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News on the Economy
Government presents card to IMF
The DR government will officially present the International Monetary Fund (IMF) with its letter of intent for a new Stand-by Arrangement today. The letter describes the policies that the Dominican government plans to implement in the context of its request for financial support to fund budget deficits. It needs to be reviewed by the IMF executive board.
The government is expecting US$990 million in international funds for this year. The funds, coming from the World Bank and the Inter-American Development Bank, will not be released until the DR signs its letter of intent with the IMF.
The WB will give US$300 million, IDB will give US$390 million and the IMF will give an additional US$300 million. US$600 million will be disbursed in 2010.
The IMF forecast that the DR economy would grow 0.5% in 2009 and 2% in 2011. This is considerably lower than the 5.3% growth registered in 2008. Inflation is expected to be 0.9% in 2009 and 5.4% in 2010.
01 October 2009 - DR1 Daily News
The government is expecting US$990 million in international funds for this year. The funds, coming from the World Bank and the Inter-American Development Bank, will not be released until the DR signs its letter of intent with the IMF.
The WB will give US$300 million, IDB will give US$390 million and the IMF will give an additional US$300 million. US$600 million will be disbursed in 2010.
The IMF forecast that the DR economy would grow 0.5% in 2009 and 2% in 2011. This is considerably lower than the 5.3% growth registered in 2008. Inflation is expected to be 0.9% in 2009 and 5.4% in 2010.
01 October 2009 - DR1 Daily News
Cisneros on the DR
South America's richest man is commending the strength of the DR's economy and the way the government has handled it. Venezuelan magnate Gustavo Cisneros also commented that the DR's current troubles with the tourism sector are linked to the current global financial difficulties and that tourism should pick up once the world economy starts to recover. Cisneros made these comments after leaving the Presidential Palace where he met with President Leonel Fernandez. According to Cisneros, the DR has a great investment climate, as do many nations in Latin America, because there is no war and no threat of terrorism. The Dominican economy has always worked well, has always grown, and has always been well-managed and well-planned, where the private sector has a strong role and government is a good guide, so the balance is excellent, which is reflected in the growth figures. Cisneros is a major investor in Casa de Campo and in the Miches area.
30 September 2009 - DR1 Daily News
30 September 2009 - DR1 Daily News
Gasoline prices down
The Ministry of Industry and Commerce issued the new fuel prices on Friday. Gasoline prices have gone down by one or two pesos. Regular gasoline went down to RD$139.40, a RD$1 reduction, and premium gasoline was pegged at RD$151.10, RD$2.00 less than the previous week. Both grades of diesel fuel and LPG remained at the same price as the week before: RD$118.10 for regular diesel and RD$68.01 for LPG. Aviation fuel, Avtur, and kerosene went up a little in price, 89 cents for Avtur and 90 cents for kerosene.
The ministry press release says that crude oil and gasoline prices fell slightly on Wednesday, giving more evidence of market saturation and the market still hurting from the worst recession since 1930. The government also reported that reserves of crude and gasoline were way above the expected limits, different from other fuels such as diesel, avtur, kerosene and LPG, which showed only slight increases this past week.
28 September 2009 - DR1 Daily News
The ministry press release says that crude oil and gasoline prices fell slightly on Wednesday, giving more evidence of market saturation and the market still hurting from the worst recession since 1930. The government also reported that reserves of crude and gasoline were way above the expected limits, different from other fuels such as diesel, avtur, kerosene and LPG, which showed only slight increases this past week.
28 September 2009 - DR1 Daily News
Montas on government shortfall
All today's newspapers are reporting Minister of the Economy, Planning and Development Temistocles Montas' detailed explanation of the government's income problems. Montas was quite clear in stating that the government income for the period January-September was RD$19 billion less than projected in the 2009 budget.
An accompanying chart in the Hoy newspaper shows how exports are off by nearly 36%, free zone exports are down almost 22% and direct foreign investments are 27.6% less than projected for the year.
During his speech at a conference on Internal Auditing and Management in Cabeza de Toro on the east coast over the weekend, Montas said that the world financial crisis that began in September 2008 put a halt to the nation's growth rate that had been at a comfortable 7% over the previous two years.
His charts showed how non-petroleum related imports were down 33.3% and even tourism was off 7.1%. Finally, the remittances from the overseas Dominican population were also down by 5.1%, and this all added to the government woes, since remittances have contributed as much as 7% of the nation's GDP.
Montas said that the main challenge for the country is to reverse the slowing or even negative growth rate, and to "reduce the impact of the crisis on the poorest sectors and prevent even greater poverty and inequality".
28 September 2009 - DR1 Daily News
An accompanying chart in the Hoy newspaper shows how exports are off by nearly 36%, free zone exports are down almost 22% and direct foreign investments are 27.6% less than projected for the year.
During his speech at a conference on Internal Auditing and Management in Cabeza de Toro on the east coast over the weekend, Montas said that the world financial crisis that began in September 2008 put a halt to the nation's growth rate that had been at a comfortable 7% over the previous two years.
