The Diario Libre is reporting today that the IMF team, currently visiting the country as part of the second set of reviews of the Stand by Agreement, has expressed interest in the accelerated implementation of the new taxes, even before the tax reform package is submitted to Congress. Their goal is to re-establish economic equilibrium in the short term. The proposal stems from the IMF?s worry over the undefined situation of the tax reform package that should be approved before 16 August, but which looks less and less likely as each day passes. The newspaper says the outgoing folks have resisted taking charge of the issue and the incoming officials do not appear to be ready to take on the task. The medicinal prescription for the economy could mean reducing or eliminating subsidies on propane gas and electricity, which would considerably affect the cost of public transport and food preparation.
Meanwhile, each day makes it tougher for the government to continue to subsidize propane gas, and electricity to the poor neighborhoods. Just yesterday Finance Minister Rafael Calderon told reporters that it would be up to the PLD party to get the tax reform package approved and put into effect.
The closure of the second revision of the Stand By Agreement hinges on the passage of the tax reform. Calderon excused his party?s lethargy on the issue, however, by saying that the social-democrat approach to taxes was different from the PLD?s attitude on the issue. Calderon continued his whitewash by saying that the PRD had fulfilled all the goals set by the IMF and that any deviances from their outlines were due to ?unforeseeable? events. The IMF, trying to slow down this game of politics, suggested last week that an orderly and constructive transition was urgently needed in order to guarantee the continuity of economic policy.
The IMF team pointed out four key items in the economy: electricity, fiscal issues, monetary issues and banking issues. The Diario Libre learned that the IMF officers even suggested an early use of some of the proposals to obtain some sort of stability in the short haul, while the politicians rework the entire proposal. Propane and electricity are ostensibly two of the principle targets.