With foreign debt obligations having doubled during the first three years of the Mejia government, economist and former director of the National Planning Office during the Leonel Fernandez government Rafael Camilo said that the government next year will need RD$40 billion to pay foreign debt, reported Hoy newspaper. Camilo said the government will need to make US$1 billion in payments on hard currency obligations plus RD$24 billion to cover savings deposits it has taken on as part of the Mejia administration’s response to the collapse of three commercial banks. Camilo also mentioned that the government owes billions to government contractors, suppliers, and domestic commercial banks, which translates into a need to allot 70% of the 2004 National Budget to debt payment. He said the government is choosing increase taxes, as apparently has been agreed with the IMF. He also pointed out that the government has issued RD$98 billion in money that is not backed by hard currency reserves, according to data from the Central Bank. Camilo commented that this practice stimulated capital flight, which is estimated at US$3.5 billion, given the steep devaluation of the peso and the continued lack of confidence in the present government.
Camilo criticized that in handling the collapse of the Baninter commercial bank, the government had given priority to the interests of a government-related group, authorizing RD$40 billion in disbursements prior to the intervention of the Central Bank, at a pace of RD$2-RD$3 billion a day. He said this was even admitted by Governor of the Central Bank Jose Lois Malkum, who said that security trucks spent days transporting enormous quantities of money to the branches of the bank. Camilo spoke on the TV program “Enfoque Semanal”, produced by Julio Cesar Jerez Whisky on Channel 15 Telemicro. Camilo said that the large amount of pesos in circulation had spiraled into the initial steep depreciation of the Dominican currency, as anyone who could went on a dollar-buying spree.