Over the past 18 years, the Dominican Republic has been operating at a growing gap, with the government spending much more than it collects. The 2020 National Budget maintains the trend.
Economist Ernesto Selman explained that the government will borrow heavily in 2020. He said the increase of RD$95.62 billion in an election year is not justified and will further deteriorate public finances. By 2020 the fiscal deficit would be about RD$110.25 billion.
He said that a society that wants to develop based on public spending and taking on debt is deceiving itself. He said the government is giving priority to consumption over investment.
“There is a deterioration of public finances. It is necessary to permanently borrow resources for the different expenses, including current ones, such as the Christmas salaries of the city councils because there are no accounting practices that provide for the payment of the 13th or Christmas salary,” he said.
He said that in recent years, while tax revenues have grown in line with the growth of the economy, public spending is increasing in a greater proportion. He said public spending has grown almost two and a half times the economy, in real terms, over the past 28 years. The problem is about spending and less about government revenues.
By 2020, Selman predicts that public spending could increase by about RD$100 billion, which would be the equivalent of a 13.1% increase. When combined with lower-than-budgeted revenues, this would bring the fiscal deficit to about RD$123.3 billion.
“From our perspective, the increase in public spending contemplated in the 2020 Budget is part of the fiscal irresponsibility that different governments have shown since the beginning of the millennium. This lack of fiscal discipline increases during election years, which has led to greater public spending and assuming higher deficits during political and electoral cycles,” he said.
Read more in Spanish:
Hoy
23 December 2019