The DR government is confronting a severe liquidity problem. If things go as planned, the government will shortly receive the cash to wade through the immediate difficulties and there will not be an acute shortage of fuel affecting the tourism market. See this latest report from Bear Stearns on the situation:
"We have confirmed with the Dominican government that the information regarding US$56 million in external debt payments scheduled for this week (as reported by the local press today) is indeed correct. As agreed with the IMF, the Dominican Republic must clear all arrears on its external debt obligations at least five business days prior to the IMF Board date of February 11. This means that by tomorrow, February 4, all outstanding payments must be made. The Dominican government has had to make foreign debt payments totaling US$83 million over the past two weeks. A US$16 million payment was made to power company Cogentrix last week, as was an US$11 million interest payment to the IDB, bringing down the total amount due during the course of this week to US$56 million. Of the US$56 million total, the pending coupon payment on the 2013 bond would account for US$27 million, and payment on non-reprogrammable Paris Club debt (mostly arrears) would account for US$29 million. The government hopes to receive a US$150 million disbursement from the IDB later today (by tomorrow morning at the latest). Of the total IDB loan, the government intends to use US$45 million to complete this week's payments (it has reportedly already set aside US$11 million from its own resources to make external debt payments). If everything goes according to plan, the coupon payment may be made as early as tomorrow, with the central bank transferring resources to the paying agent in New York some time in the afternoon; individual bondholders would get the coupon payment credited shortly thereafter (perhaps by Thursday)."
