According to a report in El Siglo, the Central Bank will start implementing a new economic model whereby it will concentrate on controlling inflation, lowering interest rates, rather than on controlling the exchange rate. Along these lines of modernizing the management of the economy, the Monetary Junta announced the approval of a strategic five-year plan to gradually eliminate the use of the mechanism of issuing certificates of participation to make up for government overspending. The certificates are issued to reduce money in circulation, but are unfair competition to banks and this time resulted in interest rate hikes such as the 12 point leap in interest rates in less than three months time. The Bank says it is now contemplating using mechanisms such as international financing through bonds taking advantage of its good standing regarding foreign debt payments. The Central Bank says it will emphasize fiscal equilibrium on behalf of the government to avoid increases in prices of items in most demand. The Central Bank forecasts Gross Domestic Product will grow 6% in 2001, and inflation will be single-digitted, as long as petroleum prices remain under US$28 the barrel. The report says that the government will focus on increasing social expenditures for a better distribution of wealth in the country. Furthermore, the Central Bank, as reported by El Siglo, announced it is working on a project to renegotiate 50% of the nation’s foreign debt, by issuing bonds on the international money markets. This would make it unnecessary for the country to request an IMF stand by loan. The Central Bank says that the debt situation is manageable. This year, the service of the foreign debt is about US$585 million, of which US$300 million are capital and the rest interest payments.
