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Supporting agreement
The Young Entrepreneurs Association (ANJE), the Association of Santiago Industrialists (ACIS) and the Dominican Business Federation (FDC), have all thrown their support behind the Dominican government's imminent Stand-by Arrangement with the International Monetary Fund (IMF). However, ACIS president Luis Nunez says the agreement will only work if there are no more taxes and the funds are well spent. He added that the agreement could lead to an economic recovery, but this would depend on the policies implemented by the government. FDC president Ivan Garcia says that the funds the DR will get will strengthen the reserves in the Dominican Central Bank and could help control inflation. Ricardo Bonetti of ANJE says that a tax increase should not be part of the agreement. Although the business sector is supporting the agreement, some have expressed concern that the agreement does not give details on how to spend the money or how to invest it.
08 October 2009 - DR1 Daily News
08 October 2009 - DR1 Daily News
IMF agreement a step closer
The DR has signed a letter of intent that will pave the way for the signing of a new Stand-by Arrangement with the International Monetary Fund (IMF) and will guarantee the DR access to an additional US$900 million in funds, this year alone. The agreement, which is the first for a Caribbean nation in more than two years, could include up to US$1.7 billion in funds for the DR during the 28 months of the agreement. The agreement was announced at the Annual Meeting of the Boards of Governors of the International Monetary Fund (IMF) and the World Bank Group being held in Turkey. As part of this new agreement with the IMF, the DR has agreed to reduce its budgetary deficit of 0.8% of the GDP to zero in 2010. The agreement calls for a 2% budget surplus by 2012. The agreement also requires reforms to the DR's crumbling electricity sector and a more efficient tax system. Yesterday, IMF Managing Director Dominique Strauss-Kahn congratulated Dominican authorities for the strength of the policies and reforms included within the agreement, "which demonstrates the commitment to strengthen the DR institutionally and economically." The Letter of Intent will now be sent to the Executive Director of the IMF for final approval. Although there have been calls from some quarters in the DR for the stability an IMF agreement would provide, there is also concern that a new "fiscal reform", Dominican political code for a tax increase, would come on the heels of this new agreement. Minister of Hacienda Vicente Bengoa, Governor of the Central Bank Hector Valdez Albizu and Economy, Development and Planning Minister Temistocles Montas were all attending the meeting in Istanbul when they signed the Letter of Intent.
See: www.imf.org/external/np/sec/pr/2009/pr09357.htm
07 October 2009 - DR1 Daily News
See: www.imf.org/external/np/sec/pr/2009/pr09357.htm
07 October 2009 - DR1 Daily News
Natural gas plant coming
The United Arab Emirates and Dominican governments have just closed a deal that paves the way for immediate construction of a US$800 million electricity generation plant in the north western port of Manzanillo, in Monte Cristi province. Rumors that the UAE would build the plant have been circulating for close to a year, but this is the first concrete information on the subject. Listin Diario reports that the plant will run on natural gas, generating 600 MW of electricity. The final details of the contract were worked out yesterday between President Leonel Fernandez and UAE Foreign Relations Minister Sheikh Abdullah Bin Zayid Al Nahyan. The meeting took place at the Presidential Palace and construction is due to begin as soon as next week.
06 October 2009 - DR1 Daily News
06 October 2009 - DR1 Daily News
DR in OECD Development Center
Hoy reports that the DR was admitted to the Development Center of the Organization for Economic Co-Operation and Development (OECD) yesterday. The country's admission into the Development Center was announced by Minister of Economy, Planning and Development Temistocles Montas. The DR is now the 7th regional member of the Center, which has a total of 39 members from the OECD nations. The basic objective of the Development Center is to serve as a link between the world's most developed countries and countries with emerging economies.
Hoy reports that the process of becoming a member of the OECD Development Center began in 2004. It included an overhaul of the DR's planning and administrative financing system.
For more information, see: www.oecd.org/department/0,3355,en_2649_33731_1_1_1_1_1,00.html
06 October 2009 - DR1 Daily News
Hoy reports that the process of becoming a member of the OECD Development Center began in 2004. It included an overhaul of the DR's planning and administrative financing system.
