NewsWhore
07-23-2008, 04:00 PM
Economists Carlos Despradel, Miguel Ceara Hatton and Isidoro Santana are advocates of a downsizing of the state to help the nation deal with the rising oil and food prices. In an interview with Hoy, the economists shared their ideas on what is wrong and how the economy could be improved.
Carlos Despradel, a former Central Bank governor, expressed his concern about the Central Bank's use of US$430 million of its international reserves to compensate for increasing imports. "We should only purchase and consume what we have enough foreign exchange to pay for," said Despradel. "When we start playing with the exchange rate and capital flees, there will be less foreign exchange to continue importing, so playing with the exchange rate now is very risky."
"Given the country's institutional weakness, letting the exchange rate float could create a very complicated situation," said Ceara, who says that the time to let the market adjust the currency has passed. Santana, nevertheless, says that the DR is expensive because its currency is overvalued. He backed the restrictive monetary policies now in place by the Central Bank. Santana says that it has been a mistake to allow the Dominican currency to become overvalued.
Ceara spoke out against the government taking on more PetroCaribe debt. In his opinion, the government should be investing these 'savings' in areas that generate foreign exchange to pay back the debt. If not, he explained, we are just creating another problem in the long term.
Santana forecast that inflation would reach 12% this year, and the growth in the GDP would be around 5%, with a current account deficit well beyond the projections. Despradel said that President Fernandez had underestimated the deficit when he spoke of US$3.4 billion in his recent address to the nation. Despradel says the deficit is more like US$4.5 billion.
Ceara commented that on 28 December 2006 the government passed Law 497-06 on Austerity in Public Spending, which had the same guidelines that were brought back by President Fernandez in his recent announcement of measures to deal with the oil and food prices crisis, and that the government has so far ignored the measures contained in the 2006 Law, which undermines his public credibility.
Despradel said there is a general feeling that we have a hypertrophied state. "I personally feel that we should make the most of the situation and reduce and merge several government departments that have been created recently and have little reason for existing," said Despradel, mentioning the Ministries of Youth, Women and Higher Education. He also suggested merging all transport departments into one. He favors reducing the number of deputies to 100 and cutbacks in the country's foreign service officials. "And then you can have a state that is half of the size and will be much more efficient," he said. Ceara said the greatest dilemma now faced by Dominican society is how to dismantle the inefficiency, clientelism and corruption that have taken hold of politics in the DR.
More... (http://www.dr1.com/index.html#5)
Carlos Despradel, a former Central Bank governor, expressed his concern about the Central Bank's use of US$430 million of its international reserves to compensate for increasing imports. "We should only purchase and consume what we have enough foreign exchange to pay for," said Despradel. "When we start playing with the exchange rate and capital flees, there will be less foreign exchange to continue importing, so playing with the exchange rate now is very risky."
"Given the country's institutional weakness, letting the exchange rate float could create a very complicated situation," said Ceara, who says that the time to let the market adjust the currency has passed. Santana, nevertheless, says that the DR is expensive because its currency is overvalued. He backed the restrictive monetary policies now in place by the Central Bank. Santana says that it has been a mistake to allow the Dominican currency to become overvalued.
Ceara spoke out against the government taking on more PetroCaribe debt. In his opinion, the government should be investing these 'savings' in areas that generate foreign exchange to pay back the debt. If not, he explained, we are just creating another problem in the long term.
Santana forecast that inflation would reach 12% this year, and the growth in the GDP would be around 5%, with a current account deficit well beyond the projections. Despradel said that President Fernandez had underestimated the deficit when he spoke of US$3.4 billion in his recent address to the nation. Despradel says the deficit is more like US$4.5 billion.
Ceara commented that on 28 December 2006 the government passed Law 497-06 on Austerity in Public Spending, which had the same guidelines that were brought back by President Fernandez in his recent announcement of measures to deal with the oil and food prices crisis, and that the government has so far ignored the measures contained in the 2006 Law, which undermines his public credibility.
Despradel said there is a general feeling that we have a hypertrophied state. "I personally feel that we should make the most of the situation and reduce and merge several government departments that have been created recently and have little reason for existing," said Despradel, mentioning the Ministries of Youth, Women and Higher Education. He also suggested merging all transport departments into one. He favors reducing the number of deputies to 100 and cutbacks in the country's foreign service officials. "And then you can have a state that is half of the size and will be much more efficient," he said. Ceara said the greatest dilemma now faced by Dominican society is how to dismantle the inefficiency, clientelism and corruption that have taken hold of politics in the DR.
More... (http://www.dr1.com/index.html#5)