The Listin Diario newspaper picks up on the latest analysis of the Dominican economic situation by the Economist Intelligence Unit, which contends that the gradual reduction of interest rates scheduled for 2004 will depend on the resumption of the IMF agreement, an improvement in investor confidence and greater fiscal discipline on the part of the government. The EIU focuses on the effects of the massive amounts of high-yielding certificates the Central Bank has issued to absorb excess liquidity created by the rescue of failed commercial banks. EIU calls the certificates “controversial”, not only for their quasi-fiscal cost but also “because they will crowd out lending to the productive sector.” It warns: “If the government does not generate substantial fiscal savings, eventually the Central Bank will have to print money to pay interest on the certificates, fuelling inflation.” Another risk factor identified by the EIU is the short-term debt for which there are inadequate resources for repayment, due to the “critically low levels” of reserves. The 3.5% shrinkage in the economy projected for 2003 is not likely to let up in 2004, says the EIU. It does however predict a moderate economic recovery for 2005, but foresees the dollar-peso exchange rate standing at RD$31 by the end of this year, rising to RD$38 by the end of 2004 and RD$40 in 2005.