For more information, see: www.oecd.org/department/0,3355,en_2649_33731_1_1_1_1_1,00.html
06 October 2009 - DR1 Daily News
19 October 2009 - Robert Buddan - Jamaica Gleaner
The International Monetary Fund (IMF) has agreed to lend the Dominican Republic (DR) US$1.7 billion under an agreement of 28 months. Jamaica is seeking US$1.2 billion for an agreement covering 24 months. These two neighbouring countries are asking for very similar support.
The DR has submitted a letter of intent after starting preliminary talks at the end of August and substantive negotiations in the first week of September. The IMF's Board now has to approve the agreement.
Jamaica started preliminary talks around April/May. We still have no IMF agreement six months after. The DR had one in one month. In their letter of intent, the DR has pledged to reduce the debt to gross domestic product (GDP) ratio to 0.8 per cent for 2009; to balance the Budget by 2010 and to achieve a surplus of two per cent by 2012. We don't know what our letter of intent will say. We do know that Jamaica has revised its debt to GDP ratio from a high 5.5 per cent to a higher 8.7 per cent, which is going in the wrong direction.
The IMF has much confidence in the DR's economy and believes that growth is around the corner. The DR, it believes, will be able to service its loan from that growth. An IMF study says that the DR will be one of the best economic performers over the next five years. It says that, starting next year (2010), the economy of the DR will begin to grow at an average of 5.2 per cent over the next five years to 2014. This will make it the third-best performer in Latin America after Panama and Peru.
Jamaica's minister of finance told Parliament two weeks ago that the Jamaican economy is doing worse than he had projected. It is declining by more than four per cent. Barclay's Capital just said the decline will be closer to five per cent or more. The minister of finance said recovery will only begin late in fiscal 2010-2011. Even if this is to believed, the kind of growth needed to pay back the IMF is nowhere in sight.
The International Monetary Fund (IMF) has agreed to lend the Dominican Republic (DR) US$1.7 billion under an agreement of 28 months. Jamaica is seeking US$1.2 billion for an agreement covering 24 months. These two neighbouring countries are asking for very similar support.
The DR has submitted a letter of intent after starting preliminary talks at the end of August and substantive negotiations in the first week of September. The IMF's Board now has to approve the agreement.
Jamaica started preliminary talks around April/May. We still have no IMF agreement six months after. The DR had one in one month. In their letter of intent, the DR has pledged to reduce the debt to gross domestic product (GDP) ratio to 0.8 per cent for 2009; to balance the Budget by 2010 and to achieve a surplus of two per cent by 2012. We don't know what our letter of intent will say. We do know that Jamaica has revised its debt to GDP ratio from a high 5.5 per cent to a higher 8.7 per cent, which is going in the wrong direction.
The IMF has much confidence in the DR's economy and believes that growth is around the corner. The DR, it believes, will be able to service its loan from that growth. An IMF study says that the DR will be one of the best economic performers over the next five years. It says that, starting next year (2010), the economy of the DR will begin to grow at an average of 5.2 per cent over the next five years to 2014. This will make it the third-best performer in Latin America after Panama and Peru.
Jamaica's minister of finance told Parliament two weeks ago that the Jamaican economy is doing worse than he had projected. It is declining by more than four per cent. Barclay's Capital just said the decline will be closer to five per cent or more. The minister of finance said recovery will only begin late in fiscal 2010-2011. Even if this is to believed, the kind of growth needed to pay back the IMF is nowhere in sight.
Fuel prices down this week
The cost of fuel has gone down by between RD$5.20 and RD$1.15 according to the latest price bulletin from the Ministry of Industry and Commerce. Both types of gasoline and diesel fuel went down in price as well as LPG for household and vehicular use.
LPG went down by RD$1.15 and is now RD$66.86 a gallon. Premium gasoline will be RD$145.90 a gallon and regular will be RD$135.50. Diesel fuel will be RD$116.70 for the regular grade and RD$121.70 for premium diesel. Even Avtur, the aviation fuel, was down RD$2.12 a gallon to RD$90.25.
According to the ministry, the international publications dedicated to petroleum prices, Platts and Opis LPG, are reporting lower prices for gasoline, kerosene and fuel oil because "they were pressured by a substantial fall in prices due to a weak demand and the news of an increase in United States inventories." Last week oil prices fell by US$8.00 a barrel.
05 October 2009 - DR1 Daily News
LPG went down by RD$1.15 and is now RD$66.86 a gallon. Premium gasoline will be RD$145.90 a gallon and regular will be RD$135.50. Diesel fuel will be RD$116.70 for the regular grade and RD$121.70 for premium diesel. Even Avtur, the aviation fuel, was down RD$2.12 a gallon to RD$90.25.
