Former governor of the Central Bank and ambassador in Washington, Bernardo Vega, presents arguments in an article in El Caribe today, writing that the International Monetary Fund estimates that from 2001 to 2002 the external shocks which affected the growth of tourism, remittances and exports cut revenues by US$1.9 billion. He argues that the country would have been better able to confront the external shocks if it had not placed US$1.1 billion in sovereign bonds, borrowed from foreign banks ?for multiple projects of doubtful yield? and had not increased the government?s staff by 44,000 in its first two years.
Vega says that the Mej?a government?s actions has resulted in a flight of capital from the country that he estimates very similar to the US$1.1 billion in sovereign-bond money. He says that the errors and ommissions chapter of the balance of payments shows evidence of the capital flight amounting to US$854 million from January to September alone.
Vega asserts that the government did not remove the first US$500 million generated by the sovereign bonds from circulation, instead using it to fund public works in time for the May 2002 congressional elections. Vega says that real growth in the DR is motorized by local investment, which dropped significantly as local investors lost confidence in the government?s management of the economy, and is reflected by the exodus of capital and the loss of jobs. He argues that if the government would have removed the sovereign bond money from circulation, the depreciation of the peso would have been much less than that which has resulted from the expansive policies of the government that overheated the economy at a time of significant external shocks.