Franco Uccelli of Bear Stearns writes in the Emerging Markets Sovereign Journal Weekly 29 April 2005 report:
“The Dominican government’s reporting of 4% real GDP growth for the first quarter of this year has generated numerous responses from individuals and private sector groups who believe that the number is inflated and that the economy does not “feel” like it is growing at such a high rate. The government, for its part, is sticking to its preliminary estimate that suggests that its calculations will soon be vindicated by the IMF, which is in Santo Domingo at the moment to perform the first review of the country’s new stand-by program. Monetary and fiscal out-performance in the first quarter of the year (when inflation remained in check, foreign reserves grew, interest rates dropped and the NFPS recorded a surplus) will likely lead to a favorable statement from the Fund upon completion of its review, and to the revision of some key variables for the year as a whole.
Meanwhile, the bond exchange that was launched last week appears to be enjoying significant positive momentum, with most investors that we have talked to indicating that they have already tendered their bonds or that they intend to do so shortly. May 4 is the last day to tender the old bonds, so we expect to have some early indications of the level of participation in the transaction by the end of next week. We still believe that the market-friendly character of the government’s restructuring proposal and market expectations of spread compression post-exchange will entice the vast majority of bondholders to submit their bonds, making the exchange operation an unqualified success. Accordingly, we remain bullish on Dominican Republic.”