Writing in the El Caribe, Pedro Silverio, as head economist at the Cenantillas research center of the Pontificia Universidad Catolica Madre y Maestra, continues his look into the government?s use of the Hydrocarbon Law funds that were meant to be used to pay the national foreign debt. According to an article reported yesterday by DR1 News, Silverio said that the government had not paid the Central Bank the money produced by the taxes on gasoline and other fuels under Law 112-00. According to Silverio, the government has hauled in RD$3.3 billion and has handed over to the Central Bank only RD$270 million. According to a Central Bank bulletin, the bank paid out US$265.3 million between January and May, but received only US$11 million from the government. Silverio points out that the government had to come up with the remaining US$245 million, bringing us to the issue of the US$600-million sovereign bond issuance developed to ?restructure the debt profile? of the DR, and thus converted short-term debt to long-term debt.
Silverio comments that early on some people had suspected that the money was to be used to service foreign debts in 2003, and that the ?profile? argument was merely an excuse to get a freer hand in the fiscal operations of government funds. Silverio says documents from the Central Bank show that the Bank paid US$182.8 on foreign debts between January and March and that it is evident that they did not receive enough funds from the government to cover these payments. So, says Silverio, this proves that the last sovereign bond issuance was indeed used to pay off debts. Not even the secondary purpose of solidifying the foreign reserves of the Central Bank was honored, since at the time of emission the bank held US$376 million in net international reserves, and by April this amount had fallen to US$349 million. Silverio says these are strong arguments to support the lack of trust in the government?s handling of the economy. He holds out hope, however, that the IMF accords might help the situation.
To contact the writer, email him at silverio@pucmm.edu.do