The Technical Secretary of the Presidency reported that the IMF's board has placed the DR standby agreement on its agenda for 21 January. Temistocles Montas said that for this to happen, however, Congress must have approved the 2005 budget by 7 January. The legislators have postponed study of the budget for next year.
Montas said that by 31 December, the country will no longer have any arrears with Paris Club countries. "For 31 December, it was believed that the country was going to have arrears of US$255 million," he said, as reported in El Caribe. "But now I can assure that as of 31 December of this year the DR will not have arrears with Paris Club countries."
In the past two months the government has reduced its spending by RD$3 billion, in absolute terms, according to Finance Minister Vicente Bengoa. He attributed the savings to the appreciation of the peso and a general reduction in official spending. Bengoa told Hoy newspaper that the positive outcome has caused the IMF technicians to investigate the situation and use it as an example. "An IMF mission that is visiting does not believe that we could have reduced spending so much, and have even been able to pay the foreign debt without a bridge loan," Bengoa told Hoy. He said that the savings are the reason why the government was able to pay off US$362 million in foreign debt payments this month, without having to resort to a bridge loan. Taking into consideration the US$85-million line of credit of the governmental Banco de Reservas, which was already agreed with the IMF, it is probable that the financial gap may only amount to US$45 million. Resources would be used to pay an arrear of US$65 million due in December to the Paris Club. The minister said they would probably only need to use US$45-US$50 million of the line of credit.
He explained that the governmental foreign debt is paid using the exchange commission and funds generated by the fuel tax. He said that the savings were produced because the government did not transfer to consumers the appreciation in the peso when indexing the price of fuel. "When we should have dropped the price by RD$6, we only reduced it RD$3, RD$2 or RD$4," he explained. He also said that other funds allotted to pay the foreign debt are the 2% tax on imports, the 30% selective tax on luxury items, and the US$10 departure tax. He indicated that savings gained by reducing the government payroll cannot be used to pay the foreign debt.
Finance Minister Vicente Bengoa reported that budgetary surpluses will be allotted to pay the internal public debt, or the so called quasi-fiscal debt, as established by Decree 1524-04. The practice in the past was for the President to have discretionary powers over the surplus. Bengoa says that this time around the government has agreed with the IMF on the use of the surplus in order to put a check on government expenditures and investments.
"If there is a surplus, then it must be allotted to pay the public debt; and if there is still money left over, then the President can dispose of it," he said.
As reported in the Listin, Decree 1424-04 was suggested by the IMF, despite the fact that Law 531 establishes that the Executive Branch can use 75% of the budget surplus at its discretion.
Bengoa highlighted that the past administration doubled the foreign debt and Congress approved foreign debt commitments of US$10 billion.
Deputies have been convened today to review the elimination of the 25% corn syrup tax, a major point of contention for the passage of the US-DR free trade agreement through the US Congress. The DR Senate approved the bill as presented by President Leonel Fernandez shortly before Christmas, after the government committed to submit an additional bill to compensate local industry in January.
The Dominican Association of Sweets Manufacturers maintains that with the issuing of Decree 15-04 on 15 November, the government is effectively doing away with the window that had been left open for local industries using sugar as an input material to compete.
The new decree incorporates an article that forces customs to dispatch sugar only companies that have a permit from the National Sugar Institute (INAZUCAR), despite their being protected under export incentive Law 84-99 or the free zone regime. INAZUCAR represents the interests of sugar producers.
The association says that the decree violates incentive laws in effect and appeals to the President, considering that the industries that use sugar generate thousands of jobs.
The association, furthermore, is requesting that the authorities review the price of sugar to adjust it to the level of February of this year. Sugar prices increased 25% between January and March in order to make up for the depreciation of the peso. Now that the peso has bounced back, the manufacturers are urging that this be taken into consideration and a new price be set.
The manufacturers represented by the Association complain that they already are forced to subsidize the sugar industry because of the monopoly on sugar imports imposed by the government to protect the sugar producers. They explain that they could import sugar at US$0.19 the lb, but are forced to buy it from the producers at US$0.29. Sugar producers are the only authorized by the government to import sugar. The manufacturers say that the subsidy amounts to RD$600 million.
The price of sugar in the DR is fixed by the Ministry of Industry & Commerce and the National Sugar Institute (INAZUCAR).
The association says that the decree violates incentive laws in effect and appeals to the President, considering that the industries that use sugar generate thousands of jobs. The association is requesting that the authorities review the price of sugar to adjust it to the level of February of this year. Sugar prices increased 25% between January and March in order to make up for the depreciation of the peso. Now that the peso has bounced back, the manufacturers are urging that this be taken into consideration and a new price be set.
Finance Minister Vicente Bengoa said that a decree issued by President Leonel Fernandez that eliminates the requirement that Honduran cigarettes entering the DR be stamped in order to resolve the conflict with British Tobacco. The company had pointed out that the precondition was in violation of trade agreements in effect. Bengoa said that a judgment of the World Trade Organization whereby the DR is required to eliminate its exchange commission will not be put into effect until two years from now, which he says will give sufficient time so that the elimination of that tax does not affect government finances.
