Press Release No. 11/335

Press Release: Statement by an IMF Mission to the Dominican Republic

September 15, 2011

An International Monetary Fund (IMF) mission led by Mr. Alejandro Santos visited Santo Domingo during August 30- September 13 to conduct discussions under the seventh review of the Stand-By Arrangement (SBA), approved by the IMF Executive Board in November 2009 (Press Release No. 09/393). At the conclusion of the visit, Mr. Santos issued the following statement:

“Discussions were productive and there was progress on the set of policies and actions for the rest of 2011 and 2012 for a letter of intent (LOI). Further discussions will be conducted from Washington in the coming weeks.

“Despite an unexpected deterioration in the external environment, overall macroeconomic conditions remain favorable. While there has been a deceleration in activity, the economy is growing at the healthy rate of about 4 percent. With less supportive external conditions, the growth projection was reduced to 4-5 percent for 2011 (from 5-5½ percent before). Inflation continues on the rise, mostly driven by higher commodity prices. Headline inflation reached 10 percent in August (y/y), but it is expected to fall to 7-8 percent by the end of the year, and to 5-6 percent in 2012 as monetary conditions remain tight.

“Program performance remains broadly satisfactory, although two performance criteria for end-June 2011 were missed, the target on the current deficit of the electricity sector and the target on the consolidated fiscal deficit. Implementation of the structural reform agenda continues broadly on track, although there are delays in specific areas.

“The recent fiscal actions adopted in mid-2011, such as the tax measures, the tighter supplementary budget and the adjustment to electricity prices put the fiscal objectives for 2011 within reach, including the consolidated public sector deficit of 3 percent of GDP, although some further refinements in policies are needed. 

“The mission met with Central Bank Governor Héctor Valdez, Minister of Finance Daniel Toribio, Minister of Economy Temístocles Montás, Minister of Industry Manuel Garcia, Vice-President of the Public Electricity Corporation Celso Marranzini, as well as senior government officials. The mission would like to thank the authorities and the citizens of the Dominican Republic for their warmth and hospitality.”