Visiting IMF officials reviewing the performance of the stand by arrangement warn that the fiscal institutions of the DR are still weak, that there are persistent problems of tax evasion and the administration of tax revenues, the electric deficit is large, while the debt of the Central Bank might complicate monetary policy. According to El Caribe, the team highlights the need to not only rationalize government expenditures, carry out an institutional reformation of the bureaucracy, but also the need for the Congress to legislate on how the money is spent and how to execute and prepare the budget. Jose Fajgenbaum, the deputy director of the IMF’s Western Hemisphere Department and Luis Cortavarria joined Ousmene Mandeng, the locally-based IMF representative.
“The crisis is not over,” Fajgenbaum told the press, highlighting that public spending has to be rationalized. They mentioned that subsidies to the electric sector alone were US$650 million last year.
Fajgenbaum pointed out the need for an overall institutional reform within the public sector, and singled out the work that the legislature has to carry out in areas such as how income is handled. According to the paper, tax evasion continues to be a major headache for the IMF and, of course, the Dominican government.
Fajgenbaum recalled the causes of the economic crisis that started in 2002 and was accentuated by the events of 9/11, the rise in oil prices and exacerbated by the banking crisis of 2003.
The team leader said that proof that the crisis was not over is that the Central Bank is still strongly supporting the private banking sector.
During the press conference to announce preliminary findings of the review, economic analyst Luis Cortavarria suggested that the term of office for the Central Bank governor and the Superintendent of Power be extended to five years and never coincide with a presidential election year in order that monetary and electricity policies may be more continuous.