The Dean of the Economic School of the Pontificia Universidad Cat?ica Madre y
Maestra, Pedro Silverio, revisits the missteps of the 2003 fiscal managers of
the Dominican Republic. He begins with the exchange crisis left over from 2002
that brought about the US$600-million sovereign bond issuance that was meant to
change the profile of the foreign debts by exchanging short-term, high-interest
debts for long-term, low-interest debts. Silverio says that we now know it was a
mean lie to cover up the financial shortcomings of the government to cover its
foreign debts. Next came the Baninter debacle, and the monetary authorities had
to decide whether to remain within the limits of the law or rush to the aid of
depositors. The path chosen has meant the impoverishment of all Dominicans ?
especially the most disadvantaged. Silverio called the issuance of debased
currency ?incomprehensible?, considering that macroeconomic deterioration was
the basis for nearly all banking crises. Then along came the IMF and its standby
agreement with what, to most observers, were very generous terms. A positive
result was seen in the exchange rate, and things seemed to be moving toward
stability. But, as par for the course, the government jumped into the void again
with its unfortunate buyback of the Ede-Norte and the Ede-Sur, and effectively
toppling the IMF deal. And, Silverio adds, just when it looked as though no more
mistakes could be made, the Mejia administration demonstrated otherwise by
militarizing the exchange market and causing the disappearance of hard
currencies. Silverio says it was this series of errors that prompted The New
York Times to write its editorial asking President Mej?a to spend his final
months in office working to strengthen the beleaguered Dominican institutions.
Silverio, who also heads the Cenantillas think tank department at PUCMM,
comments finally that this plea assumes that President Mej?a knows what to do.
But, he concludes, ?this is a supposition that the majority of Dominicans do not
agree with.? For comments, write to silverio@pucmm.edu.do