The International Monetary Fund, in a report to the Central Bank, requested that the government effectively monitor its spending on salaries, capital investment and subsidies to reduce overall spending. The report mentions that during the first quarter, government payroll expenses were up. The report specifies that the number of government employees is excessive and that the ?botellas?, or those to whom checks are issued but who do not exercise any needed function, be eliminated. Governor of the Central Bank Jos? Lois Malkum has said there are 125,000 people on payroll in government.
The report also criticizes the fact that despite the external shock the economy received at the start of 2002 government spending was up, which caused an overheating of the economy. The report mentions that the government had accelerated its capital spending during the first half of the year, which coincided with the days building up to the congressional election of May 2002. It also criticized the Central Bank for not freezing the deposits of the government derived from the first placement of the sovereign bonds.
The IMF is recommending the government cut its spending by RD$4.2 billion, or RD$433 million a month, and that these funds be deposited to the Central Bank. In April, the government did not remove any money from the system, despite having made a commitment to the private sector to remove RD$300 million a month.
The report also says the government spending on the Panamerican Games has well exceeded initial estimates.
The director of the Cenantillas economic research think-tank of the Pontificia Universidad Cat?lica Madre y Maestra said that if the government does not heed the fiscal savings proposed by the IMF, it would be sending the wrong signal to the economic agents of the market.