El Caribe highlights that imports were dwindling long before the presidential decision to impose the 10-percent surcharge on all imports not classified as raw materials, food, medicines or capital goods. As more pesos were needed to purchase a dollar, importers began buying fewer goods abroad, in anticipation of a decline in demand occasioned by the higher prices. The peso has seen a devaluation of approximately 40 percent in relation to the US dollar over the past year.
Domingo Espinal, president of the Asociacion de Almacenistas Importadores, a leading importers association, forecast a continued downward trend in imports and that orders for goods to be assessed with the new tax will drop significantly. Espinal felt the 10-percent surcharge will have the desired effect of halting imports, but he said that would not solve the problem. ?It is clear that the situation can only be fixed by generating confidence in the economic agents so that private investment may stimulate the economy,? he said. He said the government measure changes the rules of the game from one day to the next, and importers do not know if such measures will be extended beyond the first three-month term. Customs will begin applying the new tax next week.