Dominican governments over the past 10 years have proudly reported that the economy has grown 3.5% to 7.8% of the Gross Domestic Product (GDP). But Diario Libre reported on Monday, 2 July 2018, that this has come at a high and unsustainable cost. The rate of the increase in public debt is twice the rate of growth of the overall GDP over the same period of time.
Technological Institute of Santo Domingo (Intec) economist, Rafael Espinal considers that a balanced growth of both the debt and GDP would have been good. As matters stand, warnings are out that in the medium term the external debt situation is not sustainable because the present fiscal structure of the Dominican Republic cannot resist the debt service increasing year after year.
“This implies that the growth of the debt almost doubles the growth of GDP given the consolidated debt has risen to 50% or more of the GDP,” said the professor. In that sense, he said: “And with interest rates in the international market rising, treasury bonds are already at 3%, which implies an upward trend in international interest rates,” said the economist, warning that this situation would also have a negative impact on the country.
Espinal says there is no justification to maintain the high levels of debt taken on by the government. He advocates for a more modest growth of GDP and a reduction of the pace of public indebtedness. He said that at present, 20 to 23% of public revenues are needed just to make interest payments on the national debt.
“We continue to take on debt to pay debt. That pace cannot be sustained,” he said. He urged a decrease in the annual debt increase and an agreement on a fiscal pact for greater efficiency in government spending and taxation.
Read more in Spanish:
Diario Libre
3 July 2018
