NewsWhore
05-20-2010, 05:20 PM
Economist Apolinar Veloz doubts the government will reduce public spending now that it has won the mid-term election. He expects the government deficit to continue to increase, as reported in Hoy. He said that to finance the political campaign, the government took on US$1.35 billion in debt, by placing domestic and sovereign bonds, and sold its stake in the Dominican Petroleum Refinery for US$133.4 million.
Veloz, a former general manager of the Central Bank, forecast that excessive government spending would bring about an increase in interest rates as the monetary authorities rein in inflation. "The big loser will be the private sector that will be hard-pressed to get financing, and this will be even worse if the government resorts to borrowing from local banks again," he writes.
He said to expect adjustments in taxes so the government can continue to pay for its present level of spending. He said that in 2005 RD$29,939.4 million was assigned to the public debt. By 2008, the government paid RD$49,817.2 million. That means the service of the debt of the central government almost doubled from 2005 to 2008, or US$4.6 billion, says Veloz.
He said that government policy has been characterized by insufficient internal savings to finance domestic investment, government spending above the tax receipt levels and a deteriorating current balance of payments account.
As reported in Hoy he said the deficit of the current account in the balance of payments has multiplied tenfold in the period 2005-2008, going from US$473 million in 2005 to US$4.436 million in 2008.
More... (http://www.dr1.com/index.html#10)
Veloz, a former general manager of the Central Bank, forecast that excessive government spending would bring about an increase in interest rates as the monetary authorities rein in inflation. "The big loser will be the private sector that will be hard-pressed to get financing, and this will be even worse if the government resorts to borrowing from local banks again," he writes.
He said to expect adjustments in taxes so the government can continue to pay for its present level of spending. He said that in 2005 RD$29,939.4 million was assigned to the public debt. By 2008, the government paid RD$49,817.2 million. That means the service of the debt of the central government almost doubled from 2005 to 2008, or US$4.6 billion, says Veloz.
He said that government policy has been characterized by insufficient internal savings to finance domestic investment, government spending above the tax receipt levels and a deteriorating current balance of payments account.
As reported in Hoy he said the deficit of the current account in the balance of payments has multiplied tenfold in the period 2005-2008, going from US$473 million in 2005 to US$4.436 million in 2008.
More... (http://www.dr1.com/index.html#10)