On 13 October of last year, Honduras had accused the DR before the World Trade Organization of discriminatory trade practices and demanded the elimination of the obligation to stamp the cigarettes in national territory and the 2% exchange surcharge. The exchange tax represents more than RD$16 billion in revenues for the government. From January to July 2004, it brought in RD$9.24 billion in revenues. The government contemplates increasing it to 13% as per an agreement with the IMF.
Listin Diario economic section's carries today a report on the profitability of the telecommunications industry in the DR. It also says that local consumers want the phone companies to reduce the cost of their services, given that they were raised when the peso's value was at a peak low compared to the US dollar at a rate of RD$50 to US$1. With the recent escalation of the peso to RD$30 to US$1, consumers have been left waiting for a price adjustment that has yet to occur. Listin Diario reports that the tax collected by Indotel, the Dominican Telecommunications Institute, shows a surplus of RD$238.9 million from January to November. Indotel has financial certificates in savings for RD$450 million, and thus a yield of RD$91 million. Of the global revenues that Indotel receives, 70% are the product of the 2% tax on telecom services.
Indotel is legally obliged to defend the interest of consumers of telecom services.
In the Dominican Republic, 10% of the population has residential telephone service and 30% has mobile phone service.
The Dominican Association of Free Zones and the National Federation Free Zone Laborers (Fenatrazona) have agreed on a 25% raise for free zone workers. The wage increase will go into effect in two parts, 15% to be given on 3 January and 10% on 4 April. The free zone monthly minimum wage will rise from RD$3,561 to RD$4,100 on 3 January 2005. As of 4 April 2005, the wage will go up from RD$4,100 to RD$4,450.
The National Commission of Emergencies (CNE) is reporting the deaths of 33 people and 350 injuries in the Dominican Republic from 12pm on 23 December to 6am on 26 December. Of the total, 18 died in traffic accidents and 12 in gun or knife confrontations. Of the 350 injuries, 132 were sustained in traffic accidents, 34 in gun fights, 86 in knife fights, 24 in firework accidents, 34 in fights, 28 from alcohol intoxication and 12 for food poisoning.
While in 2003, 30 people died during the Christmas holiday period, 722 were reported injured. That also compares to the toll for the 2002 holiday period, when there were 36 dead and 486 injured.
The good news is that there were fewer burns and injuries related to fireworks accidents this year. According to spokesman for the Pearl F Ort burn unit at the Hospital Luis Eduardo Aybar, the number was considerably lower than in 2003. On the peak day, they reported cases of 3, down from 18 last year. Dr Carlos de los Santos urged parents to continue to be aware of the dangers and not to allow their children to handle fireworks.
Two agents of the Drug Enforcement Administration paid former Captain Quirino Ernesto Paulino Castillo a five-minute visit to his cell at the Direccion Nacional de Control de Drogas (DNCD), where they expressed that the US government will seek his extradition. This information is according to his lawyer Carlos Balcacer, who demanded that his client be sent to a Dominican jail, either at the Palacio de Justicia de Ciudad Nueva or Najayo.
Lawyer Vinicio Castilo Seman felt the former officer should be extradited and judged in the US. "We believe that the Dominican judiciary does not have the sufficient strength to investigate and judge this case given the political connections of the drug smugglers," he stated. He believes that the only way that justice could be achieved is if Paulino Castillo is extradited to the US and judged according to the US laws for having allegedly introduced tons of cocaine to the DR.
He said that this case is a challenge for the local justice system because it would need to prove its ability to investigate political connections. If tried abroad, Paulino could reveal his political and business connections. He said that Paulino Castillo was able to carry out all his transactions and export drugs to the US "protected by an oversaturated impunity provided by politicians."
The lawyer said that despite President Hipolito Mejia's awareness of the fact that the accused was directing drug smuggling operations, he instructed his brother-in-law to swear Paulino in as the chief of his re-election campaign in the province Elias Pina. The lawyer believes that President Mejia and some of his closest collaborators could possibly be investigated in the US in this case of international drug trafficking.
Paulino was arrested with his wife Belkis Ubri Medrano concurrently with the arrest of National Police Lieutenant Colonel Lidio Arturo Nin, who was at the time chief of the provincial jail of Azua, and his chauffer and cousin Tirso Cuevas Nin on Duarte highway. They were transporting 1,200 packages of cocaine.
Morning newspapers inform that "The Don," the very prosperous former army Captain Quirino Paulino Castillo, now implicated in the largest drug bust of the past 14 years, lived in the Julieta neighborhood, right behind the popular Bravo supermarket. Newspapers say his city address is Virgilio Diaz Ordonez 64. Diario Libre reports that a lady once parked in front of his residence and was shot at as she made her way to her car. Paulino Castillo was reportedly known as "The General" because of the power he ostentatiously displayed. Paulino had posted "No Parking" signs outside his residence.
