Mario Mendez, economic editor for Hoy newspaper, says that the removal of Governor Frank Guerrero Prats from the Central Bank could be a signal that the government will try to actively restrain the depreciation of the peso, instead of letting it float on the trends of supply and demand, as Guerrero Prats had favored. Guerrero Prat?s removal from the Central Bank follows the resignation of economist Eduardo Garcia Michel, another advocate of flexible exchange-rate policies. Jose Lois Malkum, however, is said to prefer more government interference to salvage the depressed peso currency. President Hip?lito Mej?a sent also sent a second supporter of governmental controls on the exchange rate, Carlos Despradel, to head the Technical Secretariat of the Presidency. ?What several are unsure of is whether or not the economic team?s reshuffling by President Mej?a signifies any changes in government spending,? writes Mendez.
He explains that the most prominent economic team members have supported the fiscal policy so far, despite the increased spending playing a good part in the exchange crisis. Economic analysts say that the government fiscal policy coupled with the expectations of the general public, and made worse by certain external factors, were behind the destabilization of the Dominican peso at the end of 2002 and at the start of this year.
Mendez says that by sending Guerrero Prats to the ministry of Foreign Relations, the idea would be to improve relations with Hugo Guiliani Cury, the Dominican ambassador in Washington, who supports all efforts that could lead to the signing of a free-trade agreement with the US. Mendez writes that Tolentino Dipp and Guiliani Cury held different positions regarding trade talks.