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‘Well-behaved’ Dominican economy will grow 4.5 per cent in 2014

Washington.- The International Monetary Fund (IMF) announced Monday a “better than expected” behavior of Dominican Republic’s economy in 2013 and predicts a 4.5% growth this year, but suggests “more ambitious fiscal consolidation targets.”

IMF Mission chief Przemek Gajdeczka said the Dominican economy grew more than 4 percent in 2013, with 3.9% inflation. “By 2014 the Mission projected approximately 4.5% real GDP growth and inflation, which stands at the midpoint of the Central Bank’s range set as a goal (4% to 5%).”

As positive elements the IMF executive stressed the reduced current account deficit, which “reflects the vigor of exports driven by the start of gold production, better performance in tourism and lower imports.”

In a statement issued at the end of his visit to Santo Domingo, Gajdeczka noted however that “there are still having challenges, in particular regarding the area of public finance, the electricity sector and the position of the external sector.”

Although the central government deficit decreased to below 3% of gross domestic product (GDP), the team led by Gajdeczka stressed that “the electricity sector continues registering large deficits.”

He suggests setting “more ambitious” fiscal consolidation goals, citing “a broadening of the tax base and lower tax exemptions, as well as the containment of expenditure.”


As to the energy sector, the IMF supports “the development of a comprehensive electricity strategy including the introduction of an automatic rate adjustment mechanism, (…)” and the new investments, as long as it’s consistent with the medium term fiscal strategy.”

Gajdeczka also hailed the commitment by Dominican Republic’s monetary authorities to the inflation target and to increase international reserves to maintain macroeconomic stability. “In the event that market conditions change or external pressures emerge, greater flexibility of the exchange rate and a more restrictive monetary policy would be appropriate tools to deal with them.”

Source: DT

Category: DR News |

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Last updated March 25, 2017 at 5:40 PM
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