| Daily News - Wednesday, 01 December 2004 |
President Leonel Fernandez spoke out against the Law of Primaries yesterday, saying it was pushed through Congress and approved without the consensus of the political parties, reports Diario Libre. On the other hand, PLD political mastermind and Presidential Secretary Danilo Medina supports its application. He told newspaper reporters that he is "totally in favor" of the new law, feeling it would guarantee the internal unity of the parties. He said the new law eliminates one of the major reasons for confrontation by enforcing the use of the JCE voter list.
The Executive Branch has announced it will send Congress a budget that entails a record 71% increase over the previous year's amount. Despite the appreciation of the peso on exchange markets, which reduces government expenses, as well as expectations for reduced inflation and presidential announcements of government austerity, the authorities chose to budget RD$207 billion of expenditures for 2005. This compares to RD$121 billion in the 2004 budget, for which a rate of RD$40 to US$1 was taken into account and an expected inflation of 40% was factored in.
The Executive Branch is expected to present Congress a budget for RD$206.76 billion today. Technical Minister of the Presidency Temistocles Montas presented the financial plan yesterday to the National Development Council that met at the Presidential Palace. He forecast economic growth of 2.5%, and inflation of 13.5% in 2005.
Of the total amount budgeted, most of the revenues are expected to be drived from import taxes (RD$53.6 billion), income taxes (RD$74.5 billion), and the National Treasury (RD$23.6 billion). The government expects RD$44.3 billion in external revenues.
As reported in El Caribe newspaper, the president of the Chamber of Deputies Alfredo Pacheco said that the government had reached a consensus with Congress to pass the bill with only minimal changes, if any.
Bear Stearns issued a report today on the Dominican Republic's economic performance, using the Central Bank's recently published third-quarter report as a basis. Franco Uccelli, who follows the Dominican Republic for the firm's emerging markets sovereign research department, focuses on such positive aspects as the GDP's 1.4% expansion from January to September; inflation's downward trend; the sharp appreciation of the peso; a current account surplus that has soared; a deceleration of capital flight; the recovery of international reserves; and the improving external position of banks. Uccelli cites several issues that are still matters of concern, however, namely: the government's fiscal deficit, including the quasi-fiscal debt, and the fact that the public external debt has inched upwards, while the government has fallen into arrears on its international debt. He mentions that public external debt service obligations are expected to total US$290 million for the period of October to December, with projections ascending to US$1.3 billion for next year and almost US$1.7 billion in 2006.
For the full report, see http://www.dr1.com/news/2004/120104_BS.pdf
Jose Luis de Ramon of Grant Thornton told his audience speaking at an American Chamber of Commerce breakfast event that the main reason for the peso's recent appreciation is that the supply of dollars is up at a time when the demand for dollars is low in the Dominican Republic. He explained that monetary emissions are under control and that there has been a reduction in bank lending as well as a commercial surplus given the competitiveness of exports. Meanwhile, the nation has faced down a recession and, because the government has accumulated arrears on the payment of its foreign debt, there has been a net flow of US$391 million. Furthermore, de Ramon attributed the local currency's upward climb to the confidence generated by the new government and expectations for a resumed agreement with the IMF.
Monetary emissions went from RD$75 billion in August 2004 to RD$72 billion in November 2004, returning to the same level as when the Mejia government lost the election in May. He mentioned that the "errors and omissions" account in the Balance of Payments reported by the Central Bank dropped 69%. This account usually reflects money in circulation not backed by reserves, known here as "inorganicos."
He explained that internal demand is expected to be 11% less than it was in 2002 and commercial banks are lending less. He furthermore said that the loans portfolio of commercial banks in 2003 stood at RD$141 billion, but descended to RD$130 billion in September 2004. He cited the reason for this as being the implementation of new banking rules that were stricter and more prudent and the fact that the high-yielding Central Bank's certificates of deposit are a risk-free and easy investment instrument, preferred by the banks over dealing with individual clients.
The country has enjoyed a surplus of the current account with the higher exchange rate providing an incentive for remittances, which had risen 6.5% by September 2004, and the export of goods and services. In 2002, the current account showed a deficit of US$798 billion, but by 2004 it had been converted to a US$1.3-billion surplus.
