Economist Andres Dauhajre warned Dominican businessmen that if the country does not implement fiscal reform, nothing will be gained with the devaluation of the peso. He said that on the contrary, it will increase production costs and reduce competitiveness of Dominican business, including exporters. Overall, he said it would have a negative effect on economic growth. "The only way to increase competitiveness with an adjustment of the exchange rate is if the percentage of adjustment of the exchange rate is greater than the inflation rate," he explained. "To achieve this, fiscal adjustment is necessary. Only this will contain the growth of the aggregate demand, and thus, reduce the inflation pressures." The failure to do so in recent years has resulted in the situation whereby the minimum wage has increased from US$90 a month in 1991 to US$172 a month in 1998, without an increase in productivity of the work force. There is a five percent spread between the street market rate and the commercial bank/Central Bank rate for purchasing U.S. dollars.
