IMF lists highs and lows of Dominican Republic’s economy
Santo Domingo.- The International Monetary Fund (IMF) published its evaluation of the Dominican economy in 2015, and reiterated a strong momentum of its economic activity, underscored by a favorable external environment and bolstered policies.
It notes however that while the Dominican financial system boasts strength, it also has weak supervision and regulation for non-banking intermediaries and cooperatives in particular. “Although the system is very small, according to available data, it is closely linked to banks through proprietary channels and some institutions are as large as banks.”
The report says weaknesses in non-bank supervision could also pose a challenge for the fight against money laundering / countering financing terrorism (CFT).
The IMF’s conclusions highlight the strengthening of the financial system, but notes that there are still “pockets of vulnerability.”
The report says the authorities have strengthened the framework of supervision and regulation, including continuous work implementing Basel’s basic principles, risk-based supervision.
It says that despite “the financial position of the banks is strong, the pockets of fast-growing credit, especially in foreign currency, deserve close monitoring.”
The IMF, in its report, points out that the banking system is highly concentrated, with around 78% of the total assets in three banks and a nearly a third in the State-owned Reservas bank.
The IMF report indicates that the presence of foreign banks has increased since 2008, with 7 of the 17 being foreign-owned. However, their share remained relatively low, with 10% of the total banking system.
It also points out that other deposit institutions are relatively small, accounting for 10% of the total financial system, including savings banks, S & Ls and credit unions.
On the exchange rate, the IMF notes that the transition to a higher exchange rate flexibility and continued accumulation of reserves will increase resilience to the effects of external shocks and the challenges of monetary policy and monetary policy management.
Nov 16, 2016
Category: DR News |