In the past two months the government has reduced its spending by RD$3 billion, in absolute terms, according to Finance Minister Vicente Bengoa. He attributed the savings to the appreciation of the peso and a general reduction in official spending. Bengoa told Hoy newspaper that the positive outcome has caused the IMF technicians to investigate the situation and use it as an example. “An IMF mission that is visiting does not believe that we could have reduced spending so much, and have even been able to pay the foreign debt without a bridge loan,” Bengoa told Hoy. He said that the savings are the reason why the government was able to pay off US$362 million in foreign debt payments this month, without having to resort to a bridge loan. Taking into consideration the US$85-million line of credit of the governmental Banco de Reservas, which was already agreed with the IMF, it is probable that the financial gap may only amount to US$45 million. Resources would be used to pay an arrear of US$65 million due in December to the Paris Club. The minister said they would probably only need to use US$45-US$50 million of the line of credit.
He explained that the governmental foreign debt is paid using the exchange commission and funds generated by the fuel tax. He said that the savings were produced because the government did not transfer to consumers the appreciation in the peso when indexing the price of fuel. “When we should have dropped the price by RD$6, we only reduced it RD$3, RD$2 or RD$4,” he explained. He also said that other funds allotted to pay the foreign debt are the 2% tax on imports, the 30% selective tax on luxury items, and the US$10 departure tax. He indicated that savings gained by reducing the government payroll cannot be used to pay the foreign debt.