NewsWhore
10-27-2010, 04:10 PM
The International Monetary Fund (IMF) announced the completion of the second and third reviews of the 28-month Stand-by Arrangement (SBA) with the Dominican Republic on 22 October and approved the immediate disbursement of about US$249 million as part of a line of credit worth US$1.72 billion that was approved in November 2009. The total resources disbursed under the agreement total US$687.6 million. The approval of the funds comes after the IMF finished its analysis of the evolution of the Dominican economy.
The IMF announced that it has approved a waiver of non-observance for the end-September performance criteria for public sector arrears to electricity generators (which were subsequently corrected), and waivers of applicability for two fiscal targets for which data on performance were not available at the time of the review meeting.
The IMF reports it has approved additional performance criteria for 2011 and structural benchmarks for 2010 and 2011. "All quantitative and structural benchmarks for the second and third reviews were met," according to the Executive Board announcement.
Murilo Portugal, Deputy Managing Director and Acting Chair, stated: "Following near stagnation at the beginning of last year, the Dominican economy is rebounding strongly. It is expected that real GDP will increase more than previously projected in 2010 and 2011, with low inflation. The positive economic activity has been achieved thanks to stimulative monetary and fiscal policies through mid-2010 and less adverse external conditions. The financial system has weathered the global crisis well.
"Fiscal policy has entered now a new phase in the second half of 2010 and the process of fiscal consolidation has appropriately begun. To ensure observance of the fiscal targets for 2010, the authorities exercising a strict control on current spending. The 2011 budget envisages a consolidated fiscal deficit of 3 percent of GDP, which represents an adjustment of 1 percent of GDP, to be achieved through a reduction in indiscriminate electricity subsidies and a strengthening of tax collections by rationalizing tax exemptions and improving tax administration, targets that are in line with the original program.
"The central bank has managed monetary policy flexibly and has a commendable track record in this area. Given the shrinking output gap, the central bank recently increased its policy rate to 4? percentoa still stimulative stanceoafter about a year of keeping it at 4 percent. The central bank indicated it stands ready to undertake further tightening if needed to confront eventual inflationary pressures. The authorities' plan to adopt inflation targeting by 2012 would be aided by a more flexible exchange rate. Continuing with the plan for recapitalization of the central bank is essential for monetary policy credibility. The authorities also plan to implement risk-based consolidated supervision that would further shield the banking system against financial shocks.
"Risks to the outlook remain balanced and could be managed with continued structural reforms and flexible macroeconomic policy. Reforms in the electricity sector, to lower its burden on public finances, and improvements in tax collections will be critical for fiscal sustainability."
See: www.imf.org/external/np/sec/pr/2010/pr10399.htm (http://www.imf.org/external/np/sec/pr/2010/pr10399.htm)
More... (http://www.dr1.com/index.html#2)
The IMF announced that it has approved a waiver of non-observance for the end-September performance criteria for public sector arrears to electricity generators (which were subsequently corrected), and waivers of applicability for two fiscal targets for which data on performance were not available at the time of the review meeting.
The IMF reports it has approved additional performance criteria for 2011 and structural benchmarks for 2010 and 2011. "All quantitative and structural benchmarks for the second and third reviews were met," according to the Executive Board announcement.
Murilo Portugal, Deputy Managing Director and Acting Chair, stated: "Following near stagnation at the beginning of last year, the Dominican economy is rebounding strongly. It is expected that real GDP will increase more than previously projected in 2010 and 2011, with low inflation. The positive economic activity has been achieved thanks to stimulative monetary and fiscal policies through mid-2010 and less adverse external conditions. The financial system has weathered the global crisis well.
"Fiscal policy has entered now a new phase in the second half of 2010 and the process of fiscal consolidation has appropriately begun. To ensure observance of the fiscal targets for 2010, the authorities exercising a strict control on current spending. The 2011 budget envisages a consolidated fiscal deficit of 3 percent of GDP, which represents an adjustment of 1 percent of GDP, to be achieved through a reduction in indiscriminate electricity subsidies and a strengthening of tax collections by rationalizing tax exemptions and improving tax administration, targets that are in line with the original program.
"The central bank has managed monetary policy flexibly and has a commendable track record in this area. Given the shrinking output gap, the central bank recently increased its policy rate to 4? percentoa still stimulative stanceoafter about a year of keeping it at 4 percent. The central bank indicated it stands ready to undertake further tightening if needed to confront eventual inflationary pressures. The authorities' plan to adopt inflation targeting by 2012 would be aided by a more flexible exchange rate. Continuing with the plan for recapitalization of the central bank is essential for monetary policy credibility. The authorities also plan to implement risk-based consolidated supervision that would further shield the banking system against financial shocks.
"Risks to the outlook remain balanced and could be managed with continued structural reforms and flexible macroeconomic policy. Reforms in the electricity sector, to lower its burden on public finances, and improvements in tax collections will be critical for fiscal sustainability."
See: www.imf.org/external/np/sec/pr/2010/pr10399.htm (http://www.imf.org/external/np/sec/pr/2010/pr10399.htm)
More... (http://www.dr1.com/index.html#2)