Juan de la Cruz writes in El Dia newspaper today on the legacy the Mejia administration will leave the Dominican Republic. He comments that although the country posted an 8% growth rate in 2000 and maintained an exchange rate of RD$16:US$1 in 2000, the DR is altogether another country only four years later. He comments that Fernandez (who was President from 1996-2000) will get back a country with a -0.4% growth rate ? the worst in Latin America ? and an exchange rate of RD$50:US$1. Furthermore, the public foreign debt has doubled, going from US$3.7 billion in August 2000 to US$7.3 billion at present, or 57% of the GDP, when factoring into the equation the buyback of the Edenorte/Edesur power distributors and other loans from multilateral organizations.
This is not to mention the high cost of the quasi-fiscal debt, or the nearly RD$80 billion in certificates of savings deposited at the Central Bank, a large number of which are due to expire at the start of the new government, or the capital flight drain of US$3.5 billion and repatriation of foreign investment of US$2 billion.
De la Cruz also mentions that from 2000-2004 inflation rose 100%. Inflation from December 2002-December 2003, by contrast, stood at 43%, and previous to that accounted for a mere 9.20% in 2000.
He comments on the recession affecting the local economy that has decapitalized commerce, especially middle-sized business, and made matters difficult for large companies to compete with foreign markets, given the country?s high tariffs.
According to him, consumers and producers alike have had to pay the high cost of the fiscal deficit and quasi-fiscal debt that represented 5.2% of the GDP in 2003, as well as the salvaging of the Baninter, Bancredito and Banco Mercantil banks. Consumers and producers feel the pain as a result of the government?s penchant for passing these costs on to them in the form of new taxes.
These new taxes comprised an increase to the exchange surcharge from 4.75% to 10%, a 2% additional tax on imports on top of the 3% import tax, a 25% tax on savings and loans organizations, a 0.15% tax on bank checks, an increase of US$10 to the departure tax, and a 5% tax on the export of goods and services.
In 2000, the average price of a barrel of petroleum was US$28.9, while today it costs US$41.17, which, combined with the severe currency depreciation, makes fuel costs extraordinarily high. Gasoline has gone from RD$27.90 per gallon in August 2000 to RD$106.70 at present and diesel from RD$18.95 per gallon in 2000 to RD$73.50, entailing increases of about 400%. Propane gas at the end of the Fernandez administration of 1996-2000 stood at RD$6 per gallon, while its current price is RD$25 per gallon, representing a 313% increase.