Economist Bernardo Vega, today’s El Caribe op-ed piece, points out, as he did last week, that the IMF is objecting to the buy-back for two reasons. The first is that the purchase will push the public foreign debt to new heights, in blatant disregard for the IMF letter of intention. Meanwhile, it will also reduce the level of foreign reserves below the agreed upon “floor”, as also set out in the IMF letter of intention.
Vega says that the monies from the World Bank are meant to be used for reforming the energy sector, not for a counter-reformation by re-nationalizing the distributors. The former ambassador to the United States warns that the conversion of the short-term private debts of EdeNorte and EdeSur, while bringing additional cash flow, will probably not be sufficient to offset the reduction in paying clients, as the “people” will consider the electricity to be “theirs”.
As a solution, the economist suggests that the Congressional approval process include the acquisition of the two distributors, not by the government, but rather by a separate private entity, such as AES, ENDESA or any of the several Canadian companies that are interested in the business. According to Vega, this solution would not violate the IMF agreements and thus would prevent any further devaluation of the Dominican peso.