Investment banker Bear Stearns published a Sovereign Latin
America Update, which brings optimistic tidings for the ailing Dominican peso
and the economy in general. The report estimates that the peso has recovered 5%
of its value in the past month, and that the economy may have already hit its
lowest point, setting the scene for a possible upturn.
The US-based institution awards the DR a Ba2/B+ rating, and attributes the
peso?s recent upward trend to the imminent IMF agreement, the restructuring of
troubled banks Baninter, Bancr?dito, and Mercantil; US$1-billion CD issuance to
soak up excess peso liquidity; increased tourism flows; robust remittances;
higher exports and lower imports.
The report says that tourism for the first half of the year has increased 21%
compared to the same period last year, translating to 1.7 million foreign
tourists. Tourist revenues are cited as having expanded by more than 18%, from
US$1.36 billion in the first half of 2002 to US$1.61 billion for the same period
in 2003.
Remittances were up 2.8%, to US$1.08 billion from US$1.05 billion in the first
half of 2002. Bear Stearns says that remittances have become a key contributor
to the country?s external accounts and represented a vital source of foreign
exchange during the crisis period.
Likewise, exports grew by 8.6% for the first half of 2003 to US$2.8 billion.
Free zone exports were up 5.7% and non-free zone exports 21.7%, boosted by the
weaker peso. Imports contracted 17.2% during the same period, causing the
merchandise trade deficit for the first half year to fall to US$1.2 billion for
the first half of 2003 from US$1.9 billion for the same period in 2002.
Bear Stearns report (PDF):
http://dr1.com/news/2003/DR_Sov Update_082103.pdf