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Daily News - Friday, 18 July 2008

Fernandez presents plan
In his long-awaited address to the nation last night, President Leonel Fernandez presented the Integrated Action Plan, which consists mainly of a collection of cost-cutting measures aimed at compensating lower-income sectors of the population for rising fuel and food costs.
Fernandez repeated the intention to cut government spending by 20%, or RD$20 billion this year. The 20% cut promise was also made in his 2004 inaugural address, but never implemented. The goal is to finish the year with a GDP deficit of 2%. This move will complement recent Central Bank fiscal policy that seeks to constrain rising inflation.
Fernandez also announced that no new government construction projects would be started, and that the government would give priority to finishing projects that are 75% complete.
The government is also looking to reduce the costs of projects being built with foreign loans by US$100 million.
Fernandez said that the government advertising budget would be reduced by 25% and that no new office equipment and vehicles would be purchased for a one-year period, with the exception of the National Police and the ministries of Public Health and Agriculture.
The President also announced a 25% reduction in the purchase of fuel for government officials. He did not quantify but announced there would be cuts in allocations to government officials for cellular phones and travel allowances.
Fernandez also announced the creation of the "Bonogas para Choferes" plan, to benefit 24,000 pre-selected owners of public transport vehicles who will be able to purchase six gallons of subsidized GLP per day at a cost of RD$38 per gallon, and benefit from 16% ITBIS tax exemptions on car part replacements.
Fernandez then announced the creation of "Bonogas para Hogares" whereby 800,000 pre-selected Solidarity Card beneficiaries will be able to purchase as much as six gallons of GLP for domestic use each month at a subsidized rate of RD$38 per gallon. Fernandez said that the government plans to increase the number of Solidarity Card holders to 800,000, up from the current 400,000 within the next 60 days.
The President reiterated his support for the production of bio-ethanol and bio-fuels as a response to the nation's dependency on oil.
Fernandez authorized a 5% reduction in the salaries of central government, decentralized and autonomous institution employees who make between RD$151,000 and RD$200,000 a month and a 10% reduction for employees who make RD$200,000 and above. He said there would also be a freeze on the public payroll, backdated to 31 December 2007, with exceptions for schools and hospitals. At the same time, there will be a 15% increase in the salaries of public employees who make up to RD$30,000 (97.6% of government employees earn this wage or less).
According to Fernandez, many of these initiatives will be implemented immediately and he has asked the Hacienda Ministry to submit the complementary budget for the plan of action to Congress. Fernandez said that the United Nations Development Program (UNDP) would help the government combat the increase in food prices. He announced that 500,000 tareas of government-owned land would be used to develop a joint venture type project for mass production of food.
For full text of the speech, see http://dr1.com/news/2008/071806_discurso.pdf

Commenting on the President's proposals
Opposition and business leaders have responded to the President's 2008 proposal with skepticism and criticism. As reported in El Caribe, opposition party leaders, PRD secretary general Orlando Jorge Mera and PRSC president and secretary general Quique Antun Batlle and Victor Gomez Casanova Jr., respectively, complained that President Leonel Fernandez's "Integrated Action Plan" was insufficient. Jorge Mera feels that Fernandez fell short with his austerity and spending plan. Batlle also said that Fernandez's words fell short, and he pinpointed that the President failed to explain exactly how these measures would be implemented. Batlle said that last night's speech was in essence the same as the President's speech in 2006, which also fell short of expectations, because none of those measures were ever implemented. He added that this speech proved that Fernandez was out of touch with the realities of the Dominican Republic, and added that the public was expecting more concrete measures.
Guillermo Caram, a former governor of the Central Bank and PRSC party spokesman, said that there were many things from last night that have just been repeated and that are not new. He said the President spoke of a 20% reduction in government spending, but had promised the same thing in 2004. Caram says that when leaders begin to repeat the same things, they lose credibility.
Members of the Dominican Agribusiness Board (JAD), the Santiago Industrialists and Traders Association (ACIS), the National Rice Producers Federation and other agricultural associations expressed their displeasure with Fernandez's measures, saying they were expecting access to more credit or a reduction of fuel prices as a way of supporting the farming sector. President of the Dominican Federation of Rice Growers Oliverio Espaillat said that the sector needs more access to financing and that farmers need two or three times as many resources than it did in previous years.
Transport union leader Juan Hubieres said that the speech was insufficient, adding that the proposed measures do not get to the core of the problem.

