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IMF says Dominican Economy is recovering
posted on: Feb 17 2010 9:32 by Royston. Viewed 502 times.
The International Monetary Fund (IMF), admitted that monetary conditions have improved significantly in the Dominican Republic after a contraction and described as "positive" the contingency agreement in force between IMF and the DR.
The IMF also considered that the Dominican Republic has enough capacity to meet demands for exports to neighboring Haiti, devastated by the Jan 12 earthquake.
The agency noted that although the Dominican economy is weak, recovery in the last months of 2009 was obvious due to growth of 3.5% in the Gross Domestic Product (GDP), the stabilization of the foreign exchange market and inflation of 5.8%.
"Monetary conditions have improved significantly (in D.R.). After a contraction, loans to the private sector recovered in late 2009 and expanded by about 8.5 percent for the year," said the report, which summarizes a two-week visit made by an IMF mission to the Dominican Republic.
The document revealed that, although some deviations were detected to the aims established in 2009, policies originally envisaged in the 2009 program are being maintained.
The Dominican Republic signed the agreement last November with the IMF, in order to cover the deficit caused by the fall in revenues attributed to the crisis in the international economy.
"The mission made significant progress in the talks and will make the final assessment of the review in Washington in the coming weeks," the statement said, referring to plans by the IMF and the Dominican authorities to draft a letter of intent for the implementation of the policy agreement in 2010.
Criticisms:
The IMF, however, did criticize two areas where the aspirations of 2009 had not been met; the limit on fiscal deficit of the central administration and settlement of arrears to electricity generators
.
In addition, the organization said that with regard to the international community's efforts to rebuild Haiti, he expected the active participation of the Dominican Republic which could increase net exports in the future. The economy has enough spare capacity to cope with this potential increase in demand," stated the report.
"The fiscal deficit of the consolidated public sector reached nearly 4.5 percent of GDP in 2009, in line with the authorities' economic program, while the central government's fiscal deficit reached 3.5 percent of GDP due mainly to increased transfers to the electricity sector and a reduction in revenues," said the agency.
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