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Dominican Republic’s high debt and low revenue demands fiscal mettle

Santo Domingo.- Governments in countries with high debt and low revenue such as Dominican Republic must exercise fiscal prudence throughout their political cycle, said on Thursday McDonald Benjamin, who represents the World Bank in the country.

“We always invite any government (…) to maintain fiscal prudence, because after all, debt is a tax to be paid tomorrow. Your children are going to pay taxes if debts are contracted today,” Benjamin said when asked about the country’s deficit and current political backdrop.

He said while debt isn’t necessarily bad it’s important to put the fund to good, wise use, noting that some countries enter into debt based on their ability to collect. “There are countries in the region which collect up to 35% of GDP in taxes and can sustain a higher debt that a country which levies 14%.”


Benjamin blamed the country’s economic structure for its persistently high levels of poverty despite Dominican Republic’s also high growth rate.

He said if growing sectors fail to create numerous good jobs there can be no balance between economic growth and poverty reduction, because low-income people depend mainly on their salary.

He said although the country’s productivity significantly increased in recent years it doesn’t always mean an increase in real wages and urged here the stronger integration between productive sectors with the local economy.

The Word Bank executive cited a study which found that Central America free zones use domestic production in a higher proportion (around 10%) than Dominican Republic.

Benjamin spoke on the role, characteristics, changes and other civil society aspects considered a key player in economic, social and political development of nations, at the seminar “Civil Society: Working Together for Dominican Republic’s Sustainable Development,” hosted by the NGO Alliance to mark its 20th anniversary.

Source: DT

June 12, 2015

Category: DR News |

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