Rafael Camilo, Director of the National Planning Office (ONAPLAN), announced yesterday that President Fern?ndez has imposed a freeze on regular government spending for the remainder of 1999. The freeze is intended to ensure that the government does not build up a budgetary deficit. Camilo explained that the measure is intended to reassure the markets that there is no need for further pressure on the Dominican peso. In recent weeks the peso has weakened slightly against the U.S. dollar despite massive injections of dollars by the Central Bank. This week the Central Bank started restricting the dollar supply to banks to try to further retard conversions from pesos into dollars. Camilo suggested that there is no reason to worry about the recent exchange rate shift, because some change "is natural" when an economy is growing vigorously, and that at this time of year businesses are replenishing inventory after year-end sales, necessitating dollar payments for imports.