According to the ministry, the international publications dedicated to petroleum prices, Platts and Opis LPG, are reporting lower prices for gasoline, kerosene and fuel oil because "they were pressured by a substantial fall in prices due to a weak demand and the news of an increase in United States inventories." Last week oil prices fell by US$8.00 a barrel.
05 October 2009 - DR1 Daily News
Tourism sees upturn
During the January-August period, the DR saw 67,000 fewer tourists than the year before, a 2.2% decrease. The main reason for the low numbers was a 1.1% decline in visitors during August. Yet, despite these shortcomings, predictions six months ago were far worse. According to Diario Libre, tourist arrivals from the United States, Canada, Russia, Portugal and Argentina have increased: in fact there were 22,000 more tourists from Canada and the United States in August than the previous year.
Tourism from the United States has been up for the past four months and in August it grew by 14%, with nearly 900,000 visitors so far this year, a 1.58% increase over 2008. This is due, in part, to the fact that travel to Europe is expensive and the weak dollar makes European travel less attractive than a tropical paradise. The outbreak of the AH1N1 influenza in the Mexican resort of Cancun also sent tourists to the DR. Tourism from Canada is up this year with over 500,000 visitors. As a matter of fact, data for the past three years, 2006, 2007 and 2008, shows that 2009 has been slightly better than 2007 or 2006. Russian visitors are up15% and tourists from France, after 10 straight months of decline, went up slightly in August.
05 October 2009 - DR1 Daily News
Tourism from the United States has been up for the past four months and in August it grew by 14%, with nearly 900,000 visitors so far this year, a 1.58% increase over 2008. This is due, in part, to the fact that travel to Europe is expensive and the weak dollar makes European travel less attractive than a tropical paradise. The outbreak of the AH1N1 influenza in the Mexican resort of Cancun also sent tourists to the DR. Tourism from Canada is up this year with over 500,000 visitors. As a matter of fact, data for the past three years, 2006, 2007 and 2008, shows that 2009 has been slightly better than 2007 or 2006. Russian visitors are up15% and tourists from France, after 10 straight months of decline, went up slightly in August.
05 October 2009 - DR1 Daily News
Economic drop is pronounced
The International Monetary Fund (IMF) calculates that the Dominican Republic will see growth of 0.5% this year and 2% in 2010, the same numbers that it predicted for the country last April, according to its latest "World Economic Outlook" report.
Last year the country's GDP grew by 5.3%, according to the report. The IMF did improve, nonetheless, the predictions for inflation, which they had originally calculated at 1.7% for 2009 and 5.8% for 2010. Finally, IMF specialists are expecting a 0.9% inflation rate for 2009 and 5.4% for 2010. Last year, the Consumer Price Index (CPI) for Dominicans grew by 10.6%, reminds the report. On the current balance of spending, they expect a deficit of 6.1% of the GDP in both 2009 and 2010.
02 October 2009 - DR1 Daily News
Last year the country's GDP grew by 5.3%, according to the report. The IMF did improve, nonetheless, the predictions for inflation, which they had originally calculated at 1.7% for 2009 and 5.8% for 2010. Finally, IMF specialists are expecting a 0.9% inflation rate for 2009 and 5.4% for 2010. Last year, the Consumer Price Index (CPI) for Dominicans grew by 10.6%, reminds the report. On the current balance of spending, they expect a deficit of 6.1% of the GDP in both 2009 and 2010.
02 October 2009 - DR1 Daily News
US$70 million loan with IDB
The Presidency's Social Policies Coordination Cabinet will receive US$70 million from the Inter-American Development Bank (IDB) over a period of 18 months. The Social Cabinet programs are managed from Vice President Rafael Alburquerque's office. Hacienda Minister Vicente Bengoa announced the signing of the 25-year loan agreement with the IDB. The program provides health, education and nutrition programs for the poor. The budget is divided into three parts: US$65.4 million for poor families, US$4 million to strengthen institutional information systems and US$450,000 to evaluate the impact of the program. US$100,000 is set aside for managing and auditing the program.
02 October 2009 - DR1 Daily News
02 October 2009 - DR1 Daily News
Public debt is US$17.39 billion
Clave newspaper highlights that the public debt is now at US$17,396.2 million, according to figures from The Economist. In other words, every baby born in the DR comes into this world owing US$1,845.
