The Listin Diario newspaper reports that the government and the IMF have agreed on a new economic stabilization program that reaffirms taxes in effect since mid-year, ups the tax on alcoholic beverages and tobacco to 30%, and new taxation on loans and savings borrowing. The report states that the IMF mission will return to Washington, DC to deliver the agreement to headquarters. Technical Secretary of the Presidency Carlos Despradel says he expects the deal to be approved this month. Despradel also said the government has conceded to cut RD$9 billion in public spending, but to maintain the electric subsidies to those consuming less than 200kWh and to continue to subsidize the price of propane gas for domestic consumption. “We have agreed with the IMF that the country will have a manageable 3.5% consolidated deficit, which will lead us to macroeconomic stability in the medium and short term,” Despradel is quoted in the Listin as having said. He also explained that the government rejected an increase or expansion of the ITBIS (value-added sales tax) base because of its effect on pricing of general consumption items.
Despradel said the IMF had demanded there be a surplus of RD$35 billion to cover the commitments to savings certificates deposited at the Central Bank, increases in the cost of petroleum and the depreciation of the peso. He said the government expects revenue from the sale of the assets of the collapsed banks (including Baninter’s former headquarters at 27 de Febrero and Winston Churchill avenues), in addition to new income from the 2% tax on imports, a 5% tax on exports, the US$10 increase on departure taxes, the 0.15% tax on check transactions and the increase from 4.75% to 10% of the exchange rate transactions surcharge.
Despradel furthermore mentioned that the IMF agreed that the government would generate revenues to the tune of RD$11 billion more by increasing monthly power bills to residences consuming from 200-700 kWh by 4% and to those consuming more than that amount by 7-8%. Despradel reported a government deficit of RD$400 million a month with the power sector, and estimated it would subsidize the poorest households for up to RD$2.5 billion next year. The propane gas subsidy next year is estimated to be worth RD$6.35 billion.