NewsWhore
06-18-2009, 05:20 PM
In a newspaper interview for Hoy & El Dia newspapers, Economists Carlos Despradel, Miguel Ceara Hatton and Apolinar Veloz addressed several of the reasons for the government's current fiscal deficit. The economists said that the government has 593,000 people on its payroll, including 95,000 retirees.
Carlos Despradel, a former governor of the Central Bank, says that the government spends 85% of its budget on payroll and subsidies, and barely 4% on infrastructure investments. Despradel believes that the DR economy is in recession, despite the Central Bank's announcement that the GDP grew by 1% in the first quarter.
Apolinar Veloz, a former general manager of the Central Bank, thinks that the Fernandez administration is taking measures to solve short-term considerations that will affect the country in the long term. He said that according to the Central Bank, the Dominican economy is moved by consumption, which is about 90% of the GDP, and of which 72% consists of imports.
Miguel Ceara Hatton, coordinator of the United Nations Development Program in the DR, said that the government has resorted to borrowing as a way of activating the economy. He said that the level of public debt is projected to end at US$13 billion, up from US$11 billion last year. He said the use of the funds is uncertain.
He mentioned that as of 29 March 2009 the debt with PetroCaribe was US$1.2 to US$1.3 billion, and the funds that would have gone to pay for fuel were instead used to subsidize the electricity sector. "We are taking on debt to pay subsidies and the debts should be for savings or to generate foreign exchange. Ultimately, we are subtracting money that would be used for development," he warned.
Despradel urged the government to be austere in its spending. He called for the example of former President Joaquin Balaguer to be followed in his strict management of government funds. "He was a true statesman, in that in his government no one had vehicles assigned, gasoline, or credit cards to pay restaurant bills," he commented. "We have to revive that," he said.
Despradel said that in Balaguer's day the budget was equally distributed between infrastructure works and spending. He criticized the fact that today only 15% goes towards investments.
Apolinar Veloz commented that the country does not meet the conditions to sign an agreement with the International Monetary Fund. He says that corrections need to be applied to the deficit in the balance of payments and the central government, the solvency of commercial banks and fulfillment of the laws. He said another limitation is the use of government money for election campaigning. He speculated that government spending would not be under control next year when the authorities have the challenge of the congressional and municipal elections. Veloz said that a US$1 billion bonds placement would not require the governmental controls that would have to be in place to receive funds from the IMF.
Nonetheless Despradel warned, "Now, in the case of the obtaining money through the issue of sovereign bonds, it would be funds for government spending, on government payroll that already has been increasing disproportionately."
More... (http://www.dr1.com/index.html#3)
Carlos Despradel, a former governor of the Central Bank, says that the government spends 85% of its budget on payroll and subsidies, and barely 4% on infrastructure investments. Despradel believes that the DR economy is in recession, despite the Central Bank's announcement that the GDP grew by 1% in the first quarter.
Apolinar Veloz, a former general manager of the Central Bank, thinks that the Fernandez administration is taking measures to solve short-term considerations that will affect the country in the long term. He said that according to the Central Bank, the Dominican economy is moved by consumption, which is about 90% of the GDP, and of which 72% consists of imports.
Miguel Ceara Hatton, coordinator of the United Nations Development Program in the DR, said that the government has resorted to borrowing as a way of activating the economy. He said that the level of public debt is projected to end at US$13 billion, up from US$11 billion last year. He said the use of the funds is uncertain.
He mentioned that as of 29 March 2009 the debt with PetroCaribe was US$1.2 to US$1.3 billion, and the funds that would have gone to pay for fuel were instead used to subsidize the electricity sector. "We are taking on debt to pay subsidies and the debts should be for savings or to generate foreign exchange. Ultimately, we are subtracting money that would be used for development," he warned.
Despradel urged the government to be austere in its spending. He called for the example of former President Joaquin Balaguer to be followed in his strict management of government funds. "He was a true statesman, in that in his government no one had vehicles assigned, gasoline, or credit cards to pay restaurant bills," he commented. "We have to revive that," he said.
Despradel said that in Balaguer's day the budget was equally distributed between infrastructure works and spending. He criticized the fact that today only 15% goes towards investments.
Apolinar Veloz commented that the country does not meet the conditions to sign an agreement with the International Monetary Fund. He says that corrections need to be applied to the deficit in the balance of payments and the central government, the solvency of commercial banks and fulfillment of the laws. He said another limitation is the use of government money for election campaigning. He speculated that government spending would not be under control next year when the authorities have the challenge of the congressional and municipal elections. Veloz said that a US$1 billion bonds placement would not require the governmental controls that would have to be in place to receive funds from the IMF.
Nonetheless Despradel warned, "Now, in the case of the obtaining money through the issue of sovereign bonds, it would be funds for government spending, on government payroll that already has been increasing disproportionately."
More... (http://www.dr1.com/index.html#3)