Economist, historian and diplomat, Bernardo Vega delights in looking at things Dominican in the light of his vast knowledge of the local scene. In this week’s column in El Caribe, Vega points out that few people have noticed that recent economic indicators point to an optimistic outlook for the future. Exports increased in value by 2.1%, even while textile exports fell 7.7%. Tourism grew by 11.7%, and remittances by 8.1%. Added to this, interest rates and unemployment fell, and government spending grew by 62% while the quasi-fiscal deficit fell. All this is in sharp contrast to the economic and financial debacle of 2003-2004.
According to Ousmene Mandeng, the out-going IMF representative in the country, “on an individual basis, the Baninter fraud represents the greatest bank fraud in the world in terms of the national GDP.” Mandeng said that there had been greater dollar amounts involved, but never a fraud that represented 20% of a nation’s GDP.”
Vega points out that due to inflation and the negative GDP growth, the average Dominican lost 20% of his income as a result of this fraud. Since the Central Bank paid all of the outstanding deposits, both offshore and local, including some that were “off the books”, Vega says that the real payees were the average Dominican middle class and poor people. He says that the morbidly curious can now see just who the beneficiaries of these payments were, by visiting the Central Bank website (www.bancentral.gov.do) and read the recently published Audit of the Ease of Liquidity (Auditoria de Facilidades de Liquidez), an audit that was required by the IMF. Mandeng also said that “the Dominican Republic’s economic program has been, without a doubt, one of the most successful stabilization programs supported by the IMF.” Vega adds that he was referring to the current government, not the former government that did not fulfill its obligations.
Vega goes on to look at the power generators that are supposedly heading towards bankruptcy. He wonders why, when the El Paso Energy Company decided to sell its shares of the Dominican generators, the offer was snatched up by the CDC group that also has the Puerto Plata Electric Company (CEPP) and Cogentrix. Vegas asks the redundant question: If things are going so badly for the CDC and the other generators in the country, why are they investing more money?” Either they see some future in the medium term or things are not that bad.
Lastly, Vega looks at the negatives, especially with regard to the environment. The new Index of Environmental Execution” places the Dominican Republic in the14th spot among the 22 countries of Latin America that were indexed. Cuba, Jamaica, Panama and Honduras were above the DR and Nicaragua, Guatemala and, of course, Haiti were ranked below.