The International Monetary Fund (IMF) has commended the Dominican Republic for its strong economic performance over the past two decades. The country’s ability to navigate the challenges of the past year, including a global economic slowdown and high inflation, has been highlighted in a recent IMF staff report. The IMF attributes the strong economic performance to sound policies and institutional frameworks.
An IMF mission was in the Dominican Republic for two weeks to assess the economic management in the country.
The IMF mission notes that despite a growth deceleration in 2023, the Dominican Republic was able to successfully bring inflation back to its target range through a combination of monetary tightening and fiscal prudence. The IMF highlighted in its assessment review that the country’s financial sector remained resilient amidst the challenges.
Looking forward, the IMF recommends a continued focus on macroeconomic and financial stability, including gradual monetary policy normalization and rebuilding fiscal and external buffers. The report emphasizes the importance of comprehensive fiscal and electricity sector reforms to boost competitiveness and inclusive growth.
To achieve these goals, the IMF suggests several policy priorities:
• Fiscal consolidation: The IMF supports the government’s plan to gradually reduce the fiscal deficit while broadening the tax base and improving spending efficiency.
• Monetary policy: The Central Bank is advised to continue normalizing interest rates while maintaining exchange rate flexibility and building foreign exchange reserves.
• Financial sector: The IMF recommends continued monitoring of the financial sector to mitigate potential risks and to strengthen the regulatory framework.
• Structural reforms: The IMF encourages further progress in improving public institutions, the business climate, education, and labor market conditions to foster inclusive growth.
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IMF
25 July 2024