(Press release provided by Moody’s Investors Service) NEW YORK, Nov 9 – Moody’s Investors Service has assigned a B1 issuer rating to the government of the Dominican Republic for domestic currency debt issues. The rating reflects limited flexibility in the fiscal area, in spite of conservative policies which has preserved moderate central government deficits in the order 1% to 2% of GDP. Sizable transfers to financially-troubled state-owned enterprises, and the presence of persistent domestic arrears to public works contractors and suppliers represent two elements that restrict budget maneuverability. Efforts to improve tax administration and to enforce tax collection have resulted in an increase of 2% of GDP in the tax burden during 1997-1998. Limited improvement in the budget position has resulted from higher tax revenues, given increased current expenditures derived from higher public sector wages, and continued transfers that account for a significant share of total government spending. The fiscal outlook is likely to be influenced by political factors. The opposition holds a majority of the seats in congress, a condition that could delay tax reforms and an ongoing process to restructure government-owned companies. Moody’s issuer ratings are opinions of the ability of entities to honor senior unsecured obligations. Specific debt issues of the issuer may be rated differently, and are considered unrated unless individually rated by Moody’s.
