In return for the RD$22.5 billion generated by the sovereign bond issuance, Dominican taxpayers will owe a sum of RD$75 billion ? a figure that does not take into account any future peso devaluations and almost equals the government budget for 2003 of RD$83 billion. The phenomenon of using sovereign bonds as a financing mechanism is unique to the Mejia administration, with previous governments having preferred financing from multilateral organizations, such as the World Bank and Interamerican Development Bank. Other recourses have traditionally included printing money not backed by reserves, the so-called ?inorganicos? made popular during the Balaguer administration.
Hoy newspaper?s economic editor, Mario Mendez, explains that the country received RD$8.5 billion for the first placement of US$500 million at RD$17.50 to the dollar, and RD$14.4 billion for the placement of the second US$600 million. The present bond issuance will cost Dominican taxpayers RD$30.6 billion in interest payments alone over the next 10 years.
