NewsWhore
08-16-2007, 06:50 PM
Economists Carlos Despradel, Andres Dauhajre, Jose Luis de Ramon and Miguel Ceara Hatton focused yesterday on where the country is at three years into the administration of President Leonel Fernandez during an interview with Hoy newspaper.
All recommend that the country continue with IMF supervision of government finances once the current stand-by arrangement runs out in January 2008. The group says that an agreement with the IMF is a positive message that is sent to the international community that has invested in Dominican sovereign bonds. Dauhajre says that an agreement of any kind, not necessarily of the stand-by variety is recommended, and needs to last for 18 months. Despradel added that public spending should not be increased at the whims of some public officials. Spokesmen for the government, even President Leonel Fernandez, have stated that once the agreement finalizes in January 2008, the government will have a freer hand.
In the last four years, even with the stand by arrangement, government spending has increased by 131% and inflation has increased by 59%, according to Despradel, who pointed out that the government has not been constrained. This would coincide with the presidential elections set for 16 May 2008.
Jose Luis de Ramon called for more attention to the cuasi-fiscal deficit that has been on the rise. The deficit has grown from US$2.3 billion at the change of government in 2004 to US$5.4 billion in August 2007. He said the deficit has since been controlled with resources from new taxation.
Ceara Hatton stressed that the government has failed to strengthen its institutions, giving greater leeway to political patronage. He said that there has been stagnation of exports, with the exception of ferronickel that benefited from better international prices. Hatton concurred with Despradel that the present growth is due to a boom in international capital inflows attracted by the macroeconomic stability.
Despradel alerted that the Dominican economy is highly dependent on imports. He said that sectors that have grown are commerce, communications, transport and services, not so industry and farming. He pointed out that in the first quarer of the year, industry and farming grew 3%, while imports increased 58%.
Despradel said that by keeping a cap on the exchange rate, the government is stimulating imports and penalizing productive farming and industry, creating a major trade deficit that is financed with the inflow of foreign capitals. Despradel feels that the exchange rate should be at 37-38%, not at 32-33%.
More... (http://www.dr1.com/index.html#3)
All recommend that the country continue with IMF supervision of government finances once the current stand-by arrangement runs out in January 2008. The group says that an agreement with the IMF is a positive message that is sent to the international community that has invested in Dominican sovereign bonds. Dauhajre says that an agreement of any kind, not necessarily of the stand-by variety is recommended, and needs to last for 18 months. Despradel added that public spending should not be increased at the whims of some public officials. Spokesmen for the government, even President Leonel Fernandez, have stated that once the agreement finalizes in January 2008, the government will have a freer hand.
In the last four years, even with the stand by arrangement, government spending has increased by 131% and inflation has increased by 59%, according to Despradel, who pointed out that the government has not been constrained. This would coincide with the presidential elections set for 16 May 2008.
Jose Luis de Ramon called for more attention to the cuasi-fiscal deficit that has been on the rise. The deficit has grown from US$2.3 billion at the change of government in 2004 to US$5.4 billion in August 2007. He said the deficit has since been controlled with resources from new taxation.
Ceara Hatton stressed that the government has failed to strengthen its institutions, giving greater leeway to political patronage. He said that there has been stagnation of exports, with the exception of ferronickel that benefited from better international prices. Hatton concurred with Despradel that the present growth is due to a boom in international capital inflows attracted by the macroeconomic stability.
Despradel alerted that the Dominican economy is highly dependent on imports. He said that sectors that have grown are commerce, communications, transport and services, not so industry and farming. He pointed out that in the first quarer of the year, industry and farming grew 3%, while imports increased 58%.
Despradel said that by keeping a cap on the exchange rate, the government is stimulating imports and penalizing productive farming and industry, creating a major trade deficit that is financed with the inflow of foreign capitals. Despradel feels that the exchange rate should be at 37-38%, not at 32-33%.
More... (http://www.dr1.com/index.html#3)