In an interview on Z101 radio talk show, Economist Henri Hebrard said that the 2020 budget is no longer valid and is completely out of tune with the new situation caused by the Covid-19 virus. He doubted the economy would grow 5%. Central Bank governor Hector Valdez Albizu in his address to announce new measures on 18 March 2020 has forecast that the Dominican economy would recover and continue to grow in 2020.
Hebrard said the government will have to rewrite the budget to spend more on public health and other new priorities. He considers that the country is facing a crisis that will have more impact on the country than the economic crisis of 2008-2009. He says the country already is vulnerable given the fiscal deficit and high public debt levels.
“I think we are all beginning to realize that this is a crisis that goes beyond an economic crisis,” he said. He explained that the 2008-2009 was a profound economic crisis. The economist explained that the present crisis is affecting the same way we live in a more severe way. He recalled that the country in 2008-2009 did not have a fiscal deficit nor the levels of debt that we have today.
On the measures announced by the Central Bank on Wednesday, Hebrard said that these make it clear that the monetary authorities have three objectives. He mentioned the government seeks to provide sufficient liquidity to the entire economic system, with measures such as reducing the banking reserve levels. It has also taken actions to decrease the interest rates, to ensure that the level of economic activity does not fall and can rebound. Hebrard says that given the impact that this crisis will have on the sectors generating foreign exchange, measures are also taken to facilitate the injection of US dollars to the market.
He said that it will be necessary to take more measures, because much of what has been taken is strictly to impact businesses. He argued that other measures need to be taken to assist people who are likely to lose their jobs by the collapse of the tourism sector.
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Z101 Digital
19 March 2020