Dominican Economy Experiences Above-Average Growth in Latin America

Dominican Economy Experiences Above-Average Growth in Latin America
Santo Domingo, 10/15/2010

The Ministers of Economy, Planning and Finance as well as the Governor of the Central Bank issued a document released to them from the International Monetary Fund (IMF) revealing the robust recovery of the Dominican economy, the result of a government and IMF-supported program, according to the President´s Office. 

“Solid banking indicators continue to show signs of adequate capital, low debt and profit recovery, all of which points to an absence of tension in the financial system,”

In a letter issued by the IMF, economic experts Temístocles Montás, Vicente Bengoa and Héctor Valdez Albizu, said that thanks to coordinated response and fiscal policy, confidence has been restored to the economy, inflation has remained low and the exchange rate is stable.

“These favorable results confirmed that our focus on the design of the program was correct as was our decision to continue to carry it out. At the same time, structural reforms are underway to face the long-term challenges that still lie ahead, such as the functioning of the energy and electricity sector,” explained the economic experts.

In addition, they assured that “in April, the government was able to issue sovereign bonds in the international markets with differentials of historically low interest rates following an improved credit risk rating.”

 “We are requesting the termination of the second and third reviews, in the Stand By Arrangement, based on the fulfillment of the quantitative criteria of execution and the structural reference indicators for the end of March and end of June,” they said.
The government officials went on to guarantee that new fiscal policies for the remainder of the year were in place to fulfill year-end goals within the framework of the program for 2010.

The document establishes that since the last review of the IMF arrangement, there are clear signs the economy is in a state of continued recovery and that the GDP grew 7.5% in the first trimester of 2010 after having experienced the same 7.5% growth in the last trimester of 2009. The recovery seems to have a wide base as we see significant economic upturns in other areas such as private credit, commerce, remittances and tourism, all of which are sectors displaying healthy growth rates

“Consequently, we have revised our estimates of GDP growth for this year from 3 to 4 points, which was our first projection from 5.5 or 6.0 per cent, which is much higher than the average in Latin America, reducing the product gap much quicker than expected,” states the document.

Inflation reached 5.0 per cent in August 2010 and is expected to remain in the Central Bank range between 6 and 7 per cent by the end of the year.
“Solid banking indicators continue to show signs of adequate capital, low debt and profit recovery, all of which points to an absence of tension in the financial system,” as stated in the letter sent to Dominican  finance officials from the International Monetary Fund.