International Monetary Fund negotiators arrive today in Santo Domingo to open talks that could lead to the enactment of a short IMF program, which, according to Hoy newspaper, would consist of a standby agreement with a duration of 18 months. The country would then be given access to a US$900-million financial assistance package. The agreement with the IMF is said to be a prerequisite to access funding from either the Inter American Development Bank or the World Bank.
A standby agreement is the standard IMF loan granted to governments, usually for a period of one to two years, with loan conditions focused on macroeconomic targets. If the Dominican Republic opts for an IMF standby agreement, the organization will require the country to fulfill certain conditions.
The business sector has been quick to voice its opinion that the productive sector ? already hurting from rising power, financial and fiscal charges ? cannot bear any new taxes that could be among the IMF conditions. The business sector has long insisted that the government restrain its own excessive spending and borrowing from abroad from foreign commercial banks. The Mej?a government has committed several times to do so, but has not made effective its promises.
Economic advisor to the President, Andres Dauhajre, has said that the country has no alternative but to sign an agreement with the IMF. He said that if this is not done, soaring rates of inflation would be extremely injurious to the aspirations of the ruling party and President Hip?lito Mej?a, who seek to be re-elected in the May 2004.