Economist Eduardo Garc?a Michel focuses today in a Fundaci?n Siglo 21 report published in the List?n Diario on the results of a 1991 agreement with the IMF. Garc?a says then inflation dropped from 100% to 4%, and the exchange rate fell from RD$17 to US$1 to RD$12.5 to US$1. Likewise, the country shortly after began an upward growth trend at a level of around 7% a year.
He says the signing of the agreement would accomplish this because it would restore confidence. The estimated US$1.5 billion in capital that fled, given the local economic and banking uncertainty, could return, he says.
?We have to stimulate the authorities to decide in favor of stabilizing the economy, leaving aside political considerations,? says the report.
Garc?a recommends that the Monetary Board be made independent and autonomous. He urges, among the reforms contemplated for the Monetary Code, that it be modified so as to require members be only full time persons, immovable for six year terms that should not coincide with a single government term. At present, the Board is primarily made up by leading businessmen.
Garc?a also makes recommendations for a fund to handle bank solvency problems, international reserves levels, banking assets in hard currency, off shore banking operations, savings and loans operations, and the role of public financial entities.
Garcc?a says that if the present crisis serves to strengthen the regulatory and supervisory institutions regarding the operation of financial companies, then the country will have learned the lessons and would be on its way to increased development.