As from February 2007 the government plans to stop subsidizing propane gas used by drivers as a cheaper alternative to gasoline. The government has contracted a company to come up with a plan that would allow the subsidy on domestic usage of lower-costing propane to continue, according to a report in Diario Libre. The proposed removal of the vehicular propane gas subsidy is, according to the newspaper, a way to free up funds for debt payments in 2007. Montas says that with the possible fiscal reform the government looks to free up RD$16 billion, and will include serious reduction in spending. The government spends RD$5 billion on propane gas subsidies, and an estimated 50% goes towards fuel for cars. Regular gasoline consumption fell by 18 million gallons between 2004 and 2005. According to several different newspapers, the more concentrated focus of the LPG subsidy in 2007 is expected to increase government revenue by RD$1.5 billion or 1% of total tax income.
Not all reports were as rosy, and in today's Hoy, economist Hector Guiliani Cury said that the projected focusing of the LPG subsidy would just increase corruption at the local level. He said that there was no way that a gas tank filled at the local LPG distributor could not be taken home and then installed in a vehicle. Guiliani suggested that the focus needed to be sharpened through the use of special ID cards that would identify the poorest as eligible for the subsidized gas.
Technical Minister to the Presidency Temistocles Montas said yesterday that there would be increased government austerity in 2007, with "drastic reductions in costs," of up to 15% in all government institutions, including the judiciary, Central Electoral Board (JCE) and Congress, compared to 2006. Montas is quoted in Hoy as saying that if the government doesn't make this move now it would lead to a bad situation on the future. Montas says that instead of questioning the government's announcement of a possible reform, the business sector should instead be aiding the situation and coming up with solutions to the problem. Montas went on to defend the government payroll, which many feel is another financial burden on the country, and said that the payroll is at 4.3% of the total GDP, which according to him is way below the Latin American average. Montas said that the government payroll is now 9,000 persons lower than it was during the Hipolito Mejia administration, when it represented 6.2% of the GDP.
Montas, as the head of the President's economic team, said that these recommendations are being given to President Fernandez because next year the government needs to have a 2.0% or 2.5% surplus in the GDP. Such a surplus will permit the government to face the debt service payments that are required for 2007, since these will hit RD$19 billion if there is no capital reduction.
The International Monetary Fund and the government's economic team will be meeting today to reaffirm the Dominican government's commitment to follow the letter of intent already worked out. The meeting will take place at the Presidential Palace. A source told Diario Libre that there is agreement on just about all the points and that the only thing missing is the final text and the signing ceremony. Over the last few days, the mission headed by Andy Wolf has met with public and private entities. At the meetings, the private sector representatives have unanimously pointed out that the government has to stop the wastage evident in government spending.
In spite of a solid-front defense of the new tax proposals announced last week in Washington, DC, opposition to the so-called "fiscal correction" is growing every day. Yesterday, the spokeswoman who represents most of the Dominican industrial and commercial sector, Elena Viyella de Paliza, spoke out against the proposal. She suggested that if the authorities would save just 10% of their income, there would be no need for any further "adjustments" to the tax structure. This criticism echoes what many Dominican bishops said last week. Furthermore, the opposition parties, a minority in both the Senate and the Chamber of Deputies, have voiced their opposition to further taxation as a way of increasing government funding. Both the PRD and the PRSC parties have come out against the proposal, even though they are minority in Congress.
Added to the political, religious and business sectors, the Block of NGOs has also come out with a declaration of opposition to new taxation. According to El Caribe, Juan Ramon Larancuent said that the country needs reforms that will stimulate social programs, create jobs and improve public services. Larancuent said that what has happened so far is a consistent government policy of continually increasing income to provide "bureaucratic glamour" at "offensive" levels both in the country and in the diplomatic service overseas.
German group Siemens and French group Thals announced the signing of a US$125 million contract for the new Santo Domingo Metro yesterday. The contract was signed by the Office for Transit Reorganization and will be to cover costs of electro-mechanical equipment. In the last weeks there has been a delay in construction of the Metro, according to Diario Libre, because of a reported breakdown of one of the excavating machines.
In a lightening-fast move, the Dominican Senate has approved the legislation paving the way for the implementation of the DR-CAFTA agreement latter this month or in December. Just moments before the measure went up for a vote, two of the President's closest advisors, Danilo Medina and Temistocles Montas were seen speaking to various senators and urging a quick passage. The legislation included various modifications to several laws that needed to be adjusted to the realities of DR-CAFTA. These included the laws on industrial property, copyright, intellectual property and the Penal Code.
The Canadian organization Export Development Canada (EDC) is offering financing to small and medium-sized producers in the Dominican Republic and other Latin American nations. David Goldfield, in charge of EDC affairs for Latin America and the Caribbean, is quoted in Hoy newspaper as saying that to this date EDC has invested more than CAD$1 billion in the DR, mostly in the areas of mining, tourism, electricity and water. The EDC is a special arm of the Canadian government that functions as an international bank.
