The Dominican government is facing a very large debt service this coming year and the figures, at least in the newspapers, are not matching up well for the budget planners. According to Hoy, the government must pay RD$65 billion in debt service fees in 2007, about US$1.97 billion at current exchange rates. Temistocles Montas, the President's Minister for Technical Affairs (STP) told reporters that the government would dedicate 6.3% of next year's GDP to pay foreign debts service charges. Listin Diario says that a reduction in income and the new charges for debt servicing are a major challenge for the budget planners. One of these new charges is that the two-year moratorium requested by the government at the beginning of its current term is now up, and US$200 million in payments are due. And another new situation for the planners is the payments that are due on the interest of the bonds that were issued to recapitalize the Central Bank and reduce the quasi-fiscal deficit. This will require about RD$5.5 billion. What is troubling the budget planners is the lower-than-expected results of the most recent tax reform program. While it increased VAT and broadened the consumer tax base, other taxes are producing lower returns than expected. Many businesses have begun to require cash payments in lieu of checks that are taxed. Added to that, the DR-CAFTA agreement for which many taxes were eliminated has not yet begun and therefore tax income from the new businesses and industries has not arrived, either. Facing a promise to create 600,000 new jobs over the next two years, the government must now face the reality of a new tax reform bill.
Secretary of Foreign Relations Carlos Morales Troncoso met with Arab League Secretary General Amro Musa yesterday to discuss the possibility of his organization supporting the DR in its bid for a non-permanent seat on the United Nations Security Council. During the meeting Morales announced that the DR was taking on temporary presidency of the February 2007 Latin American meeting between the Rio Group and the Arab League. Morales outlined the benefits that the Arab League nations would obtain from relations with the DR, as the country moves towards implementing the DR-CAFTA treaty.
Though a complete national gasoline shortage was prevented, many gas stations are still without diesel fuel, leading to more questions as to when the problem would be completely solved. Last week the country was in a state of panic as many as 98% of all gas stations were without fuel, but service returned to normal over the weekend following the arrival of two oil tankers from Texas and Venezuela. Nonetheless, many service stations are still experiencing diesel fuel shortages. Listin Diario reports that 95% of all gas stations in Santiago and the Cibao region do not have diesel. Ruben Montas, president of the Dominican Refineries SA (Refidomsa) is quoted by Listin Diario as saying that normal consumption of diesel fuel is 840,000 gallons per day, but that recently more than 1 million gallons per day were being disbursed. The fuel shortages have affected banana exports in the northeast region, public transport and farming work while tourism in Puerto Plata has also been affected. The Ministry of Industry and Commerce has announced that importer Coastal will be bringing 3,570,000 gallons of diesel fuel to the country in the next few days.
The Dominican Republic has made an impact at the 3rd Annual International Fair of the Amazon, in Manaus, and the 2006 Fruit Fair in Fortaleza, Brazil. The Dominican consulate in Sao Paulo promoted a Dominican stand at the fairs, in conjunction with the Caricom Chamber of Commerce, where information about the country, foreign investment and the business climate was given out. El Caribe newspaper reports that the activities were sponsored by the Center for Exportation and Investment in the Dominican Republic (CEI-RD), with help from the Dominican consulate in Sao Paulo. The events include the founding of a chamber of commerce in Sao Paulo. These developments are aimed at increasing bi-lateral relations between the two nations.
The Central Bank has informed that the consumer price index (CPI) for September registered a negative rate of -1.10% in relation to the month of August, due to the decrease in petroleum prices. This figure places the inflation rate through the first nine months of the year at 3.46%, and placed the 12-month inflation rate between September 2005 and September 2006 at 4.73%. This averages out the inflation for the last 12 months to 7.80%. The Central Bank is confident that these figures are an indicator that the year will end with a single digit inflation rate, which is their goal. The transport sector experienced the largest decrease at -6.77%.
The government-sponsored Essential Medicines Program (Promese) has gone past the RD$50 million mark in sales after it corrected some of the issues related to the medicine market and related to the People's Pharmacy program. For the buying public, the Promese offer is a 30% savings (or more) on many medications. For example, Acetaminophen caplets (500mg.) are about RD$3.00 per pill, but in Promese, they are just RD$0.50 each. Many of the most sought after medicines can be found in these establishments. Promese is now supplying 40% of medicines for the public hospitals and also supports dialysis for kidney patients. The program also provides free neo-natal care at the three major hospitals: San Lorenzo de Los Mina, Nuestra Senora de la Altagracia, and the University Regional Hospital Jose Maria Cabral y Baez in Santiago.
Electricity Generator Itabo has issued US$125 million in bonds on the international market. The corporate bonds will pay 10.875% APR and interest will be paid every six months beginning in March 2007. Fitch Ratings gave the bonds a "B-"rating with a positive outlook and S&P gave the bonds a "B" rating also with a positive outlook. At the current time the Itabo facility is controlled by AES Corporation that owns 50% of the shares and the Dominican government owns 49.97%. Over the last 12 months, the AES Dominicana Group has placed US$285 million in corporate bonds on the international market, and invested a large part into improving the energy sector in the DR. AES controls Andres, Dominican Power Providers and Los Mina, in addition to Itabo.
Details of a preliminary report published by the BHD Bank's Business Consultancy Program is reporting that around one third of Dominican business could close after the country's entry into DR-CAFTA if they fail to make the proper fiscal reforms. BHD president Luis Molina Achecar informed that 30% of businesses are competitive while 40% can be considered indifferent. The assessment program, ASE-CAFTA, evaluated the market competitiveness of each of the business studied. The president of COPODYME, the Dominican Council for Small and Medium-sized businesses also advised that with the energy crisis, lack of financial backing from commercial banks, and obsolete technologies many businesses will have a tough go of it once DR-CAFTA is in place.
