Press Release No. 09/357

Press Release: IMF Reaches Agreement in Principle with the Dominican Republic on a US$1.7-Billion Stand-By Arrangement

October 6, 2009

Mr. Dominique Strauss-Kahn, the Managing Director of the International Monetary Fund (IMF), today issued the following statement after the signing of a Letter of Intent by the authorities of the Dominican Republic:

“I welcome the staff-level agreement reached with the Dominican Republic over the weekend and the signing of a new Letter of Intent today by the Dominican government outlining their policies over the next two and a half years, for which they are requesting the support of the IMF under a 28-month Stand-By Arrangement amounting to about US$1.7 billion (SDR 1.09 billion).

“This letter sets out a consistent program of policy commitments to help the Dominican economy recover from the effects of the global financial crisis, and put it on a strong footing for sustainable growth and macroeconomic stability going forward. The key commitments include a primary deficit of the combined public sector of 0.8 percent of GDP this year, falling to zero in 2010 and gradually rising to a surplus of 2 percent of GDP in 2012. This adjustment will be supported by an ambitious agenda of structural reforms, including improvements in tax administration and a sharp reduction and rationalization of tax exemptions; electricity sector reforms; improvements in banking supervision; the implementation of an inflation targeting framework; and a strategy for developing domestic capital markets and public debt management.

“We applaud the authorities for their strong program of policies, which demonstrates their commitment to fortify the institutional framework and the economy of the Dominican Republic. This Letter of Intent will now be forwarded to the IMF Executive Board. A meeting of the Board to consider the authorities’ request for a Stand-By Arrangement could take place in due time and following normal circulation periods.”