Newspapers over the Christmas holidays published statements and documents involving former army chief Radhames Zorrilla Ozuna, former chief of the Armed Forces, retired Major General Jose Miguel Soto Jimenez, and as high up as President Hipolito Mejia, in the irregular military career of former army captain Quirino Ernesto Paulino Castillo. Paulino Castillo is being singled out as a key figure in the confiscation of 1,387 kilos of cocaine last week in a joint US DEA and DNCD operation.
Soto Jimenez tried to wash his hands of all responsibility by saying he was merely following his superior's orders. The direct boss of the chief of the Armed Forces is the President.
Former army chief, Radhames Zorrilla Ozuna, who openly campaigned for the re-election of former President Hipolito Mejia, also excused himself from wrongdoing by pointing to his superior, Soto Jimenez, as the person responsible. He refers to a 10 September 2003 memorandum that the Listin Diario published on 23 December that is signed by then-Armed Forces Minister Jose Miguel Soto Jimenez. The communique features the instructions of former President Hipolito Mejia, regarding Paulino Castillo's promotion to first lieutenant of the Army.
Soto Jimenez, in turn, says that the latest promotion came following a recommendation from Zorrilla and he refers to the book that records the career of each military, where this recommendation is stipulated.
Paulino Castillo had been removed from the army on 1 August 2002 by then-Army chief, the retired General Manuel Ernesto Polanco Salvador. The order to remove him is retroactive to March 2002, when Paulino had been promoted to sergeant major of the army. When then-President Hipolito Mejia replaced Polanco Salvador with Zorrilla Ozuna, Paulino was reinstated and promoted.
The Listin Diario says that former President Hipolito Mejia had received army intelligence reports, supported by investigations made by by the DEA, the frontier intelligence service (DOIF), and the Drug Department (DNCD) on the suspicion that 44-year-old Paulino was involved in drug smuggling operations. The newspaper explains that Mejia had been notified that the DEA was on Paulino's trail. As reported in the Listin Diario, Mejia was made aware of the situation in April 2004, but considered it inauspicious to remove the officer, as such an action could capitalized on politically by his opponent in the May 2004 election.
The Listin Diario editorial over the holidays commented that then-President Hipolito Mejia had boasted on several occasions that he was the most informed man in the nation.
Listin Diario political analyst Orlando Gil writes: "The political responsibility was that of President Mejia, but the institutional responsibility belonged to the military chiefs who were unable to resist the evident degrading of the armed forces. In his analysis today, Gil contrasts the collapse of institutionalism within the military under Mejia and his armed forces chief Soto Jimenez, to the bolstering of institutionalism that had occurred under former President Antonio Guzman and his armed forces chief, General Adriano Valdez Hilario.
"President Hipolito Mejia did not have that assistance and he was allowed to act with the uninhibited attitude of a recent recruit to the army. All those damaging effects to institutionalism were the consequence of a quick-tempered disposition that could have been checked if it had met with superior intelligence and had acted in time. Now he is stuck in this mess and the finale cannot be for him just to bear his chest and let that all the shots be fired at him. The burden must be shared," he explains. Gil says that the military are already effecting skillful maneuvers in their statements that they were carrying out superior orders, and without taking note that the person giving the orders was a neophyte and that it was up to them to be responsible, alert and give guidance.
Hoy newspaper pointed out in a report on Wednesday, 22 December that approximately 100 military were readmitted to the forces during the Mejia administration, despite their having been previously removed for justifiable reasons, such as theft and drug smuggling.
The Armed Forces minister, the now-retired Lieutenant General Jose Miguel Soto Jimenez, was aware of the situation and created a commission to investigate the cases. Hoy newspaper has a copy of the shocking findings of that commission's study.
The cases include an air force captain who the National Department of Investigations (DNI) had signaled as having been removed for his involvement in the trafficking of 399 kilos of cocaine from Santo Domingo to Miami. The drugs had been transported on an American Airlines jet on 9 April 1990. The captain entered the air force shortly after the start of government of then President Hipolito Mejia, on 1 October 2000, as a corporal and was swiftly promoted to captain.
In the army, there is the case of Lieutenant Colonel Jose Pimentel Garcia and Major Jose Petherson Santos, who had been dismissed for their alleged ties to well-known drug trafficker Cesar Augusto Diaz Pena. And Captain Williams Jimenez Villafana was readmitted to the army despite a charge of leaking information to drug smugglers, alerting them that they were being followed by the National Drug Control Department (DNCD).
With their loss to the Aguilas over the weekend, the Escogido is unlikely to make it to the round robin tournament that defines who will play in the playoffs. The round robin starts the winter series all over again and is played in January. So far, it looks like the playoffs will center around the Aguilas, Gigantes, Licey and Estrellas. This means there will be games taking place in the Cibao, San Francisco de Macoris, Santo Domingo and San Pedro stadiums in the New Year. The standing as of Sunday, 26 December: Aguilas, Gigantes (one game behind), Licey (three games behind), Estrellas (4 games behind), Escogido (7 games behind), Azucareros (12 games behind).
The contents of this webpage are copyright © 1996-2008. DR1. All Rights Reserved.