Luis Molina Achecar, president of the Banco Hipotecario Dominicano, alerted against the present high interest rates and the trend for these to continue to increase. Interest rates have been increasing since the government instituted restrictive monetary policies in March due to the increasing fuel prices on international markets and high government spending to complete major public works. Molina alerted to the contraction the economy has suffered. He spoke during a conference at the Expo Europa 2000 trade show. Molina explained that the prime interest rate has escalated to 28-30%, which has brought about a deceleration of the economy. Consumer interest rates are 38-42%, and banks are paying depositors upwards of 18% on savings. Economist Andres Dauhajre also alerted to the consequences the monetary restrictions are having on the solvency of small and medium-size businesses. He said that some government economists wrongly believe that putting the brakes on the growth of the economy is convenient to correcting the deficit of the Balance of Payments. Dauhajre feels this is the worst prescription for the DR economy. "It will bring more serious problems than those it is trying to resolve," he said.
