The administrator of the Banco de Reservas, Vicente Bengoa Albizu, reported yesterday Sunday 27 January that in New York, US$300 million in bonds were placed at 7% interest over 10 years. The interest will be paid every six months. He described the operation as “a convincing acknowledgement of the confidence that international investors have in the future of the Dominican Republic.”
The executive director of the Regional Center for Economic and Sustainable Strategies (CREES), Ernesto Selman was critical about the legality of the placement of the US$300 million by the Banco de Reservas. While the bank argued that the placement was aimed at expanding the base capital, Selman said that no banking entity growth should be sustained on taking on debt. He said that the operation increases the liabilities of the government bank and thus increases the Dominican Republic’s public debt and required congressional approval. The placement “could be reflecting a weakening of the general balance of the Banco de Reservas (BR),” he said, as reported in Hoy.
Selman criticized the lack of transparency of the operation that took place without the general public being aware. He said he became aware when US investors contacted him for an opinion.
“We are concerned that this kind of measure increases public debt,” he told Hoy. He said the BR’s financial statements show situations worse off than the average of Dominican banking. Since the BR has provided 94% of loans to public sector, Selman asks whether the new placement is to continue to finance the state beyond what was already agreed in Congress. Selman says that in 2012 the government borrowed twice the debt taken on by the private sector, as noted by the International Monetary Fund (IMF).
www.hoy.com.do/el-pais/2013/1/27/464458/Selman-dice-bonos-del-BR-son-deuda-publica