The government announced that it will pay the 13th wage as of 13 December. National Treasurer Pastora Mendez says this means an additional RD$2.3 billion of currency in circulation. Meanwhile, Hoy newspaper’s economic editor, Mario Mendez, points out today that the most intriguing item of the Central Bank report is that which is titled “Others” and refers to the internal financing carried out by the official financial organization. The Central Bank itself described the supposedly miscellaneous category as contributions made to the liquidity of commercial banks, plus accounts receivable. Customarily, the “Others” account had maintained a level of RD$30 million, but, as a consequence of the government coming to the rescue of the Baninter, Bancredito and Mercantil banks, the total has skyrocketed to RD$75.76 billion for 2003. And Mendez says it continues to increase. He mentions that as of August 2003, the “Others” total stood at RD$73 billion, but only one month later, when the problems of the three banks were supposedly under control, the figure moved up to RD$75.76 billion. Mendez says it would be interesting if the government did not lump the amounts into the “Others” column, and instead, for transparency’s sake, detailed what the amounts covered – especially since the amount almost equals the entire national budget for last year, which was about RD$85 billion.
Furthermore, Mendez writes that the monetary emission registered a significant increase in November, going from RD$64.36 billion as of 30 October to RD$70.4 billion as of 25 November. Money in circulation increased during the same period from RD$28 billion to RD$31.59 billion. Checking accounts were up from RD$36.34 billion to RD$38.80 billion. This behaviour, he writes, is in sharp contrast to what happened in September, when the monetary emission declined from RD$55.45 billion to RD$55.68 billion.
The Central Bank’s January-September reports shows that total liquidity of the banking system was up 43.8% for the period, going from RD$148.1 billion as of December 2002 to RD$212.9 as of September 2003.
The extraordinary increase in money in circulation comes at a time when the government is attempting to force a gradual reduction on the banks’ and exchange houses’ peso price.