Press Release No. 05/100

Press Release: Statement by IMF Staff Mission on the Dominican Republic

May 10, 2005

The following statement was issued today in Washington, D.C. by Mr. Guy Meredith, the International Monetary Fund's (IMF) mission chief for the Dominican Republic:

"The IMF mission which visited Santo Domingo from April 25 to May 6, 2005, made important progress towards completing, at the staff level, the first review of the Dominican Republic's program supported by a Stand-By Arrangement from the Fund. In parallel, the mission advanced in the Article IV consultation discussions centered on the medium term challenges to restore and sustain high growth.

"Developments under the program remain favorable, and preliminary information suggests that the end-March 2005 quantitative performance criteria have been met with comfortable margins. The continued implementation of cautious fiscal and monetary policies have contributed to strengthening confidence, reducing inflation, and lowering interest rates. Preliminary estimates, based on standard national accounts methodology, also suggest that real GDP expanded by about 4 percent in the first quarter of 2005. Meanwhile, the 12-month inflation rate fell to 3.9 percent in April from 28.7 percent in December 2004, and the average interest rate on central bank certificates is now below 14 percent. In this regard, and despite the growth in central bank certificates in early 2005—reflecting the larger-than-anticipated accumulation of international reserves, the central bank's quasi-fiscal losses remain within the program's estimates.

"The Dominican authorities will travel to Washington shortly to resume discussions on the first review of the program and the Article IV consultation. These discussions will focus on the macroeconomic policies for the remainder of the year, as well as on structural reforms such as the submission to congress of draft laws to reform fiscal management institutions and on the implementation of the banking strategy," Mr. Meredith said.