In a letter to Diario Libre, Guy Meredith, the International Monetary Fund’s (IMF) mission chief for the Dominican Republic, rejected the country’s decision to take on a Colombian loan for the electricity sector, as announced by CDEEE administrator, Radhames Segura. The chief of mission said that to cover the increasing cost of power, the government should resort to cuts in other spending, not to borrowing. He rejected the government’s plan to freeze the power tariffs until after the May elections and its intention to cover the difference by taking on debt. In his opinion, the unlimited subsidy affects the IMF’s program objectives. Power distribution companies in the DR have not been efficient in increasing collections from non-paying consumers, thus passing the burden on to those who pay for the service and taxpayers in general in the form of a governmental subsidy.
Meredith writes: “A central element of the government’s economic program is to reduce the public debt to the levels during the financial crisis of 2003-04. To take on more debt by way of increasing the subsidy of the electricity sector would be contrary to this objective.”