IMF hails Dominican Republic’s tax reform, warns of slumping economy
Santo Domingo.- The International Monetary Fund (IMF) on Sunday said the recently passed tax reform will contribute to make Dominican Republic economy less vulnerable, but cautioned that the economic performance has deteriorated and the private sector’s activity has slumped
It said the deficit grew even further in 2012 on rising government spending and reduced transparency in budget execution.
The IMF said the country’s economic growth weakened in the last 24 months after reaching 7.8% in 2010, slowing to 4.5% in 2011 and is expected to remain below 4% this year.
Suggests lowering the debt
The IMF suggests that the Government to reduce the public debt to 35% of the GDP), which was the level in 2007-2008, before the crisis and required, to achieve that goal,” a strategy to reduce the overall fiscal deficit to a prudent level in 2013-2014.”
“To reduce external vulnerabilities, and strengthen the fiscal position, it will be necessary to maintain a tight monetary stance that is consistent with the strengthening of the international reserve position.”
“The moderation in domestic absorption as a result of these policies will help safeguard external stability,” the statement said.
In its evaluation of the Dominican economy, the IMF mission led by Przemek Gajdeczka said policy implementation has deteriorated, significantly increasing the fiscal deficit in 2012.
It said revenue was low (excluding exceptional factors), while the primary public spending jumped nearly 40%, and the consolidated government deficit doubled the projected for 2011 (at 8.5% of the GDP), in addition, a large proportion of expenditure was conducted above the corresponding budgetary appropriations, reducing the transparency of those operations. “The projected total public debt will reach 44% of GDP in 2012, compared with 35% of GDP in 2007-08.”
IMF supports government plan
The IMF delegation agrees with the recently approved tax reform, with which the Government would reduce public debt to the ratio of GDP in 2007-08.
“The mission supports the authorities’ plan to improve the business climate, promote competitiveness and create better conditions for economic growth, intensive job creation. Comprehensive implementation of reforms in the power sector is critical to ensuring a stable infrastructure for private sector development. The mission hails the recent adoption of the process of “one-stop window to register new companies and plans to expand the registration of titles to real estate and other properties,” says the IMF report.
Source: Dominican Today
Category: DR News |