"The appreciation of the peso has surprised even the most optimistic," he said during the breakfast meeting held at the American Chamber of Commerce in Santo Domingo yesterday. From a RD$48-to-US$1 rate in June of this year, the dollar now commands a much lesser rate of RD$29 – a level last seen in June 2003.
Interestingly, De Ramon said that while confidence has grown in the new government, contrary to what has been stated, there has not been a significant return of flown capitals. He explained that deposits in dollars and pesos in banks increased more during the May-August government transition period than during the first months of the new government.
Deposits for March-May represented US$420 million, from June-August they stood at US$701 million and from September-November they were put at US$283 million.
De Ramon explained that the increase in the Central Bank reserves has contributed to an upswing in confidence. He informed that from July to the present time, there has been an increase in net reserves of US$247.4 billion, which is 3.5 times the amount of reserves held in January 2004.
He felt that the dollar is reaping fewer pesos because the supply will continue to exceed the demand over the next few months and mentioned the US$1 billion in disbursements that will come with the December or January signing of the IMF agreement, the approval of the fiscal reform that provided the government with additional funds, the receipts of incoming dollars in insurance payments following Hurricane Jeanne, plus the normal rise in US dollars that accompanies the thousands of visitors arriving for the holidays.
The speaker said he didn't feel that the peso's new valuation was sustainable, however, and expected the dollar to perform a recovery on domestic markets by March 2005. He said that the currency appreciation has contributed to a weakening of Dominican goods' and services' ability to compete at a time when costs such as electricity, wages and taxes are burgeoning. He predicted that internal conditions would exert pressure on the exchange rate in 2005 and felt a lower exchange rate would stimulate an increase in imports, while the lost competitive edge would result in fewer exports. He also attributed this to the payments the government must make on its accumulated foreign debt, including the cost to buy back the power distribution companies.
http://www.dr1.com/news/2004/120104_GT.ppt
The government announced it would pay its 13th Christmas salary to government employees from 9 to 12 December. This means an additional RD$2.7 to RD$2.8 billion will be circulating on behalf of the government. The private sector is expected to disburse its Christmas bonus paychecks on or around 15 December.
The Metropolitan Transport Authority (AMET) and the city government of Santo Domingo (ADN) made almost RD$700,000 in 54 days by fining people whose vehicles were parked illegally. As reported in El Caribe, AMET tow-trucks removed 519 vehicles from 28 September to 22 November and imposed fines worth RD$686,800. Of the total, AMET received RD$450,900 and the city government RD$235,900. According to Yasser Dominguez, who is in charge of the treasury department of the municipal government, not everyone has to pay the fine. He said that they have been making exceptions for legislators, government officials and vehicles belonging to government institutions.
The Colonial Zone, Gazcue, Centro de los Heroes and Bella Vista Mall environs are the areas from where most vehicles were towed.
Fines and the AMET/ADN breakdown are:
Motorcycles: RD$500; Cars: RD$1,300; SUVs and pickups: RD$1,800;
Trucks: RD$3,200-RD$4,500.
A court of appeals released Juan Julio (Johnny) Morales, who is accused by the government prosecutors of coauthoring a RD$1-billion fraud against the government through the Plan Renove transport program. The four judges of the Court of Appeals revoked the decision of Judge Victor Daniel Martinez Guerrero, who had ordered domiciliary arrest for Morales.
Morales interpreted the release as "recognition of my innocence."
After the government prosecution presented its case against Morales and the other 11 accused, the US Consulate informed that it was suspending the travel visas of all 12 of those implicated in the scam until a verdict was given in court.
The Police say the two men who were suspect of having robbed a group of tourists in Punta Rucia, Puerto Plata died in a shootout with police yesterday at 5:40am in the Los Camarones, Bayacanes area of La Vega province, as reported in El Nacional newspaper. One of the dead was identified as Manuel Siri, a resident of the Cristo Rey slum in Santo Domingo. The other man was not identified.
Hoy newspaper's Que se Dice column alerts that there have been confirmed reports of people being pick-pocketed in local supermarkets. The columnist urges shoppers to watch their handbags, especially on those days when the stores have their super-sales. A special warning is given to watch for anyone getting too close, as that person could have an ulterior motive for being there that not necessarily is to buy cheap vegetables.
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