The tax reform bill was submitted to Congress via the Chamber of Deputies following a meeting between President Fernandez and a group of business leaders at the Presidential Palace. Diario Libre reports that the President said the reform was "radical and deep" because it refocuses the tax system so that it is mostly based on internal taxes instead of international trade and customs. The tax reform is accompanied by three other bills: two that make the Tax Department and the Customs Department autonomous, and another about collection efficiency.
El Caribe reports that President Fernandez is confident that Congress will pass the tax reform without problems. "It is being done at a difficult moment for the country and has the DR-CAFTA as its counterpart", stated the President. He maintained that if the reform is not approved, the country runs the risk of remaining isolated.
The National Hotel and Restaurant Association (Asonahores) has warned Congress that the tax reform bill presented by the Executive Branch is not the result of consensus as has been stated, and represented only the position of a part of the productive sector. Listin Diario reports that the organization is asking Congress to listen to the tourism sector, the agribusiness sector, and other industrial and social representatives that had not been taken into account despite representing major sectors of the economy, most notably tourism which is responsible for 40% of the foreign exchange entering the country and generates more than 20% of the total demand in the economy. Asonahores president Enrique de Marchena Kaluche said that the tourism sector would go to Congress where he is sure they will be listened to. De Marchena sustains that they are not asking for privileges but rather they want conditions to be created in this country that will allow it to compete with other tourist destinations that target visitors and investments in the same markets as the DR.
Hoy reports that Foro Ciudadano claims the bill does not represent the interests of the majority. The organization announced it will promote the establishment of a "fiscal agreement" in the Congress to guarantee a long term social investment of 12.5% of the GNP. They also added that the reform proposed by the government is applying 71% of taxes on the general consumer whereas only 29% goes to the wealthier parts of society.
The Mexican government is willing to unblock funds accumulated by the DR in the San Jose Agreement, amounting to approximately US$300 million, as stated by Mexican Ambassador Isabel Barbara Tellez de Ortega. Listin Diario reports that the diplomat explained there are three possible ways for the country to get those funds and said the best option was through the Central American Economic Integration Bank (BCIE). She pointed out that the DR still needs to ratify its entry to the BCIE and approve other bills that Mexico has in its favor, and which are being ignored. The San Jose Agreement is a mechanism whereby Mexico and Venezuela supply petroleum to several Caribbean and Central American countries under preferential conditions, financing 20% of the oil bill. The financing is allocated to development projects. In the case of Mexico, funds have not been able to reach the DR and the subject has been debated for two years. The ambassador also said that the two countries are planning, through the Dominican Petroleum Refinery (Refidomsa), to hold a workshop with the participation of Mexican experts for the possible exploration of oil in Dominican territory. When referring to the Petro-Caribbean agreement, the diplomat said that any agreement that helps would be welcome.
The president of the Senate, Andres Bautista Garcia, asked the United Nations to take a more active role on the issue of Haitian migration to the DR yesterday. According to a report in Listin Diario, the lawmaker made his comments during the Second World Summit of Parliamentary Speakers, held at the United Nations in New York City. "These reflections should include the worrying social phenomenon of migration... which requires the active participation of the United Nations and all its organizations, for all that is involved in the massive migration of our Haitian neighbors into our territory", said Bautista. He also spoke about the contribution of parliaments to the fight against violence and terrorism in all its expressions and in favor of citizen security. He also encouraged lawmakers to commit themselves to the reduction of poverty.
The Ministry of Foreign Relations will not disclose its official position on the scandal generated by the news that the Dominican Ambassador in Haiti, Jose Serulle Ramia, received a payment of US$48,000 from the Haitian government to celebrate a Dominican-Haitian cultural event in the Dominican city of San Francisco de Macoris (see DR1 Daily News 6 September 2005). Clave Digital spoke to the Public Relations Department and was told that Minister Carlos Morales Troncoso was in Nicaragua and the Dominican Government position on the case would not be disclosed until his return.
The Dominican government has made a US$50 thousand donation (equivalent to RD$1.5 million) to the people affected by Hurricane Katrina in New Orleans. Diario Libre reports that the donation was delivered to US Ambassador Hans Hertell by the Administrative Secretary of the Presidency, Luis Manuel Bonetti, as a gesture of solidarity. Hertell expressed appreciation towards the Dominican authorities and said that the flood is still causing large-scale damage. The diplomat said the donation symbolizes the bonds of friendship existing between the US and the DR. According to a report in Listin Diario, Hertell thanked the Dominican government for the messages of condolence and solidarity sent from different sectors in the DR after the destruction and loss of life caused by Katrina.
