President Leonel Fernandez addressed the nation on Monday, 16 September, giving a report on his first 30 days in office. He said that his government has been sending all the proceeds from the tax on petroleum products, with the exception of the subsidy for propane gas that benefits consumers, to the Central Bank, so that it can meet its repayment obligations for the foreign debt. He explained that, in the past, the Central Bank authorities in order not to affect the macroeconomic stability were borrowing from the commercial banks, a measure which involved an estimated RD$1,700 million which can now be offered at lower interest rates to the private sector.
The President also explained that the Monetary Junta has made RD$400 million of the Central Bank’s resources available for loans to productive sectors through the Defipro department of the Bank at 14.5% interest, down from the previous 18.5%. For the agriculture sector, the government has assigned RD$300 million to the Banco Agricola and RD$50 million to the Ministry of Agriculture to begin a program of short cycle crop production for the domestic market. Overall, this means an additional RD$2,450 million is now available for the country’s productive sectors which, he explained, should spur a reactivation of the economy.
He also said that he has instructed the Ministry of Finance that all the U.S. dollars received by the government should be exchanged at the Central Bank at the prevailing rate in order to increase the nation’s international reserves. At the same time the government has established measures to rationalize public expenditure and increase tax income to balance the budget, and avoid deficits that generate inflation.
He also announced that beyond the commitment to maintain macroeconomic stability and generate new employment he has promulgated Law 16-95 on foreign investment which establishes clear and transparent rules for investments from abroad, eliminating some obstacles that previously impeded their flow, and would generate jobs.
The Fernández government has also requested that the National Congress approve the country’s participation in the Multilateral Investment Group (Migas) that guarantees foreign investments made in the Dominican Republic. These guarantees include, among others co-insurance and re-insurance against non-commercial risks, which President Fernandez said is an essential instrument to grant additional security to the foreigner who wants to invest in the country.
In regard to improving the living standards of Dominicans, he pointed to the increasing of the superannuation for government service pensioners, including the military, and establishing that no pensioner will receive less than the minimum legal salary.
As to the children, he said that some 200,000 more are now receiving breakfast at school, up from 100,000 under the past administration. Other programs benefiting students are the beginning of a scheme to repair some 2,000 classrooms starting in December, and an increase of RD$10 million in the subsidy granted to the state university, UASD, in addition to more than RD$25 million so that it can complete the UASD-IDB-FUNDAPEC program that will allow it to improve its sports complex, technological education courses, create a modern library, and other facilities.
Concerning the health sector, the government is promoting preventive medicine campaigns, such as vaccinations, and allocating over RD$26 million for the repair of hospitals.
Addressing the issue of refuse, he stated that the responsibility for its collection in Santo Domingo is that of the municipality, but as the government is paying the bill, it will demand that the terms of the contract with Dixi Sanitary/Attwoods Dominicana be fulfilled.
As for electricity, he said the installed capacity can produce 1,400 megawatts, but as of 16 August, the CDE was generating only 600 megawatts, while the daily demand is estimated at 1,200 megawatts. He explained that the CDE only contributes 50% of the power, which requires that the government purchase electricity from the private generators to make up the difference, at a cost of over RD$300 million a month.
An important factor in the equation is the lack of payment for electricity by many consumers. He said that in July the CDE was only receiving monies for 38% of the electricity supplied. It should receive some RD$700 million a month but is, in fact, only collecting RD$350 million, while its commitments exceed RD$550 million. He said his government has ordered a subsidy of RD$205 million monthly in order to cover the deficit.
Also referred to other state organizations, such as CEA, the state sugar corporation, and the CORDE companies that cover a wide variety of services and products. he described them as being in a state of bankruptcy, primarily attributing their condition to corruption. President Fernandez said that just to keep them alive would cost the government RD$4,000 million, “without this meaning that the power cuts would disappear, that there would be sufficient sugar or that the state enterprises would stop operating in the red.”
He said that the solution to the plight of the CDE, CEA and CORDE as proposed by the government is contained in the bill Ley de Reforma de la Empresa Pública. This bill has been sent to Congress and provides for the public enterprises to become private companies, so they can increase their capital with contributions from private investors, be these Dominicans or foreigners. He said that the strategy foresees that all of the workers in the public enterprises will have the right to take up shares in the companies to the extent of their benefits (prestaciones laborales).
The President said that, nevertheless, if the above mentioned privatization scheme was to fail, the bill also authorizes other processes, such as concessions, licenses, sale of assets or any other type of transfer. It states that the resources generated, benefits and dividends, will be placed in a fund for development that will be administrated by a trust.
In the President’s own words, “with creative imagination, will, honesty, and the right working spirit, we can lead our country to progress and modernization. The Ley de Reforma de la Empresa Pública is a first step in that direction.”