The government is projecting an increase in public spending of 4% for the rest of the year, after having reduced it by 22% during the January-April period of this year. The increase includes the period that covers from May to December of this year, and the aim is to stimulate economic growth. Economists attributed the decline in the economy to the implementation of the November 2012 fiscal reform that among other measures increased the national value added tax by 2%, expanded its coverage.
The Central Bank announced that it will maintain interest rates at 4.25% as part of its monetary policy.
According to the Central Bank, economic activity and internal demand declined in the first quarter of the year. Nonetheless, some of the local indicators show a slight increase so far in the second quarter, influenced by the monetary measures.
The Central Bank said that borrowing by the private sector in local currency has accelerated as a result of the reduction in the legal reserves and lower interest rates in the market. In this sense, they reported that they have freed up nearly half of the resources approved by the Central Bank for the financing of productive activities. The report indicated that the recovery of private credit should contribute to a reactivation of consumptions and private investment during the second half of the year.
http://www.bancentral.gov.do/publicaciones_economicas/infeco/infeco2013-03.pdf