The School of Economics at the Technological Institute of Santo Domingo (Intec) warned that if the government continues taking out loans and issuing bonds the country will find itself in a “blind and dark alley.” In their fourth report on the Dominican economy, the INTEC School of Economics professors point out as worrisome for 2018 the weight of the debt service as a percentage of government spending.
During a press conference, the dean of the Business Area of the School of Economics, Franklin Vasquez, and the coordinator of the Economics School of Intec, Rafael Espinal warned: “In the budget recently approved by the National Congress, debt service represents 42.5% of public expenditures, and if we look back to 2007, this underrepresented barely 24.3% of expenditures.”
The debt issuance practice of the government in the medium-term will put the national economy at risk, making it more expensive and costly to place bonds in the world’s financial markets, say the economists. The professors say that in the year 2018 bonds for a value of RD $68 billion will be issued on the local level and for US$1.5 billion on the international market, which is equal to 2.2% of GDP, to reduce the budget deficit. The professors say that “without a doubt, the policy of continuously increasing the debt level, to close to US$3 billion at intake in this budget, is of major concern to the Intec economic team.
Looking at the country’s economic performance in 2017, the economists pointed out that the nation’s economy presented a slight slowdown and what they called “a swaying behavior.” After the real growth of 7.1% between 2014 and 2016, Dominican economic activity presented a year-to-year growth of 5.3% and 2.7% in the first and second quarters of 2017. This is explained by, among other things, by a significant fall of 10.8% in investment or gross capital formation in the period between April and June of this year. The economists estimate that total debt is now reaching 52.4% of GDP.
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Diario Libre
Listin Diario
20 December 2017
