Public finances outperform government expectations

Minister of Hacienda Jochy Vicente had reported that the government ended 2021 with a fiscal deficit of -2.7% of the Gross Domestic Product (GDP) or RD$144.77 billion. The amount is RD$15.06 billion below what was estimated in the reformulated National Budget that had been presented in November 2021.

Vicente emphasized that the reduction of the deficit was made without the need to resort to borrowing.

“Historically, reformulated budgets have meant more borrowing. In 2021, for the first time, a reformulated budget was submitted with lower financing needs,” he highlighted. He pointed out that the public collection agencies had revenues of RD$841.24 billion pesos in 2021, an increase of 12.7% over last year. He explained that economic growth and other administrative measures made the increase in state revenues possible.

The results garnered the government a pat in the back by the National Association of Young Entrepreneurs (ANJE). Luis Manuel Pellerano, president of ANJE says the recently-released numbers are a good sign and an important milestone to continue with the economic recovery of the Dominican Republic.

With the 12.7% increase in collections compared to what was initially budgeted, a better level of planning in terms of spending and revenues is evidenced, says Pellerano. He highlighted that capital spending, as per the initial budget, was executed at 100%. He says there has been budgetary discipline in government that has resulted in the reduction of the fiscal deficit by year’s end.

“The efforts of the current government administration to make public spending more efficient and rigorously planned are indicators that will have a positive impact on the business climate and competitiveness levels of the Dominican Republic,” said Pellerano.

He pointed out that although debt levels continue to be high, it is important to highlight that the reformulated budget 2021 had lower financing needs than the initial budget, which implied a reduction in non-financial public sector debt of 5.5 percentage points and in interest payments as a proportion of fiscal revenues by 4.92 percentage points.”

“As a business guild that brings together the thinking of young entrepreneurs, we aspire to continue taking the necessary actions to continue efficiently managing the 2022 National Budget and beyond, and we highlight as a good sign the reduction in the levels of non-financial public sector debt and interest as a proportion of fiscal revenues during 2021,” Pellerano pointed out.

Likewise, the positive fiscal outlook continues in January 2022. El Caribe reports that the government received RD$2.32 billion and spent RD$1.98 billion for the first half of January, with revenues exceeding expenditures by 17.05%.

A report from the National Budget Office indicates that from 1 to 14 January 2022, the government received RD$32.54 billion and spent RD$27.80 billion. The National Budget 2022 estimates the year will end with a RD$174.79 billion deficit.

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27 January 2022