Diario Libre reports that the Center for Exports and Investments (CEI-RD) director Eddy Martinez has said that this year's exports would surpass the US$1.2 billion mark, and assured that by next year exports would reach the US$1.5 billion mark. Martinez also made a bold prediction when he told the newspaper that by 2010 the country would export more than US$12 billion in goods. Dominican products are currently sold in 150 markets worldwide.
A study by the World Bank titled "Close to Home: The Development Impact of Remittances in Latin America" shows that the money sent home by workers in developed countries is effective in helping economic growth and the fight against poverty in Latin American and the Caribbean, but these are not a substitute for sound development policies. The study shows that the money sent home has helped improve each nation's educational and health indicators. The Dominican Republic, together with Guatemala and Honduras is one of the nations in the area that receives more than 10% of its GDP from remittances. The report says that for every 1% increase in remittances as part of GDP there is a 0.4% decrease in poverty. Mexico leads all nations with more than US$43 billion in remittances in 2005. A staggering 54% of Haiti's total GDP comes from remittances. In conclusion, the report recommends a reduction in the cost of sending money in order for remittances to continue at their current volume. Follow the discussions at http://discuss.worldbank.org/content/interview/detail/4640/
The Dominican Attorney General Dr. Radhames Jimenez has highlighted something that most Dominicans are already aware of. Jimenez was quoted in Hoy newspaper saying that there is a discriminatory judicial system that favors rich Dominicans over poorer ones. The AG also said that the implementation of the Penal Code has been encouraging, but added that he agrees with the findings of a recent report on the subject. Jimenez also mentioned that because of these social discrepancies, people who cannot afford legal counsel would receive the service free of charge as from next year. Cardinal Nicolas de Jesus Lopez Rodriguez seconded the AG's comments by saying that when a verdict is about to be announced, in many cases social class is a key consideration in the punishment. He conceded, however, that the Supreme Court has made an effort to combat this. The study that Jimenez and the Cardinal are quoting is the Quality and Access to Penal Justice in the Dominican Republic, which was conducted by Isis Duarte and Joel Arboleda with the help of the Foundation for Institutionalism and Justice (FINJUS) and the US Agency for International Development (USAID).
US Coast Guard Commander in San Juan, Puerto Rico, Captain James Tunstall said that so far in 2006 the Coast Guard has intercepted 3,321 people in the waters between the Dominican Republic and Puerto Rico. Local immigration officers have also apprehended 1,454 on Puerto Rican beaches. Tunstall revealed that 15 Dominicans accused of involvement in the organization and transportation of illegals were facing trial at the United States District Court in Puerto Rico. So far, eight of the accused have been convicted in a case involving eight deaths near the Cerro Gordo beach. They were sentenced to a total of 73 years in jail.
US ambassador in the DR, Hans Hertell announced yesterday that the US Homeland Security Department was planning to collect the fingerprints and photographs of people who are involved in the organization and transport of illegal aliens to United States territory. According to Hertell, the data collected will be entered into the criminal database in the US. He said that he wanted to be clear on this point: that organizers of illegal boat trips are criminals.
Tunstall and Hertell spoke at a ceremony launching the third phase of the "Illegal voyages are voyages to death" campaign sponsored by the United States Coast Guard Service, the Attorney General of the Dominican Republic and the National Migration Office.
A RD$100,000 bond has been set for Francisco Schiffino Diaz who was arrested last Saturday at the Caribbean Sun beach with ecstasy pills, cocaine, marijuana and a gun. Hoy reports that Schiffino, who was once employed as an adviser at the Ministry of Foreign Relations, was caught trying to sell the drugs at an electronic music festival being held at the beach. Schiffino was dismissed from his post last September because he was suspected of being involved in drug activities during his tenure there.
El Caribe newspaper is reporting that the Department of Drug Control (DNCD) has named Jose Miguel Castro and Melvin Antonio Cordero Campusano as the owners of a 550-kilo shipment of drugs that was seized by Spanish authorities in Barcelona several weeks ago. The Dominican authorities are urging members of the drug network to turn themselves in or face steeper penalties if they are caught. The 550 kilo shipment was hidden inside bamboo furniture and departed from the port at Eastern Haina. Authorities say that the traffickers had set up dummy businesses, like the abandoned JMC Import & Import business in Villa Consuelo, in order to smuggle the drugs.
Journalist Huchi Lora says that "the country is not aware of the reality of the bateyes," and so, today he will begin his expose of the reality of the workers' barracks in the sugar mills. These housing areas are called "bateyes" and often develop their own local government and even reach the status of municipalities. Lora has produced 24 episodes of the documentary. According to El Caribe, the making of the series involved a long period of hard work in the field and some excellent editing. The crude way of life in the bateyes as well as the opinions of men and women whose livelihood depends on the work carried out in the cane fields are all part of the documentary. Ricardo Thorman was the photojournalist, and he was assisted by Rosaly Acosta and Francisco Rodriguez. Some of the music was composed by Lora himself and some is of a more historic nature. The first episode in the series, which is called "Cana y Sudor" (Sugarcane and Sweat) airs today on two programs, El Dia and Medio a Medio on Telesistema 11.
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