His charts showed how non-petroleum related imports were down 33.3% and even tourism was off 7.1%. Finally, the remittances from the overseas Dominican population were also down by 5.1%, and this all added to the government woes, since remittances have contributed as much as 7% of the nation's GDP.
Montas said that the main challenge for the country is to reverse the slowing or even negative growth rate, and to "reduce the impact of the crisis on the poorest sectors and prevent even greater poverty and inequality".
28 September 2009 - DR1 Daily News
Banreservas + MoneyGram
Banreservas general manager Daniel Toribio has stressed the importance of remittances to banks in the DR and the economies of Latin America. Toribio was speaking during the official start of a joint remittance program by MoneyGram and BanReservas. He said that Banreservas was seeking to compete for a greater share in the remittance market with MoneyGram as a partner. MoneyGram has 180,000 offices all over the world and Banreservas has 193 branches in the Dominican Republic.
Toribio said that 1,205,000 Dominicans live overseas. During the first half of the year -January through June - overseas residents sent US$1.45 billion back to the Dominican Republic, according to Toribio. During 2008, remittances accounted for 7.5% of the nation's GDP.
25 September 2009 - DR1 Daily News
Toribio said that 1,205,000 Dominicans live overseas. During the first half of the year -January through June - overseas residents sent US$1.45 billion back to the Dominican Republic, according to Toribio. During 2008, remittances accounted for 7.5% of the nation's GDP.
25 September 2009 - DR1 Daily News
IMF demands fewer subsidies
In what can only be described as an unexpectedly blunt statement, the Minister of Hacienda has said that the International Monetary Fund (IMF) is demanding that the government should increase its spending on infrastructure and the quality of its current expenditures. They are also demanding the reduction of tax incentives because they are considered to be excessive and damaging to the local economy. Hacienda Minister Vicente Bengoa told Hoy newspaper reporter Mayelin Acosta Guzman that the IMF wants the country to readjust public expenditures to spend more on capital expenditures and less on current expenditures. Bengoa said that the IMF was going to disburse US$990 million this year, adding that tax incentives would be reviewed.
25 September 2009 - DR1 Daily News
25 September 2009 - DR1 Daily News
World Bank call for redirection
The strategy the World Bank is sketching out for the Dominican Republic is placing an emphasis on a redirection of the nation's development over a four-year period. The change in direction will focus on better quality in public expenditures, a stronger accounting of expenses and increased social and capital investments. The bank emphasized the existing high social inequality, as seen with steady economic growth over the past 50 years but with poverty reaching the 40% level.
The bank expects to quickly disburse some US$300 million before the end of the year. The government is hastening to structure the programs that will be financed with these resources.
World Bank country manager for the DR Roby Senderowitsch said that of that amount US$150 million are for quick disbursal and would be used for social areas. The idea, according to Sanderowitsch, is to improve the distribution of economic growth.
The overall objectives of the program are to promote competitiveness within a sustainable economic environment, expansion of public spending and institutional development, institutional strengthening, especially better accounting of expenditures, including public access to this information, and finally, the establishment of alliances to promote the reforms that will ensure better distribution of economic growth.
25 September 2009 - DR1 Daily News
The bank expects to quickly disburse some US$300 million before the end of the year. The government is hastening to structure the programs that will be financed with these resources.
World Bank country manager for the DR Roby Senderowitsch said that of that amount US$150 million are for quick disbursal and would be used for social areas. The idea, according to Sanderowitsch, is to improve the distribution of economic growth.
The overall objectives of the program are to promote competitiveness within a sustainable economic environment, expansion of public spending and institutional development, institutional strengthening, especially better accounting of expenditures, including public access to this information, and finally, the establishment of alliances to promote the reforms that will ensure better distribution of economic growth.
25 September 2009 - DR1 Daily News
Fernandez on IMF signing
President Leonel Fernandez assured reporters in New York that the government would be signing an agreement with the International Monetary Fund (IMF) in less than three weeks to finance the budgetary problems that he attributed to the impact of the world crisis on fiscal collections. "These are not agreements for structural adjustments to resolve issues of balance of payments", said Fernandez when interviewed in New York where he is attending the 64th General Assembly of the United Nations.
He said that imports and exports were down in the DR, as well as tax sales revenues. He stressed that this is not a fiscal deficit, but rather a shortfall due to the decrease in collections.
"In principle we are with the IMF, which gives us greater credibility in the international financial markets and will allow the Dominican Republic to place bonds at an interest rate that is within the country's aims," the President told reporters in New York.
President Leonel Fernandez returns to the DR on Sunday.
25 September 2009 - DR1 Daily News
He said that imports and exports were down in the DR, as well as tax sales revenues. He stressed that this is not a fiscal deficit, but rather a shortfall due to the decrease in collections.
"In principle we are with the IMF, which gives us greater credibility in the international financial markets and will allow the Dominican Republic to place bonds at an interest rate that is within the country's aims," the President told reporters in New York.
President Leonel Fernandez returns to the DR on Sunday.
25 September 2009 - DR1 Daily News
World Bank US$40.5 million funds
On September 17 the World Bank Board of Directors approved US$30.5 million for the Second Phase of the Health Sector Reform Project (PARSS2) and US$10 million additional financing for the existing Social Protection Project.
