Economist Miguel Ceara Hatton has said that the public deficit could be eliminated by 2024 if the government eliminates wasteful spending. Ceara Hatton says that the consolidated public debt is now at US$37 billion, equal to 50% of the GDP. Ceara Hatton advocated for the government reducing the pace of public spending to three quarters of the pace of tax revenues. He presented the proposal in the report “A Proposal to Correct the Fiscal Situation and Public Debt” on 6 February 2018.
The economist said that the Dominican public debt had grown at around US$2.4 billion a year over the past 58 months, from the end of 2013 to October 2017, creating an unsustainable situation that will force market adjustments.
Ceara Hatton was referring to debt generated by government monetary policy and the sale of certificates of the Central Bank. These certificates originated in the 2003-2004 Baninter bank fraud. He criticized the government has not complied with agreements to capitalize the Central Bank to deal with this debt. This Financial Public Sector Debt (SPF) is equal to US$10 billion, or 14% o the GDP.
He said on the other hand there is the public deficit that growths given the relationship between taxation revenues and government spending. Of this, US$29 billion is the Non-Financial Public Sector Debt, or 39% of the debt.
Ceara says that if the government reduces the growth of public spending to 3.1%, fiscal balance would be achieved by 2020.
He observed the outstanding economic growth of the country has not served to finance improvements in the quality of life in the country. He said that economic studies have shown that the Dominican Republic is the seventh country in the world to least take advantage of opportunities for increases in wealth per inhabitant to improve quality of life, principally in the areas of education and health.
He forecast that if the present government fiscal policies are maintained, the government deficit would stay between 2.3 and 2.4% of the GDP from 2018 to 2024. He forecast the Non-Financial Public Sector Debt would increase to 42% of the GDP in 2022 and 43% in 2024.
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El Dia
7 February 2018
