Hoy newspaper reports that the IMF has requested the Dominican government postpone the implementation of its agreement with Union Fenosa for 30 days. Reportedly, the request is made in a letter to government authorities delivered to the government via Central Bank Governor Jose Lois Malkum, who was attending the IMF meeting in Dubai. An IMF mission is due next week to monitor governmental fulfillment of the stand-by arrangement.
The IMF is apparently curious as to how the buyback of Union Fenosa’s power distributors will affect governmental finances. According to the report in Hoy, Finance Minister Rafael Calderon denied that the deal would require an increase in taxes. Calderon says he has not received notification of the IMF’s objections to the deal. The newspaper recalls that the Union Fenosa agreement will cost the country more than US$700 million over a 12-year period. The government had originally sold its 50% participation in 1998 to Union Fenosa for slightly over US$200 million.
Meanwhile, the US$200-million World Bank assistance for the electric sector has not yet been disbursed.