Government tax bonanza
The Dominican government is flush with cash, with taxpayers serving more than was budgeted for the year. Clave newspaper reports that for the first half of the year, the government tax collections were 105.3% more than budgeted, for RD$6.77 billion windfall. "This makes it clear that the fiscal deficit is not due to a lack of revenues, but rather to the excesses of government spending," reports Edwin Ruiz of Clave. During a press conference with economic editors last week President Leonel Fernandez acknowledged that the fiscal deficit for 2008 will be more than the 0.7% of GDP projected for the year, but there is no information on the exact amount. There is speculation that it could total RD$32.7 billion at the end of the year, as estimated by economist Hector Salcedo Llibre, or 2.3% of GDP.
Economy Minister Temistocles Montas says that the present economic crisis could be worse than the 2003 Baninter crisis. He said that there is a deficit in the current account of the balance of payments that could reach 8-9% by the end of 2008 due to rising imports.
Meanwhile, the government's plan is not to increase taxes for now, but to continue implementing its very efficient tax schemes and attracting new taxpayers. Juan Hernandez of the DGII forecasts that with new systems in place, tax evasion, which is at a historic low of 26%, could be lowered to 18%.
When asked about the transparency and good use of government collections, Juan Hernandez nevertheless told journalist Huchi Lora that "that is another scenario."

Heliport inaugurated
Jose Tomas Perez, director of the Civil Aviation Institute, was present at yesterday's inauguration of the Santo Domingo Ecological Heliport. The heliport, which is located on the 30 de Mayo Highway, has the capacity for 40 helicopters. During his speech Perez said that before this heliport's construction, there wasn't a public landing pad for use by tourists or businesspeople in Santo Domingo. He added that incoming helicopters had to ask permission from private businesses in order to land on their property, or would have to land at the La Isabela Airport in northern Santo Domingo. Perez also said that the new heliport could motivate investment by a city tours company. Airport Department director Andres Van der Horst said that the heliport will fill a long-standing void.

We can't do it
While city government workers might feel happy at the prospect of a pay rise, Fausto Ruiz, president of the Dominican Municipalities Federation (FEDOMU), said there is no way that the nation' s municipalities can implement the wage increase initiative proposed by President Leonel Fernandez yesterday because they simply don't have the money, and payrolls are already too big. Ruiz, who is also the mayor of La Vega, said that the country's city halls are in the same predicament. Ruiz said that the government should include the municipalities and city halls in the new "Plan for Integrated Action" budget in order to reduce the burden.

Shipments will be fumigated
Agriculture Minister Salvador Jimenez has said that all shipments coming from Haiti will be fumigated as part of an initiative to prevent the spread of a carnivorous ant outbreak that has been reported in border areas. Jimenez said the ant, the Paratrechina (Hymenoptera formicidae), is a very aggressive ant that attacks crops and livestock. The Minister said that several international organizations are taking part in the fumigation project. Jimenez said that government officials have known about the outbreak for three months and have helped the Haitian authorities identify the particular ant.

FTZs recover
Luisa Fernandez, director of the National Free Trade Zone Council (CNZFE), says that many of the free trade zone (FTZ) companies that had left for Mexico, Central America or Asia have returned to the DR. Fernandez said that in Asia there are increasing salary requirements and that companies have to meet American environmental requirements. While this is detrimental to Asia, it has been beneficial for the DR. She added that distance is also an issue since freight costs are higher because of the amount of fuel needed to transport goods from Asia to the US. Fernandez concluded that US companies would rather buy from the DR than wait six weeks for a shipment to arrive from China.

HD TV coming
Telecable de Tricom and the Venezuelan consortium Latin American Pay Television Service (LAPTV) have signed an agreement which will allow subscribers to access Movie City HD, a high-definition movie channel. According to Hoy, this agreement will allow Dominicans to be the first subscribers in the region with access to high-definition television viewing. Officials say the service should be available by August and will cost no more than RD$250 per month to cable subscribers. LAPTV includes the participation of Universal Studios, Metro Goldwyn Meyer, Paramount Pictures and Twentieth Century Fox.

History relived
El Caribe, quoting a story in the Cuban government newspaper Granma, says that the 1976 bombing of a Cubana flight in which 73 people died, was planned in Bonao by Romanian national Alexander Vlonsky, a.k.a Sacha Volman. The newspaper writes that anti-Castro activist Luis Posadas Carriles planned the bombing on 11 June 1976 alongside Volman, who was believed to have strong political ties in the DR, especially with the late Dominican politician, former President Juan Bosch. The paper adds that CIA agents helped with the planning of the attack.

