News reports showed photos of Cesar Sanchez signing contracts with Union Fenosa representatives at the Hotel Santo Domingo at 5:30am on Tuesday, in order to meet deadlines set by government negotiators. The reasons for the rush, however, were not disclosed and economic analysts are at a loss to explain.
Speaking to members of the national dialogue at the PUCMM yesterday, Finance Minister Rafael Calderon told the press that the process to take over the electricity suppliers could not stand any further delays, and that is why they could not observe the IMF’s request to postpone the deal for another 30 days. The government was, however, open to making “fiscal adjustments” in the wake of the deal, according to Calderon.
Calderon, as reported in El Caribe, believes the RD$1.3-RD$1.5 billion the company collects monthly is enough to pay the contracted debt, now with Didoel subsidiary of Union Fenosa, suppliers and operational expenditures.
Under the terms of the agreement, the government would pay RD$2.5 billion to the electricity distribution companies before the end of the year. This money was originally to have come from the unpopular 5% tax on exports, which was yesterday declared unconstitutional by the Supreme Court, leaving the authorities with a dilemma, says government economic advisor Jaime Aristy Escuder. He contends that the needed funds will now have to be raised either through increased taxation or by raising the price of electricity by 41%. The business sector has suggested the government reduce its payroll, which they say is padded with political appointees who do not perform any necessary function. The government has said that such cutbacks are not an option, given the upcoming May 2004 presidential election.