Generally speaking, representatives of the business community have been critical of government measures that give priority to macroeconomic stability and the stability of the exchange rate versus creating an adequate climate for the productive sectors.
Ignacio Mendez of the Federacion de Asociaciones Industriales (FAI) says that the measures announced last week by the Monetary Board to decrease money in circulation pushed the prime rate from 28 to 35 percent. He said that the restrictions on money in circulation will bankrupt many small and medium sized businesses that cannot afford the 40 percent and higher interest rates that banks are charging on loans secured at much lower rates. Mendez feels that the new measures announced on Sunday by President Mejia will do little to improve the conditions for these businesses and predicts that the cure will be worse than the illness.
In a story in Listin Diario, Ignacio Mendez said that the increased taxes imposed throughout the Mejia administration have become a major burden for production sectors. According to him, the tax reforms have made it much more expensive for companies to produce, while simultaneously increasing the cost of goods purchased by the middle class. These reforms included a 1.5-percent tax on gross sales, an augmented ITBIS from 8 to 12 percent, increases to selective taxes on consumer goods, and the petroleum tax (fixed at RD$15.60 per gallon of regular unleaded gasoline).