Money-changing business
Dominicans are quick to smell a new business opportunity. Now, given the widespread shortage of change that is affecting stores, there are businesses that will cash bills for a fee. This is only making matters worse, because they have collected coins in the market for distribution to businesses needing cash and willing to pay the 15-20% commission fees, as reported in Hoy.
Pedro Perez of the National Organization of Commercial Entities (ONEC) denounced the continued acute shortage of RD$10 and RD$25 coins. He said that matters are now worse, because after the Central Bank denied that there was a shortage, customers stepped up the pressure demanding change. Businesses try to encourage their customers to take something extra for the change, or to pay with credit or cash cards. Perez says that there are more RD$5 coins available, but not enough to cover the stores' needs.
The Central Bank announced that it has ordered shipments of new coins that are due to arrive in October, November and December.

Medicare hunts turns interesting
On 19 June news outlets reported that US federal agents were in the DR investigating a money-laundering scheme involving Medicare funds. Sources revealed that the perpetrators of the scam had defrauded the Medicare system out of millions of dollars and laundered the money through the DR. Three FBI agents as well as other enforcement officials were in the DR investigating, but little information was released at the time. The case took an interesting turn on 11 July when El Dia reported the kidnapping of Cuban national Yubelkis Benitez Ramirez and her Dominican boyfriend Lenin Linares Guerrero. The Police investigated the case and found out that Benitez was the daughter of whom was being investigated for the Medicare scam. She was kidnapped at her father's Vista Bavaro cabanas in Bavaro, by those who would ask for a ransome after learning her father was linked to the Medicare scam. El Dia explains that kidnappers, Fausto Munoz, Elias Sanchez, Noemi Sanchez, Cristian Marte Marte, Edwin Portorreal Marte and former police officer Anderson Mateo, were looking to extort the elder Benitez for US$5 million in return for Yubelkis' release. The Police was able to rescue her at the home where she was kept in Santo Domingo Este. Police believe that he had bought the properties with the Medicare money. The FBI sent Denis Pierce to continue the investigation. In a further twist to the drama, Hoy reports that police officers and the legal authorities have seized three motels, apartment buildings, houses, seven luxury vehicles, a water park in Bavaro, boats and a helicopter in Higuey. The property and material goods belong to Oscar, Jose and Luis Benitez. US DEA and FBI agents cooperated in the seizures.

Alvarez Renta to jail
Luis Alvarez Renta, one of the men convicted in the BanInter banking scandal, was sent to Najayo jail last night. Renta has been sentenced to 10 years imprisonment. Hoy writes that before Renta made his way to the jail he and his lawyers made a series of requests to judge Saulo Ysabel, including a transfer to the Haras Nacionales jail in Santo Domingo North. All their requests were denied. Renta will share a designated area of the jail with Ramon Baez Figueroa and Marcos Baez Cocco, who were also sentenced to 10 years in prison. Both men entered Najayo on Wednesday night. Judge Ysabel said that he would wait until Monday before deciding what to do in the case of Vivian Lubrano de Castillo. Lubrano, who was also sentenced for her involvement in the case, claims to be sick and is currently hospitalized. Her daughter says that Lubrano could die if removed from the hospital.

Guzman among the best
Dominican boxer Joan Guzman has been rated among the top 20 boxers in the world by ESPNDEPORTES.com. Guzman is ranked 17th on the list, and is topped by his rival, Filipino Manny Pacquiao. This is the first time a Dominican boxer has been included among the best in the boxing world. Experts say that if Guzman can beat rival Nate Campbell on 13 September he could jump up to being ranked amongst the top five boxers in the world. When Guzman faces Campbell, three different belts will be on the line. If Guzman wins he would have collected three championship belts - an unprecedented feat for a Dominican boxer.

Super Sanchez leads delegation
The Dominican Olympic Committee has chosen Felix Sanchez, the DR's first Olympic gold medalist as the DR's flag-bearer at the Summer Olympics that open on August 8 in Beijing. Juan Vila, head of the Dominican Olympic mission, says that within the next few days President Leonel Fernandez will meet with the athletes and present them with the ceremonial Dominican flag. Sanchez stormed on to the international sports scene during the Athens 2004 Olympics and won the DR's first gold medal at any Olympic games after crushing the competition in the 400 meters hurdles.
The Olympic Committee has announced that the first part of the Dominican team will leave for China on 25 July. Team members are Felix Sanchez, Carlos Yoelin Santa, Arismendy Peguero, Pedro Mejia, Yoel Tapia, Marielys Sanchez and Yon Soriano (track and field). Lin Ju, Qian Lian, Wu Xue and Joenny Valdez (table tennis). Gabriel Mercedes (tae kwon do). Argenis Nunez, Juan Carlos Payano, Winston Mendez, Roberto Navarro, Felix Diaz and Gilbert Castillo (boxing). Yudelkis Contreras (weight-lifting). Raul Aguayo (sailing). Jacinto Ayala (swimming). Maria Garcia, Juan Carlos Jacinto and Teofilo Diek (judo), and Julio Dujarric (skeet).
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