NewsWhore
08-09-2006, 07:00 PM
Economist Carlos Asilis believes that the Dominican economic authorities should maintain the stability of the Dominican peso and controlled market until it tackles the problem of the quasi-fiscal deficit. The government maintains a quasi-fiscal deficit of more than RD$150 billion (approx. US$5 billion). Participating in a round table on Challenges for the Dominican Economy on the occasion of Hoy newspaper's 25th anniversary, the economist said that the Central Bank acted correctly in anchoring the exchange rate to a stable rate. In his opinion, the economy recovered at a rate faster than even the authorities expected, which lead to the appreciation of the exchange rate, and the strengthening of the peso. In his opinion, the country should maintain this strategy of not allowing the peso to float freely until it can tackle the quasi-fiscal debt. Superintendence of Banks, Rafael Camilo said yesterday Dominican taxpayers would be responsible for the quasi-fiscal debt, a great part of which was accumulated due to government decisions regarding commercial bank fraud. Camilo said, as reported in the Listin Diario, that it could take Dominicans 15-20 years to pay off this debt.
Speaking at the same event, Hector Guiliani Cury said that the government is reticent to let the currency float because the depreciation would lead to a contraction of the economy, the cost of servicing the debt would increase considerably with depreciation, and the pass-through of the exchange rate to inflation is high. He also mentioned that government payments also depend on the exchange rate, such as the subsidies of the energy sector and the servicing of the foreign debt. When there is a depreciation of the peso, government costs increase without a parallel increase in tax revenues.
Economist Federico Martinez, speaking at the same event, said that "If we want to progress as a nation more needs to be spent on human development areas, infrastructure and institutional development". Martinez said that citizens should demand increased transparency from the government, combined with control of corruption before the imposition of more taxes to cover increasing government spending.
More... (http://www.dr1.com/index.html#14)
Speaking at the same event, Hector Guiliani Cury said that the government is reticent to let the currency float because the depreciation would lead to a contraction of the economy, the cost of servicing the debt would increase considerably with depreciation, and the pass-through of the exchange rate to inflation is high. He also mentioned that government payments also depend on the exchange rate, such as the subsidies of the energy sector and the servicing of the foreign debt. When there is a depreciation of the peso, government costs increase without a parallel increase in tax revenues.
Economist Federico Martinez, speaking at the same event, said that "If we want to progress as a nation more needs to be spent on human development areas, infrastructure and institutional development". Martinez said that citizens should demand increased transparency from the government, combined with control of corruption before the imposition of more taxes to cover increasing government spending.
More... (http://www.dr1.com/index.html#14)