Dominican Republic economy’s year-long roller coaster ride
Santo Domingo.- Today Dominicans say farewell 2012, a year whose bitter pills included a tax package which only serves to cover a portion of the RD$187.0 billion fiscal hole inherited by president Danilo Medina’s administration.
The New Year that starts tomorrow also sets forth a new cycle in the Dominican economy, the promise of government transparency and the first time the government allocates 4% of GDP to pre-university education, as the law stipulates.
Ups and downs
According to a summary by listin.com.do, the Central Bank applied a monetary policy which kept the inflation target in check and staved off an uptick in the dollar’s exchange rate, while the peso depreciated around 3%.
The Internal Taxes Agency (DGII) also began to play a leading role to implement the tax reform when it picked up the pace with adequate standards and tax collections, including the new levies.
The electricity sector deficit headed the discussions and yielded headlines throughout the year, whereas tourism posted 4.6 million visitors and the Dominican economy will conclude 2012 with an estimated growth above 4%.
1. WHAT HAS NEVER BEEN DONE
“A bitter pill”
President Danilo Medina debuts with a tax reform to plug the fiscal hole.
2. CONTROLLED SPENDING
Decree 499-12: The government ordered controls on spending, including the auctioning off of gas-guzzling vehicles.
Exceptions: Reform led to rises in some food prices, although overall weren’t as high as first feared.
4. MONETARY FUND
Conversations with the IFM could resume in January
SOLUTION TO DEFICIT
The IMF assessed the economy. The deficit concerned the technicians.
5. DOLLAR RATE
CENTRAL BANK’s official measures calmed a nervous market. The authorities kept in check the dollar rate. Depreciation in 2012 was only 3.36% to buy and 3.44% to sell.
6. TOURISM AND GOALS
Next 10 years projection: The government’s goal is 10 million tourists in as many years. Tourism revealed that 2012 closed with a record 4.6 million visitors.
7. THE ELECTRICITY SECTOR’s US$1.5B HOLE
Mismanagement leads to a yearend deficit of US$1.5 billion and debts in arrears exceed US $1.0 billion.
8. SUPPORT FOR MSMEs
Credit Resources of RD$10.0 billion
The government earmarked more than RD$10.0 billion for MSMEs through various organizations specialized in the sector.
9. TOBACCO STANDOFF
RD vs. Australia
The Dominican tobacco sector filed a lawsuit against Australia’s packaging rules, claiming lack of fairness and against global trade.
10. CENTRAL BANK
Stability: Central banker Hector Valdez Albizu scored big by maintaining 2012 inflation target under control, at just 3.26% from January to November, well below the 5.5% yearend goal.
11. The price of chicken
Despite complaints of losses, the poultry farms are on the upswing as yearend chicken prices posted record rises of more than RD$10, to around RD$50 per pound,.
12. GOVERNMENT DEFICIT
Unchecked spending attributed mostly to the electoral campaign in the first half took the deficit to more than RD$187.0 billion, excluding the Central Bank, which was the target of scathing rebuke.
Source: Dominican Today
Category: DR News |