Well if the peso devalues, will prices rise like when Hipolito was President? That would be a double whammy. When the peso was 56:1 prices rose to compensate but when the peso went back the prices remain artificially high today.
Frank:
I do not believe it will devalue as in the Mejia days. That was brought on by a systemic banking crisis.
But the current situation of borrow, spend and pretend has been facilitated by the IMF when they rode into town and saved the DR economy from collapse. They have been trying in vain to get the government to change its ways....but to no avail. And, once the government figured out they could just bailed out again and again....their behavior (financial) has still not changed. And as one can plainly see, the "low" interest borrowing costs are more than offset by the IMF's demands.
Those demands have been more and higher taxes on the population. Now if those taxes were properly spent, that would be one thing. But since the DR is dead last of 144 countries in wastefulness of government spending, the need for taxes will show no signs of abating for the foreseeable future.
Add in the fact that the DR has subsidized oil from Venezuela (they have Presidential electionson Sunday) that allows them to defer full payment for 20 years....and that the price of gas is already so heavily taxed, it begs the question....where does all that money go?
It certainly does not go to pay the power generators. It certainly does not go to education, or to the health and welfare of the citizenry. One can only conclude it gets swallowed up by the political party in power for the benefit of its members.
And I imagine that the resident spin doctor will be here before too long to post about all those schools, hospitals etc., the "government" is building or built. So before he tries that spin, understand that the money for most of those new schools and public hospitals was lent to the DR by the various other world agencies for development, i.e., the WorldBank, USAid, IADB, etc.
So the question still stands....where does all the government money go?
But of course, the question is rhetorical. Do nothing NGO's controlled by Senators that employ do nothing relatives. Hundreds and hundreds of deputy ministers that only know where they go to collect their check...not what they actually are supposed to do. More military generals than the US and Canada combined. Thousands of soldiers who are on government payroll yet asigned to private duty for powerful and influential party members...or who are leased out by those same party members for further political gain. Ambassadors and their staff to certain countries that do not even have an embassy to reside at.
The list goes on.
Respectfully,
Playacaribe2
