Economist Eduardo Tejera believes that the “mounting” indebtedness being taken on by the Medina government is reaching dangerous levels. On the topic of the recent issue of US$1 billion in sovereign bonds that the Dominican Republic placed on the international capital market, Tejera stated that the combination on one hand, of “high fiscal deficits and on the other hand financing them with public debt” is a very delicate situation that will explode in the future, as quoted in Acento.com.do
Tejera points out that in January the country issued US$2.5 billion in Sovereign Bonds and they have now announced another issue of US$1 billion at a time when the public debt is reaching nearly 47% of GDP. He adds that this is absorbing 45% of the tax income for debt service and yearly payments. Tejera recalled that Congress has also approved more than US$650 million for the new coal-fired generators to be built in Punta Catalina, and they require another US$1.5 billion to complete the construction.
Sovereign bonds financing is now 52.2% of the Dominican foreign debt. According to the Public Credit Department, US$23.24 billion in foreign debt as of April 2015, US$12.12 billion are sovereign bonds. Of the total, US$8.68 billion (37.4%) have been placed abroad and US$3.42 billion (14.8%) in the domestic market.
The statistics show that the government has borrowed abroad more, with foreign placed sovereign bonds increasing from US$2.46 billion at the start of the Medina administration to US$8.69 billion, for a US$6.23 billion in debt increase, or 252.6%.