The government published full-page spreads in most morning newspapers today, regarding its petition to the IMF in exchange for US$1 billion in assistance. Negotiating for the government are Central Bank Governor Jose Lois Malkum, Technical Secretary of the Presidency Carlos Despradel, Finance Minister Rafael Calder?n and Superintendent of Banks Julio Cross. The government is pursuing an agreement with the IMF to restore confidence and foreign-exchange stability. In its letter of intent to the IMF, the government proposes to:
Freeze salaries of government workers for the rest of the year.
Reduce the fiscal and quasi-fiscal deficits to 1% of the gross domestic product in 2003 and by 2% in 2004.
Dissolve the Baninter Group and its properties as soon as possible and pay depositors.
Improve supervision of commercial banking.
Adjust spending on government projects to a level that does not exceed 5.1% of the GDP for 2003.
Work towards the unification of the exchange rate.
Work with international financial organizations in order to produce a fiscal reform package for 2004.
Some of the mechanisms announced by the government include a 2% tax on all imports; a 0.15% tax on all checks; and a US$10 hike for outbound passengers at airports and ports (increasing the cost of the departure card to US$20).
Hoy newspaper reports that Malkum explained that for now there will be no talk of removing government employees. Central Bank Governor Malkum months ago stated that there are around 125,000 excess employees working in the government bureaucracy. These included thousands of ?special assistants? to the President earning wages of more than RD$25,000 a month each.
Following a meeting at the Chamber of Deputies, where he explained the government proposal, Malkum said that the government?s main objective is to reduce the exchange rate, which would benefit the entire country. He estimated that the exchange rate is between five to eight points higher than what it should be due to the uncertainty and pressures on the economy, reported in Hoy newspaper.