Domincian Republic Economy
The IMF is optimistic that 2010 will be a year of growth for the DR. In an interview with Listin Diario, the IMF chief of mission in the DR, Alejandro Santos predicted that the economy would maintain a growth rate of 3-4% in 2010. Recently Central Bank governor Hector Valdez forecast that the Dominican economy could grow by 8%.
Santos says the 4% would be surpassed if the country were able to boost its exports and remittances and if travel to the DR picks up pace. Furthermore, he said that the reconstruction work in Haiti would stimulate demand for Dominican goods and services.
Santos said the economic program presented by the government, which has been approved by the IMF, with which the DR has a 28-month Stand-by arrangement, does not involve new taxes or increases in current tax rates. It does require, however, that the level of tax revenues in regards to GDP should total 15% by 2010. He believes that this can be achieved through reducing tax evasion and what he described as “rationalizing tax exemptions,” which he says have increased in recent years. He says the economic recovery will have a positive effect on tax collections.
Santos said the agreement with the IMF has made it possible for the country to have access to borrowing abroad. He says this is important in light of the effects of the international financial crisis on the local market. “With the recovery of the economy, the focus needs to be one of gradual fiscal consolidation to strengthen the sustainability of public finances and a decline in the percentage the debt represents in the GDP,” he said.
On the state electricity sector solutions, Santos said the new plan the IMF is backing calls for three new structural measures – increase in number of paying clients by power distributors with an increase in clients and the floating of rates of the tariffs, and the increase in the number of households that benefit from the BonoLuz subsidy for poor families.