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President Announces Austerity Plan

President Announces Austerity Plan

Dominican President Leonel Fernández, announced the implementation of an austerity plan to go into effect the second semester of this year. It will consist of cut backs in public spending and the acceptance of outside financing necessary to cover the slimmer government budget.

One of the goals of the new budget is to reduce spending by 20% for the period of August to December of this year.

President Fernández’s announcement came on Thursday night during an address to the nation that was broadcast on TV, radio and Internet.

The president instructed the Ministry of Economy to immediately work out spending quotas for the Supplementary Budget, based on established criteria, to be submitted to the upcoming National Congress, according to the Presidential Office of Information, Press and Publicity.

One of the goals of the new budget is to reduce spending by 20% for the period of August to December of this year. The savings would be equivalent to nearly 20 million pesos.

“The current crisis will oblige us to be serious about spending, to be measured and moderate.  Not to squander, not to waste but to appreciate the value and importance of each thing we have and not to succumb to the temptation of vanity that always incites us to consume more than we need,” said President Fernández in his national speech announcing the new austerity plan.

He noted that the adjustment in interest rates, the use of international reserves and changes in the structure of legal exchange have all contributed to the monetary slowdown.

These decisions were taken by non-oil-producing Latin American countries in an effort to confront the crisis, he explained.
Subsidies will be granted to supplement basic family food needs as well as energy and transport services, explained the president. He said this was being done to help citizens with low incomes in an effort to protect them from the impact of the international crisis, adding that current high food and oil prices are not permanent.

Among the austerity measures to be adopted immediately by President Fernández´s government include: a moratorium on new infrastructure projects; the prioritization of the building projects that are at least 75% finished; the reduction by 100 million dollars of spending in investment projects financed by external sources.  

 In addition, there will be a 25% reduction in government publicity, a freeze on the purchase of office equipment and all types of vehicles for one year with the exception of the National Police and the Ministry of Agriculture.

There will also be a 25% reduction in the amount of fuel purchased by government officials, a decrease in cell phone use, toll payments, per diem payments, allowances and a general cutback in public expenditure.  

The government austerity policy will imply a 5% decrease in government employees´ salaries for those workers who make between 151,000-200,000 pesos monthly. For those who make more than 201,000 pesos, the salary cutback will be 10%.

The austerity measures also involve a freeze on public salaries with the exception of school and hospital workers.

Complete speech (Spanish)>


Date of Publication: July 19, 2008

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