Journalist Edwin Ruiz points out that the Ministry of Hacienda only acknowledges a government debt of US$11,358.2 million. He writes that the Dominican government stats do not account for accumulated obligations and debt payments to electricity companies, or the so-called Central Bank quasi-fiscal debt. Clave newspaper says that from January to September 2009 alone, the government approved new loans for US$897.2 million and EUR18.5 million, for US$924.14 million in US$ dollars.
The Economist also forecasts that the debt is rising. It indicates that for 2011, the public debt will have risen to US$19,355.2 million. By then the public debt will have grown from 41.22% of the Gross Domestic Product (2009) to 43.6% of GDP by 2011.
Ruiz says that the Ministry of Hacienda stats report that the debt at US$11.2 billion is 24.3% of the GDP. The Ministry indicates that of this, the foreign debt is US$7.14 billion and has grown 13%, or US$844.5 million, compared to 2006. The domestic debt is estimated in US$4.2 billion. This does not take into account arrears with the electricity sector. The new CDEEE executive vice president Celso Marranzini says the overall debt is US$590 million.
Economist Carlos Asilis told Clave that the levels of debt are a cause for concern. He told the newspaper that the "levels are very close to the ceiling of what the country can bear in the long term." He said that conservatively speaking, the debt could be at 50-55% of GDP. He says that this means that, "the days the Dominican state can continue improvising and applying patches to the Dominican economy will soon be over. He said the government only deals with public finances when its back is against the wall.
"The role of the state in our economy needs to be redefined", he said, "especially with regards to an injection of a high degree of transparency and rationality in public spending, a more proactive approach to the economy and greater economic freedom for the productive sector, by way of less financial repression," he said.
Miguel Ceara Hatton of the United Nations Development Program office said that taking on debt could be good or bad. He said that the country has a serious problem when it comes to the quality of government spending. "There is not enough information about where the money is going," he told the newspaper. He says there is "an institutional framework that does not allow for transparency or accountability." He says that in these circumstances, to go on taking on debt generates many concerns.
For The Economist report, see http://buttonwood.economist.com/content/gdc
01 October 2009 - DR1 Daily News
Journalist Edwin Ruiz points out that the Ministry of Hacienda only acknowledges a government debt of US$11,358.2 million. He writes that the Dominican government stats do not account for accumulated obligations and debt payments to electricity companies, or the so-called Central Bank quasi-fiscal debt. Clave newspaper says that from January to September 2009 alone, the government approved new loans for US$897.2 million and EUR18.5 million, for US$924.14 million in US$ dollars.
The Economist also forecasts that the debt is rising. It indicates that for 2011, the public debt will have risen to US$19,355.2 million. By then the public debt will have grown from 41.22% of the Gross Domestic Product (2009) to 43.6% of GDP by 2011.
Ruiz says that the Ministry of Hacienda stats report that the debt at US$11.2 billion is 24.3% of the GDP. The Ministry indicates that of this, the foreign debt is US$7.14 billion and has grown 13%, or US$844.5 million, compared to 2006. The domestic debt is estimated in US$4.2 billion. This does not take into account arrears with the electricity sector. The new CDEEE executive vice president Celso Marranzini says the overall debt is US$590 million.
Economist Carlos Asilis told Clave that the levels of debt are a cause for concern. He told the newspaper that the "levels are very close to the ceiling of what the country can bear in the long term." He said that conservatively speaking, the debt could be at 50-55% of GDP. He says that this means that, "the days the Dominican state can continue improvising and applying patches to the Dominican economy will soon be over. He said the government only deals with public finances when its back is against the wall.
"The role of the state in our economy needs to be redefined", he said, "especially with regards to an injection of a high degree of transparency and rationality in public spending, a more proactive approach to the economy and greater economic freedom for the productive sector, by way of less financial repression," he said.
Miguel Ceara Hatton of the United Nations Development Program office said that taking on debt could be good or bad. He said that the country has a serious problem when it comes to the quality of government spending. "There is not enough information about where the money is going," he told the newspaper. He says there is "an institutional framework that does not allow for transparency or accountability." He says that in these circumstances, to go on taking on debt generates many concerns.
For The Economist report, see http://buttonwood.economist.com/content/gdc
01 October 2009 - DR1 Daily News