NewsWhore
07-31-2006, 04:10 PM
Technical Minister for the Presidency Temistocles Montas writes in a recent report that the Central Bank's quasi-fiscal deficit will not solve itself, nor will a solution come "out of the skies." Montas said that solutions to this problem would depend on cooperation between the new legislators who take office on 16 August. He is concerned that everyday more of the government revenues are specialized, tying down the government.
He alerts there are two errors that cannot continue to be made. One of these is not passing on to consumers the increases in the cost of petroleum, by maintaining subsidies, primarily on the price of propane gas. Montas points out that the second error is believing all can be financed by borrowing. The government has postponed payment for many of its burgeoning fuel purchases through a new credit program with Venezuela.
"The country has gotten to the point where to take on any new debt, one will have to cancel old ones to sustain the public debt. If not the country will fall again into crisis. We have to have present that when we are taking on debt what we are doing is passing the present costs to the future generations," Montas alerts.
He writes that commitments to service the debt are already more than 6% of the Gross Domestic Product and next year the two years of grace achieved by restructuring the debt will expire. This will mean that only to pay the foreign debt, next year the country will need US$300 million dollars more, he alerts. "That is why we speak of the importance of rationalizing public spending and austerity in public spending," he reports.
As the chief of the President's economic team, he said that a solution to the deficit will require an "important fiscal effort" in order to face the load of interest payments on the certificates of deposit emitted by the Central Bank. He called for accountability and transparency in all of the Central Bank's operations.
Hoy newspaper published an extensive report where Montas details the challenges ahead. He refers to these as meeting the IMF agreement requirements, adapting the economy to DR-CAFTA conditions, managing the external high petroleum cost shock, reducing the subsidy to the energy sector, dealing with the quasi-fiscal debt of the Central Bank and putting into place a viable strategy to ensure social cohesion.
http://www.hoy.com.do/app/article.aspx?id=83769
Link To Original Article (http://www.dr1.com/index.html#4)
He alerts there are two errors that cannot continue to be made. One of these is not passing on to consumers the increases in the cost of petroleum, by maintaining subsidies, primarily on the price of propane gas. Montas points out that the second error is believing all can be financed by borrowing. The government has postponed payment for many of its burgeoning fuel purchases through a new credit program with Venezuela.
"The country has gotten to the point where to take on any new debt, one will have to cancel old ones to sustain the public debt. If not the country will fall again into crisis. We have to have present that when we are taking on debt what we are doing is passing the present costs to the future generations," Montas alerts.
He writes that commitments to service the debt are already more than 6% of the Gross Domestic Product and next year the two years of grace achieved by restructuring the debt will expire. This will mean that only to pay the foreign debt, next year the country will need US$300 million dollars more, he alerts. "That is why we speak of the importance of rationalizing public spending and austerity in public spending," he reports.
As the chief of the President's economic team, he said that a solution to the deficit will require an "important fiscal effort" in order to face the load of interest payments on the certificates of deposit emitted by the Central Bank. He called for accountability and transparency in all of the Central Bank's operations.
Hoy newspaper published an extensive report where Montas details the challenges ahead. He refers to these as meeting the IMF agreement requirements, adapting the economy to DR-CAFTA conditions, managing the external high petroleum cost shock, reducing the subsidy to the energy sector, dealing with the quasi-fiscal debt of the Central Bank and putting into place a viable strategy to ensure social cohesion.
http://www.hoy.com.do/app/article.aspx?id=83769
Link To Original Article (http://www.dr1.com/index.html#4)