Central Bank Governor Jose Lois Malkun admitted yesterday during the question-and-answer period following his talk at the American Chamber of Commerce luncheon that by the end of 2004, the country could owe as much as RD$84 billion in interest payments on the savings certificates issued by the Central Bank, as reported in the Listin Diario. Lois Malkun said the year began with a debt of RD$60 billion, but new savings certificates issued this year have increased that total by RD$24 billion. He said that to neutralize the increase, the Central Bank expects to receive revenues of RD$20 billion, which would include RD$8.5 billion from deposits the government will make from pesos freed up by the renegotiation with the Paris Club. Additionally, RD$6 billion would come from the sale of the portfolios of the Mercantil, Baninter and Bancredito banks and another RD$4 billion from the sale of Central Bank property. He mentioned that the Scotiabank deal has generated resources of RD$4 billion.
Lois Malkun is confident that the government debt is manageable. “The quasi-fiscal debt is not a problem for the country or the IMF because it is manageable for an economy that generates more than US$7 billion a year.”
He denied the government would have to freeze resources, or use the Argentinean model of a financial “corralito.” Said Lois Malkun, “If we didn’t do it in the moment of crisis, when we nearly through ourselves out the window of the 12th floor of the Central Bank, now I am more calm.”
The CB governor reported that the government has already paid the interest due on the Brady Bonds and on 27 March will honor payments due on the sovereign bonds.
During his discourse he also mentioned that the government is considering introducing tax reforms in June, when the transitory 5% tax on exports and 2% tax on imports would be substituted by other permanent taxes.
Lois Malkun said the government foreign debt stood at US$5.849 billion, representing an increase of US$1.3 million over December 2002.
He said a delegation from the IMF would arrive today to participate in meetings with the three leading Presidential candidates and the board of the National Council of Private Business (CONEP) in order to obtain a national commitment, as the IMF agreement is one of two years, not three months. “We have to give absolute guarantees as a country that this program will continue,” he explained.