NewsWhore
06-08-2011, 04:50 PM
As reported in all today's newspapers, the IMF mission issued a statement yesterday on progress made during their visit to Santo Domingo. The mission reported that inflation rose to 8%, year to year, in May, because of the increase in the rising prices of food and fuels on the international markets.
The mission also reported that the large subsidies to the electricity sector, because of the higher oil prices of oil, worsened the fiscal results of the program that had been agreed upon with the Dominican authorities.
Alejandro Santos, the chief of mission, said nevertheless that despite higher prices for basic products, the macro-economic situation continues to be favorable, and although economic growth has been lower than expected, the real GDP expanded 4.3% in the first quarter of 2011. He said that the Central Bank increased its policy rate by 275 basis points since the last quarter of 2010, going from 4% to 6.75%, and the tighter stance is consistent with the economy operating at potential and needed to contain spillover effects on inflation from the higher food and fuel prices.
He said that several performance criteria for end-December 2010 and end-March 2011 were not met - especially those related to the electricity sector, where larger subsidies deteriorated fiscal performance. But most structural measures have been implemented, some with a delay.
He indicated on the other hand that the increase in oil prices has led to significantly larger-than-planned electricity subsidies for 2011, but the authorities have reacted by adjusting electricity tariffs by 8 percent effective in June 2011 and, cutting non-social spending by 12 percent since April 2011. In addition, he mentioned the tax measures sent to Congress aimed at reversing the declining trend in tax collections, and that the government has reiterated its commitment to the objectives and policies of its economic program, which foresees a hardening of the policies for this year.
The IMF expects economic growth to be between 5% and 5.5% and the inflation rate between 6% and 7%, while the fiscal policy heads to a public sector deficit of 3% of GDP, which was foreseen in the 2011 Budget.
In the press release, Santos says that the discussions have been productive and they agreed on essential measures to ensure that the government program goes forward.
More... (http://www.dr1.com/index.html#3)
The mission also reported that the large subsidies to the electricity sector, because of the higher oil prices of oil, worsened the fiscal results of the program that had been agreed upon with the Dominican authorities.
Alejandro Santos, the chief of mission, said nevertheless that despite higher prices for basic products, the macro-economic situation continues to be favorable, and although economic growth has been lower than expected, the real GDP expanded 4.3% in the first quarter of 2011. He said that the Central Bank increased its policy rate by 275 basis points since the last quarter of 2010, going from 4% to 6.75%, and the tighter stance is consistent with the economy operating at potential and needed to contain spillover effects on inflation from the higher food and fuel prices.
He said that several performance criteria for end-December 2010 and end-March 2011 were not met - especially those related to the electricity sector, where larger subsidies deteriorated fiscal performance. But most structural measures have been implemented, some with a delay.
He indicated on the other hand that the increase in oil prices has led to significantly larger-than-planned electricity subsidies for 2011, but the authorities have reacted by adjusting electricity tariffs by 8 percent effective in June 2011 and, cutting non-social spending by 12 percent since April 2011. In addition, he mentioned the tax measures sent to Congress aimed at reversing the declining trend in tax collections, and that the government has reiterated its commitment to the objectives and policies of its economic program, which foresees a hardening of the policies for this year.
The IMF expects economic growth to be between 5% and 5.5% and the inflation rate between 6% and 7%, while the fiscal policy heads to a public sector deficit of 3% of GDP, which was foreseen in the 2011 Budget.
In the press release, Santos says that the discussions have been productive and they agreed on essential measures to ensure that the government program goes forward.
More... (http://www.dr1.com/index.html#3)