NewsWhore
10-07-2010, 04:10 PM
Writing in Hoy newspaper, former Central Bank governor Bernardo Vega describes how the 2011 National Budget submitted to the ruling party majority Congress includes US$2.5 billion in loans of various hard currencies. Of that amount only 8% is subject to public tenders, or transparency. The remainder US$2,304 million the government will be able to spend on purchases and public works without tenders, which, he writes, given the present practices will mean overvaluation and juicy commissions.
Vega explains that the 8% is made up of loans from the IDB and the World Bank. The 92% comes from sovereign bonds (US$500 million), bonds issued locally in Dominican pesos (equal to US$727 million), Petrocaribe resources (US$281 million), resources from the IMF that the government, not the Central Bank, will receive (US$251 million) and loans in hard currency for specific projects (US$545 million).
The projects to be financed include the Coral highway (US$69 million), the Uvero Alto-Sabana de la Mar highway (US$10 million), the Boulevard del Este (US$3 million) and military radars (US$1.4 million). There is also a loan for US$35 million to start construction on seven hospitals, a key-in-hand project, as popularized during the Hipolito Mejia government with no tenders and major overvaluation.
The loan for the Metro that President Fernandez requested from President Sarkozy will involve a US$182 million disbursement.
In the budget the government explains that it has not yet reached the limit of indebtedness, saying that a relation of 25% of debt to GDP does not compromise the credit rating of international agencies or additional access to financing, and allows for additional indebtedness in case of domestic crisis. The government does admit that the proportion has already been surpassed. In 2009 it was 36.6%, it will be 36.7% this year, and next year it will be at 36.4%.
Government planners add that only with surpluses in the public sector (when the government has been dragging deficits for the past five years that have been financed by taking on debt) is that the 25% level will be restored, with a forecast for this to happen in 2017, if the surpluses begin in 2012. Vega reminds readers that 2012 is an electoral year.
Vega asks how long will Moody's and Fitch continue to give the DR acceptable ratings when we will borrow US$2.5 billion next year due to the fiscal deficits, but have to pay US$1.64 billion in foreign and domestic debt and when half of those payments go to bilateral loans (US, Venezuela, Spain, etc) that are not renegotiable in the Paris Club.
He warns that for the government to reach the level of local taxation of 15% in 2013, as established in the agreement signed with the IMF, increases and additional taxes will have to be levied. He mentions that these include granting the Ministry of Hacienda the decision on who gets tax exonerations, cost-benefit analyses of present and future tax exemptions, taxation of fuel used to generate electricity, approval of laws to regulate the prices of transfers and sub-capitalization, updating prices of houses subject to the luxury tax, indexing the tax on license plates to inflation, increasing the tolls to RD$50, etc.
More... (http://www.dr1.com/index.html#7)
Vega explains that the 8% is made up of loans from the IDB and the World Bank. The 92% comes from sovereign bonds (US$500 million), bonds issued locally in Dominican pesos (equal to US$727 million), Petrocaribe resources (US$281 million), resources from the IMF that the government, not the Central Bank, will receive (US$251 million) and loans in hard currency for specific projects (US$545 million).
The projects to be financed include the Coral highway (US$69 million), the Uvero Alto-Sabana de la Mar highway (US$10 million), the Boulevard del Este (US$3 million) and military radars (US$1.4 million). There is also a loan for US$35 million to start construction on seven hospitals, a key-in-hand project, as popularized during the Hipolito Mejia government with no tenders and major overvaluation.
The loan for the Metro that President Fernandez requested from President Sarkozy will involve a US$182 million disbursement.
In the budget the government explains that it has not yet reached the limit of indebtedness, saying that a relation of 25% of debt to GDP does not compromise the credit rating of international agencies or additional access to financing, and allows for additional indebtedness in case of domestic crisis. The government does admit that the proportion has already been surpassed. In 2009 it was 36.6%, it will be 36.7% this year, and next year it will be at 36.4%.
Government planners add that only with surpluses in the public sector (when the government has been dragging deficits for the past five years that have been financed by taking on debt) is that the 25% level will be restored, with a forecast for this to happen in 2017, if the surpluses begin in 2012. Vega reminds readers that 2012 is an electoral year.
Vega asks how long will Moody's and Fitch continue to give the DR acceptable ratings when we will borrow US$2.5 billion next year due to the fiscal deficits, but have to pay US$1.64 billion in foreign and domestic debt and when half of those payments go to bilateral loans (US, Venezuela, Spain, etc) that are not renegotiable in the Paris Club.
He warns that for the government to reach the level of local taxation of 15% in 2013, as established in the agreement signed with the IMF, increases and additional taxes will have to be levied. He mentions that these include granting the Ministry of Hacienda the decision on who gets tax exonerations, cost-benefit analyses of present and future tax exemptions, taxation of fuel used to generate electricity, approval of laws to regulate the prices of transfers and sub-capitalization, updating prices of houses subject to the luxury tax, indexing the tax on license plates to inflation, increasing the tolls to RD$50, etc.
More... (http://www.dr1.com/index.html#7)