Vega warns on Metro funding

[NewsWhore]

Economist and former Dominican Central Bank governor Bernardo Vega has warned that Metro funding for 2007 will increase the pressure on public spending during the year. At the same time, Vega asked if the Metro would be managed by a foreign firm that is well versed in the management of a rapid transit system or a member of the current political party in power, the PLD. According to Hoy newspaper, the respected economist also asked whether a permanent subsidy would be created for the Metro, and wondered what the fare rates would be. Vega also pointed out that the loan packages for equipping the rail system were not approved during 2006 because the government was already above the borrowing limit established in the IMF stand-by arrangement. The former Dominican ambassador to the US also reminded reporters that the imminent DR-CAFTA agreement would also include the purchase of many items that are still needed to complete the Metro system. DR-CAFTA should have been implemented in 2006, but the government has delayed passing required complementary legislation into 2007. Vega interprets the rush to approve the different loan packages as an attempt to avoid the restriction on public bids required by the free trade agreement. In his general comments, Vega also said that the impact of the trade agreement would be felt this year with "a new culture in the public administration and in the handling of business in the private sector." He warned that 2008 would be a very difficult year when the government will have to address the bulging quasi-fiscal debt. On the positive side he mentioned that there are expectations for dropping US interest rates and international petroleum prices, while export prices continue strong. He also forecast the DR-CAFTA will stimulate new investment.

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