The high-level IMF team has left the Dominican Republic without reaching any decisions on the second review of the Stand By Agreement signed last August. Nor was a date set for sending a tax reform bill to Congress. On one hand, the government is saying that it is up to the incoming PLD officials to prepare the new tax reform legislation, while on the other hand the spokesman for the IMF mission Ousmene Jacques Mandeng said that the lack of legislation would cause even more uncertainty among financial entities. He said that IMF technicians are ready to return and continue the negotiations on the Stand By Agreement.
Daniel Toribio, a member of the transition team for the PLD party reaffirmed that the government must present the tax package in order for the various parts to come together in agreement. Currently, the StandBy Agreement is in a phase of ?postponement? while the Dominican government tries to work up a suitable tax package, something that President Mejia has said he does not want to do. Talks with the IMF broke off one week before the elections that resulted in an overwhelming victory for the PLD party.
Toribio said on a TV program yesterday that the Mejia government has paid for several studies to prepare the tax reform bill. As reported in El Nacional newspaper, Toribio said that he has heard that the Central Bank and the Ministry of Finance paid RD$25 million to the Fundacion Economia y Desarrollo belonging to economist Andy Dauhajre for one such study. Dauhajre confirmed he had a contract with the ministry for the preparation of a tax reform bill in three phases. The total value of the contract was US$250,000, or approximately RD$12 million. Dauhajre said that the deal took into account a first part outlining the basic ideas for reform and a second part with the preparation of a preliminary bill that would be delivered this or next week. He said that of the total amount agreed, they had received US$100,000.
Toribio said on TV that if the country has made such a significant expense, then he would like to see the study that has been carried out.
Finance Minister Rafael Calderon also ordered a study that was conducted by professors Glenn P Jenkins and Chun-Yan Kuo from the Department of Economics of Queen?s University (Canada) and Hector Guiliani Cury from the Central Bank. Titled ?Fiscal Adjustment for Sustainable Growth in the DR,? the proposal suggests an increase in the telecommunications tax and the ITBIS (the DR?s VAT).