The Health Sector Reform Project seeks to improve basic services, with an emphasis on the lower-income population. Furthermore, it seeks to enhance the quality of public expenditure and healthcare workers' capacity to respond to medical emergencies.
The PARSS2 is the second in a series of three projects that the World Bank will finance for the health sector, the first phase of which ends in December. "Through these new operations the World Bank will continue to support the government's efforts to improve coverage, selection, and concentration of public social protection programs, which aim to provide a more inclusive, efficient and transparent system for all Dominicans, especially the poorest," said Roby Senderowitsch, World Bank Country Manager for the Dominican Republic.
This US$10 million in additional funds for the Social Protection Project is part of the government's efforts to reduce poverty and attain a higher degree of social equality.
The original project approved by the Board of Directors in August 2007 was for US$19.4 million, and was approved by the Dominican Congress in November 2008. It will continue its objective of improving coverage, concentration, selection and effectiveness of the Dominican government's social protection programs. This objective is being met by the provision of identity documents for poor Dominicans, institutional strengthening of concentration mechanisms, and improving the monitoring and evaluation of social programs.
21 September 2009 - DR1 Daily News
The Health Sector Reform Project seeks to improve basic services, with an emphasis on the lower-income population. Furthermore, it seeks to enhance the quality of public expenditure and healthcare workers' capacity to respond to medical emergencies.
The PARSS2 is the second in a series of three projects that the World Bank will finance for the health sector, the first phase of which ends in December. "Through these new operations the World Bank will continue to support the government's efforts to improve coverage, selection, and concentration of public social protection programs, which aim to provide a more inclusive, efficient and transparent system for all Dominicans, especially the poorest," said Roby Senderowitsch, World Bank Country Manager for the Dominican Republic.
This US$10 million in additional funds for the Social Protection Project is part of the government's efforts to reduce poverty and attain a higher degree of social equality.
The original project approved by the Board of Directors in August 2007 was for US$19.4 million, and was approved by the Dominican Congress in November 2008. It will continue its objective of improving coverage, concentration, selection and effectiveness of the Dominican government's social protection programs. This objective is being met by the provision of identity documents for poor Dominicans, institutional strengthening of concentration mechanisms, and improving the monitoring and evaluation of social programs.
21 September 2009 - DR1 Daily News
Montas says subsidies stay
Minister of Economy, Planning and Development Temistocles Montas says that the government would not be eliminating the electricity subsidy just yet. The subsidy compensates for power distribution companies ineffectiveness at collecting for power delivered.
Speaking in Santiago, the official said that the government has designed a plan for improving collections and the functioning of the distributors with the objective of preventing the collapse of the electricity system.
"The government still cannot remove the subsidy to the electric sector, because if we remove the subsidy the system will fail", said Montas, when he was asked about it with reference to the concern expressed by the International Monetary Fund (IMF) mission that the subsidy was unsustainable.
According to Diario Libre, figures from the Superintendence of Electricity indicate the monthly subsidy on the electricity bill that the government provides is currently around RD$223.25 million.
Likewise, Montas reported that the government would receive the rough draft of the letter of intention for the agreement with the IMF for further revision early this week (today or tomorrow).
"We will go over the rough draft with President Leonel Fernandez and if there is no objection, we will proceed to notify the IMF so that the board of directors can deal with it in October", said Montas.
The official made it clear that the IMF has not expressed much concern about excessive government spending, but was worried about falling revenue levels.
He added that the IMF understands that in order to get the economy going the government needs to spend more, but it cannot do so because its income has fallen off.
Last weekend, an IMF mission ended its talks leading up to the letter of intent for the Stand-by arrangement that is set to last for several years, warning that there are problems in the country that need addressing, especially in the energy sector.
21 September 2009 - DR1 Daily News
Speaking in Santiago, the official said that the government has designed a plan for improving collections and the functioning of the distributors with the objective of preventing the collapse of the electricity system.
"The government still cannot remove the subsidy to the electric sector, because if we remove the subsidy the system will fail", said Montas, when he was asked about it with reference to the concern expressed by the International Monetary Fund (IMF) mission that the subsidy was unsustainable.
According to Diario Libre, figures from the Superintendence of Electricity indicate the monthly subsidy on the electricity bill that the government provides is currently around RD$223.25 million.
Likewise, Montas reported that the government would receive the rough draft of the letter of intention for the agreement with the IMF for further revision early this week (today or tomorrow).
"We will go over the rough draft with President Leonel Fernandez and if there is no objection, we will proceed to notify the IMF so that the board of directors can deal with it in October", said Montas.
The official made it clear that the IMF has not expressed much concern about excessive government spending, but was worried about falling revenue levels.
He added that the IMF understands that in order to get the economy going the government needs to spend more, but it cannot do so because its income has fallen off.
Last weekend, an IMF mission ended its talks leading up to the letter of intent for the Stand-by arrangement that is set to last for several years, warning that there are problems in the country that need addressing, especially in the energy sector.
21 September 2009 - DR1 Daily News