Elena Viyella de Paliza, president of the National Council of Business considers the Central Bank issuance of savings certificates at above-market rates "unfair competition" with the private banking system. ?What need was there
to increase interest rates on deposits by 10 additional points, creating a greater deficit to the Central Bank of RD$2.5 billion a year? Where is the money going to come from to pay the deficit? Why create it?" asked Viyella. She said she could not
understand why the government would penalize the sectors that should be called upon to pull the country out of its present economic crisis. ?To levy taxes on the generators of hard currency is to kill those who we should instead be asking to produce
more hard currency,? she said.
According Viyella, the problems of the country would not be solved with more taxes, but with a reduction in government spending, something for which CONEP has been lobbying for more than a year.
The Central Bank issued in July alone RD$20 billion in savings certificates at rates of interest that ranged from 32% to 36%. The bonds issued by the government are expected to cost more than the entire yearly budgetary allotment of the Ministry of
Education. The bonds were issued following the government’s decision to bailot all collapsed bank depositors. The government went beyond the legal depositor insurance of RD$500,000 protection stipulated in the Monetary & Financial Code and chose
instead to protect all deposits in troubled banks, including Baninter and its offshore affiliates, Bancredito and now, Mercantil.
On Thursday, Pedro Silverio, director of the Cenantillas economic research center of the Pontificia Universidad Catolica Madre y Maestra, said that the Central Bank is printing money to redeem the interests due on the savings certificates it has
placed on the market. He said the government needs RD$8 billion for the rest of the year. He estimates the government has placed about RD$85 billion in certificates.