While it is true that the Dominican Republic has reduced its propensity to issue sovereign bonds over the past year, there is a growing tendency for the country to collect more debt. As reported, the Medina government contracted US$2.5 billion in sovereign debt in 2019, down from US$3.118 billion in 2018.
This was revealed in the report entitled “Preliminary Balance of the Economies of Latin America and the Caribbean” issued late last week by the UN Latin American and Caribbean Economic Commission (ECLAC).
The report also shows that the economic growth of the Dominican Republic this year will be less than forecast by local experts. The Central Bank of the Dominican Republic had forecast a 5% growth rate, but ECLAC sees the rate to be 4.8%. 18 of the 20 countries covered by the report showed a slowdown of their economies. The only exceptions were Guatemala and Colombia.
On the other hand, the report focuses on how the Dominican Republic, Costa Rica, Ecuador, Paraguay and Guatemala have been taking on increasing debt. The explanation is that as government spending increases, governments face the need to borrow when incomes do not meet expenditures at the end of the year.
ECLAC also noted that the Dominican Republic is sixth in the region in a ranking of those paying the most interest on debt obligations. The debt load is 3.2% of GDP, while last year, it was 3.1% of GDP.
According to ECLAC, tax collection, or a lack thereof, has contributed to the deceleration of the economic growth of the region. In the Dominican Republic, tax income represented 8.9% of GDP this year, while last year it was 8.8% of GDP. The regional average is 10.3% of GDP.
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Diario Libre
16 December 2019