NewsWhore
04-07-2011, 05:10 PM
A group of economists recently held a meeting at the Corripio Media group to discuss the country's future prospects, especially after an IMF mission that met in the DR recently announced that the fifth review of the IMF Stand-by arrangement could not be completed. The IMF is calling for more taxation and reduced government spending to shrink the government deficit. The economists said until that happens, a disbursement of US$800 million will not be received, as reported in Hoy.
Former Central Bank governor Carlos Despradel said that exports needed to increase, but if this is to happen, the country's products and services need to be competitive. He said for the local labor force needed to be competitive and the quality of education needs to improve. Last year the economy grew by 7.8%, largely due to the fact that the government took on RD$120 billion in debt that was used for spending that activated the economy, said Despradel. But he said that could not be repeated because it is unsustainable, and in the short term there is a need to think of increasing the pace of exports.
He called for the country to source multilateral loans given the increasing current account deficit, that last year peaked at US$4.4 billion. He said the deficit was due to an increase in imports, the 30% increase in the price of fuel, an increase of 60% in vehicle imports and of 33% in appliance imports.
He discounted the option of devaluing the peso as a solution. He said that Dominican manufacturing depends on imports and called for a change in the economic model for a focus on production.
Economist Rolando Guzman said a reduction in the rate of growth of GDP would not be bad. He commented that growth has become an objective in itself. He called for more jobs and social policies directed in a way that ensures that the poorer sectors do not shoulder the cost of growth. "A higher tax burden is needed, but together with better quality of public spending," he said.
Economist Apolinar Veloz said the government reacted to the IMF constraints by increasing the interest rates to curtail spending, but he said inflation is external and difficult to confront. He said the increase in the interest rates would bring less investment, less job creation and an increase in poverty.
"Economic growth is only sustainable if the country can guarantee the maintenance of a permanent flow of indebtedness in the coming years to maintain the level of investment that the economy needs and the level of consumption," he said.
Veloz pinpoints the deficit in the trade balance. He said the economic model is anti-exporter and promotes imports. "If there is a change of the model then it should be to one based on stimulating exports and reducing imports as a way for domestic production can survive and be competitive," he said.
He advocated for improvements in quality of government spending, given that a large part of this is related to corruption. Spending takes place on projects where money is tied to corruption, he said. He said that as of June 2010 works under construction had depleted their budget. "What that means is that the larger works are tied to corruption and that has to be fixed with public policies that guarantee sustained growth," he said.
More... (http://www.dr1.com/index.html#6)
Former Central Bank governor Carlos Despradel said that exports needed to increase, but if this is to happen, the country's products and services need to be competitive. He said for the local labor force needed to be competitive and the quality of education needs to improve. Last year the economy grew by 7.8%, largely due to the fact that the government took on RD$120 billion in debt that was used for spending that activated the economy, said Despradel. But he said that could not be repeated because it is unsustainable, and in the short term there is a need to think of increasing the pace of exports.
He called for the country to source multilateral loans given the increasing current account deficit, that last year peaked at US$4.4 billion. He said the deficit was due to an increase in imports, the 30% increase in the price of fuel, an increase of 60% in vehicle imports and of 33% in appliance imports.
He discounted the option of devaluing the peso as a solution. He said that Dominican manufacturing depends on imports and called for a change in the economic model for a focus on production.
Economist Rolando Guzman said a reduction in the rate of growth of GDP would not be bad. He commented that growth has become an objective in itself. He called for more jobs and social policies directed in a way that ensures that the poorer sectors do not shoulder the cost of growth. "A higher tax burden is needed, but together with better quality of public spending," he said.
Economist Apolinar Veloz said the government reacted to the IMF constraints by increasing the interest rates to curtail spending, but he said inflation is external and difficult to confront. He said the increase in the interest rates would bring less investment, less job creation and an increase in poverty.
"Economic growth is only sustainable if the country can guarantee the maintenance of a permanent flow of indebtedness in the coming years to maintain the level of investment that the economy needs and the level of consumption," he said.
Veloz pinpoints the deficit in the trade balance. He said the economic model is anti-exporter and promotes imports. "If there is a change of the model then it should be to one based on stimulating exports and reducing imports as a way for domestic production can survive and be competitive," he said.
He advocated for improvements in quality of government spending, given that a large part of this is related to corruption. Spending takes place on projects where money is tied to corruption, he said. He said that as of June 2010 works under construction had depleted their budget. "What that means is that the larger works are tied to corruption and that has to be fixed with public policies that guarantee sustained growth," he said.
More... (http://www.dr1.com/index.html#6)