Economic Authorities Sign Letter Of Intent with the IMF

At the annual meetings with the International Monetary Fund (IMF) and the World Bank, Dominican Central Bank Governor, Héctor Valdez Albizu; Vicente Bengoa, Minister of Finance and Temístocles Montás, Minister of Economy, Planning and Development, met with Dominique Strauss-Kahn and Murilo Portugal, IMF Managing Director and Deputy Managing Director, respectively. The purpose of the meeting was to deliver a Letter of Intent that will pave the way for the signing of a new Stand-by Agreement with the International Monetary Fund. Other officials at the meeting included Paolo Nogueira Batista, Executive Director of the Chair to which the DR belongs, as well as other international and national IMF executives, according to the President’s Office of Information, Press and Publicity.

The program has incorporated structural aspects to strengthen governability and to achieve better organization of the electricity sector and to include elements of social policy that allow the State to help those most in need.

The program agreed to by the Dominican authorities and the IMF includes the design of a fiscal reform plan and maintenance of current monetary conditions with the idea of staving off the effects of the international financial crisis. To these ends, in 2009, monetary authorities have adopted measures to reduce interest rates in order to make credit more available in the economy. Notwithstanding, the capacity to carry out an expansive fiscal policy to counteract the economic cycle has been limited by a drop in tax collection and drastic reduction in international and domestic financing which have resulted, to a large extent, in the international financial crisis. In terms of taxes, the proposed plan involves a series of joint strategies oriented at strengthening the country’s tax office in addition to a comprehensive managing of fiscal exemptions.

The program has incorporated structural aspects to strengthen governability and to achieve better organization of the electricity sector and to include elements of social policy that allow the State to help those most in need.

This new Stand-By Agreement with the IMF will be in effect for 2 years. In the macro economic framework it is expected that the rhythm of growth will help restore the GDP, reduce inflation, gradually decrease the balance of payment deficit while increasing the primary surplus of the consolidated public sector.

By signing the Letter of Intent, the Dominican government will continue the process through which it will have access to $900 million dollars in funds, in what remains of this year alone ($390 million from the Inter-American Development Bank (IDB), $300 million from the World Bank and US$300 million additional from the IMF).

Temístocles Montás, Héctor Valdez Albizu, Dominique Strauss-Khan and Vicente Bengoa.