After the recent rather heated exchanges relating to the current Dominican economy, I was reflecting how we had arrived at our current situation . People who have been here for some years will recall ,that prior to 2008, the appalling state of the roads ,say, from Sosua all the way to the Samana and from San Pedro to Punta Cana and then to Bavaro and from San Cristobal to the west. Many of the Zonas Franca were in bad shape . There was huge unemployment. When the world moved into a nasty recession in 2008, probably caused by the secondary housing finance markets in the USA, it was a great temptation for many to say we must tighten our belts and ride out the economic storm . Early in 2009, the G20 meeting was held in London and at this meeting many of the wealthy countries transferred their drawing or borrowing rights with the IMF to developing countries to save them from disaster. The Dominican Republic jumped at this opportunity to borrow at historically low rates and to embark on a massive infrastructure programme. Massive for the DR, at any rate. Of course there was opposition from people who firmly believed that you only bought and did things when you had the money in the bank but the DR went ahead with a programme to build for the future and then to let the future generations of Dominicans pay.
What we saw now is obvious to everyone as they travel around the country. We were very fortunate that a world class company, Odebrecht from Brazil came to the DR with all their expertise and machinery . They used local subcontractors who used to local workers and the DR avoided the worst effects of the depression. There were some errors made along the way by government officials who had never experienced such a huge and diverse programme and by the politicians who saw an opportunity to make a quick peso , but overall we had very quickly advanced to a more modern country. But the Government had to borrow an unprecedented amount of money in a series of tranches to finance all this work. The current generation and future generations of Dominicans now must finance and gradually repay these borrowings which have been used to improve the Dominican economy.
All that is good news. What is not so good is for Dominican Governments to spend more money than they earn on actually running the country and then to borrow more money to make up the difference. Somehow the cost of Government must be reduced and if this occurs I think the DR can really benefit from the great decisions made more than a decade ago .
What we saw now is obvious to everyone as they travel around the country. We were very fortunate that a world class company, Odebrecht from Brazil came to the DR with all their expertise and machinery . They used local subcontractors who used to local workers and the DR avoided the worst effects of the depression. There were some errors made along the way by government officials who had never experienced such a huge and diverse programme and by the politicians who saw an opportunity to make a quick peso , but overall we had very quickly advanced to a more modern country. But the Government had to borrow an unprecedented amount of money in a series of tranches to finance all this work. The current generation and future generations of Dominicans now must finance and gradually repay these borrowings which have been used to improve the Dominican economy.
All that is good news. What is not so good is for Dominican Governments to spend more money than they earn on actually running the country and then to borrow more money to make up the difference. Somehow the cost of Government must be reduced and if this occurs I think the DR can really benefit from the great decisions made more than a decade ago .