Thieves removed four kilometers of electric cables from the Las Americas Highway over the weekend and left a major portion of the causeway without lighting. This is the second robbery in the last week, according to El Caribe. The first robbery was of 25 large copper ground wires for transformers along the highway. The most recent job left about 100 of the high voltage lights without any electricity and also affected sections of the side roads. A joint effort between EdeEste and Santo Domingo Este municipality provided the highway with plenty of lighting for safe driving from 15 September, but the thieves successfully put an end to that effort. Spokespersons from EdeEste urged the police and armed forces to put all their energies into stopping this type of vandalism.
The BanCredito fraud case took another odd turn when it was announced that the firm hired to audit the actions of the Banco Leon subsidiary BanCredito was an insurance company, which is prohibited under Dominican law 146-02. So it turns out that the judgments against Manuel Arturo Pellerano Pena and Juan Felipe Mendoza Gomez were passed with improper evidence. Pellerano and Mendoza were charged with financial improprieties in the BanCredito case on 17 August. In order to reach this conclusion, the firm Duarte and Associates was hired by the Central Bank, with no public consultation, to audit the books, but Duarte and Associates is an insurance firm, eliminating them from the auditing of financial records. The firm had no previous auditing experience. In order to be able to provide auditing services the firm must first have authorization from the Banking Superintendence.
Economist Felix Calvo, a former official of the Central Bank of the Dominican Republic during the Mejia administration, writes in today's El Caribe that Eduardo A. Masferrer, the former president of the Hamilton Bank, was sentenced to 150 years in jail by Judge K. Michael Moore of the Southern District Court in Miami, Florida. Calvo points out that Masferrer was sentenced for: committing fraud against financial institutions; for bank fraud; for bank fraud (second case); for betraying trust in handling third party funds; for obstructing the investigation of a financial institution; and finally, for giving false statements to government agencies. According to Calvo, this case provided a lot of surprises. The Hamilton Bank had a lot of dealings with BanInter, especially during each bank's last months. From 2002 onwards, a lot of BanInter money was "escaped" through this bank. The name Luis Alvarez Renta shows up again and again in the 9,000 pages of the case. Calvo is of the opinion that the Central Bank should spend what it has to in order to examine this file. The young economist calls the United States justice system "very impressive." He says that when he went to look up the files in the Masferrer case, he was surprised to find the Judge's name engraved in stone at the entrance to the courthouse. This convinced the economist that the fight in the US against bank fraud made no exceptions and that the sentence handed down by Moore emphasized the fact that the capitalistic "good guys" were done playing games with other people's money. Calvo says that the sentence is well written, as if to make clear for future judicial references. He cited the sentence: 360 months prison each for five counts is the same as 150 years. And this sentence was for a "patriot" who stole "a mere" US$20 million. The amount of money never entered into the verdict. The judge told Masferrer: You were given complete trust by society, and you have defrauded that society which is an aggravating circumstance. In other words, according to Calvo, "society let you live well by means of capitalism as it then existed, and you have made a mockery of society." The economist says that this is not a bad sign, if we note that several bankers and non-banking businessmen are under scrutiny in Florida. Some will go free, while other should get the same deal as Masferrer, at 57 and facing 150 years in jail. Calvo puts the issues relating to the dealing between the Hamilton Bank and BanInter in the hands of the government. He says that this Cuban-American guy was often seen in a top restaurant on Santo Domingo's Malecon, usually in the company of Luis Alvares Renta. Calvo himself says he was an eyewitness.
Diario Libre reports that the Chamber of Deputies is studying the possibility of granting the Ministry of the Interior and the Police responsibility for carrying out a first official census of foreigners living in the country, both legal and illegal. Once the initial study has been completed, Immigration and the intelligence organizations will be responsible for keeping the census updated.
The Metropolitan Transit Authority (AMET) is reminding the public that tomorrow is the last day for renewing vehicle license plate stickers. Transit authorities informed Diario Libre that 250,000, or 40% of all vehicles, have not yet had their plates renewed, an alarming rate for a process that began in early July. Last week AMET warned that vehicles that don't have their plates renewed will be confiscated by authorities. All that is needed to renew the registration is a photocopy of the vehicle registration paper and a photocopy of the owner's personal ID card, the cedula. This can be done via the internet at www.dgii.gov.do (click on Marbete 2006), or by phone on 809 730 2445 in Santo Domingo or 1 809 200 0136 (toll-free) from any point outside the nation's capital. Banks, savings and loan associations and many major shopping centers offer fast, courteous service. Late renewals will be subject to a RD$400 penalty charge.
A young man in Villa Mella was killed because he tried to stop the sale of drugs in front of his house. The young man, Eskarlen Villar, 24, was shot by a man only identified as Jean Carlos, and died at 10:00pm. Looking for quick revenge, Villar's family members set the murderer's house ablaze, but unfortunately neighboring houses also caught fire, leaving 25 families homeless. Police are investigating the incident.
Dominicans of Chinese origin are holding their October Full Moon celebrations in the Barrio Chino, Santo Domingo's Chinatown district. This year's festivities are placing a particular emphasis on the Dominican people's wellbeing. Construction on the Avenida Duarte, where the celebrations took place, didn't affect the ceremony, which is sponsored by the Chinese Cultural Center and the "Flowers for All" foundation. Foundation president Rosa Ng told El Caribe that the celebrations are the second most important in the Chinese calendar, in that they ask the gods for a good harvest. During this celebration Chinese families eat a dish made with fruit, served on the flower of the lotus plant. Ng also mentioned the fast progress in the construction of the Barrio Chino. The government is providing RD$25 million, while Barrio Chino residents are providing the rest.
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