not been paid. "This fear of meddling with politics can result in not only the government losing its battle, but also the war against corruption, to which it is obliged for many reasons, even politics," he writes.
Gil also feels that the Department for the Prevention of Corruption (Depreco) should not intervene, as they are there to prevent corruption, not prosecute it.
The United Nations office reports that a recent study showed that more than 50% of Dominican men of ages 15 to 29 are using condoms when having sex with someone other than their spouses. ONUSIDA, the HIV-AIDS division of the United Nations, says that the disease is widespread in the DR, but the prevalence is declining in response to effective measures taken to prevent its spread. These include alerting Dominicans to reduce their number of sexual partners and to increase their use of condoms. In Santo Domingo, for instance, the prevalence of HIV-AIDS among pregnant women declined from 3% to 1% in the past eight years.
The contents of this webpage are copyright © 1996-2008. DR1. All Rights Reserved.