The US dollar was being bought yesterday at RD$0.50 less than the closing rate last Wednesday according to El Caribe. In the afternoon, it was being bought between RD$29.50 and RD$30.50 in different exchange agencies, while commercial banks closed with a minimum rate of RD$29.75 and a maximum rate of RD$30.25. The US currency was being sold at exchange agencies for RD$31.00 and RD$31.80 and at banks for RD$31.25 and RD$31.40. The decrease is expected to continue according to the president of the Association of Exchange Agents, Augusto Peignand. The announcement that the Dominican Petroleum Refinery will not be purchasing its foreign exchange on the market has influenced the decrease in the rate.
Listin Diario reports that the US dollar dropped by RD$1.50 in both purchase and sale rates. On Thursday afternoon the US currency was being sold at RD$30.50 and bought at RD$29.75.
According to its last report corresponding to August 2005, Fitch Ratings classified the DR as "B-", with the observation of stable future perspectives and a level a risk similar to that of the country in foreign and local currency. As reported in Clave Digital, this can be considered an improvement from December 2003 when the DR had received classifications that indicated a deteriorating country-risk factor. In its July reports, Fitch Ratings has classified the country as "B" - for long term foreign currency and "B" for local currency. A month earlier, in May, its classification was "DDD" and "B" respectively. Fitch Ratings highlights that after a profound crisis in 2003 in the wake of bank collapses and poor management of public finances, the country began to present signs of stabilization following the presidential elections in May 2004. This was possible due to the quick fiscal and monetary adjustments made by the new administration that began on 16 August 2004. It states that the fiscal position had deteriorated notably in the midst of the electoral process last year, a situation that caused the breaking for a second time of a stabilization agreement signed with the International Monetary Fund (IMF). However, the agreement was rescued by the new government, which is able to present a significant decline in inflation and interest rate levels. However, Fitch Ratings considers that the country's institutional profile is still not favorable. According to the analysts, the DR is characterized by weak institutions, an inefficient bureaucracy, inappropriate economic policies and the absence of structural reforms that reinforce existing laws and regulations.
In a speech to international bankers in Miami, the Governor of the Central Bank, Hector Valdez Albizu, highlighted the economic recovery and stability that is currently under way in the DR. He stated that during the first semester of 2005 GNP grew by 5.8%, with a specific growth of 7.2% during the second quarter. He explained that the growth in GNP is based on private sector activity, especially in communications, commerce and tourism. Another important aspect, according to Valdez, is the control of inflation which has dropped from 51.84% annually as registered in August 2004 to -1.0% registered in July 2005. Valdez also mentioned the strength of Dominican banks. He was addressing executives of international banks, investment banks, risk classifying agencies and institutional investors, under the auspices of the Association of Commercial Banks of the DR.
President Leonel Fernandez stated yesterday that the DR's foreign exchange stability is safe as 40% of petroleum imports will be financed and a credit line has been made available in the US for the payment of the oil bill, Diario Libre reports. According to the President, these mechanisms will protect the country's economic stability even if the prices of crude oil continue to rise on the international market. The country's improved risk classification, which rose from CCC to B is an example of international agents' trust, as well as the possibility of access to international financial markets. Fernandez quoted the President of the Inter-American Development Bank (IDB), Enrique Iglesias, as saying that the DR's economic recovery was "miraculous and beyond what can be explained in any economy textbook". The DR recently signed the Petro-Caribbean agreement with Venezuela, whereby it will be able to finance 40% of its oil imports with a 2 year grace period and 25 years term to pay back the principal.
During the last few months the tourism sector in the DR has lost approximately 10,000 jobs, as stated yesterday by Enrique de Marchena Kaluche, President of the National Hotel and Restaurant Association (Asonahores). According to Hoy, De Marchena stated that the lay-offs have been caused by the problems the sector is experiencing in order to be competitive, considering the high cost of energy, fuel, and the rates and taxes on airline tickets. De Marchena said that businessmen try not to fire employees and use the modality of rotating personnel with three-month suspension periods. He also warned that the DR could lose tourists if it does not offer quality services, and that visitors might choose to go to Cancun, the Maya Riviera, Jamaica or Cuba. He stated that the main expense in the tourist sector is electricity and claims that the DR has the most expensive energy in Latin America.
The boy who was wounded in his left eye by a stray bullet, Joselito Hernandez Lamarche, (see DR1 Daily News 23 August 2005), is traveling to Miami today with the Deputy Minister of Interior and Police, Roberto Lamarche and Dr. Ilka Garcia, where he will be examined to determine if he has any chance of recovering sight in at least one of his eyes. The boy had lost the sight of his right eye three years earlier. Listin Diario reports that the boy will be examined by ophthalmologist Salomon Melgen who is considered to be one of the most prominent specialists in the US.
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