## 1domea2020001 - EXECUTIVE SUMMARY

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---

### Context
- The Dominican Republic experienced a prosperous decade with high growth, low inflation, a relatively strong external position and significant gains in poverty reduction.
- The economy was highly vulnerable to the outbreak of the COVID-19 pandemic because tourism is one of the most important activities.
- As the pandemic advanced and travel restrictions intensified globally:
  - The Dominican economy lost an important source of foreign exchange and employment.
  - Weaker domestic activity is having a negative impact on tax receipts while the government needs to provide additional health services, creating budgetary pressures that will require additional financing.
  - As businesses struggle, their ability to service their credit lines would be diminished, putting a strain on the financial position of banks.

### Request for Fund support
- Authorities requested financial support under the Rapid Financing Instrument (RFI) in the amount of SDR 477.4 million (about US$650 million), equivalent to 100 percent of quota; which is within applicable limits under the GRA.
- The full amount will become available upon Board approval and will be used for budgetary support.
- The authorities stand ready to continue cooperating with the Fund in finding solutions to the balance of payments and fiscal imbalances.

### Macroeconomic policies and immediate priorities
- Main short-run policy challenge: minimize the loss of human lives as the COVID-19 pandemic advances.
- The macroeconomic policy response includes a fiscal package, monetary easing and liquidity provision, and supportive macroprudential measures; staff considers the response adequate but authorities need to stand ready to calibrate and expand these measures as needed.
- The Government declared a National Emergency and the Ministry of Public Health has designed a plan to face the pandemic.

### Recent developments (pre-COVID context)
- The Dominican Republic had been the fastest growing economy in Latin America (6½ percent) over the last several years.
- 2019 outcomes:
  - Real GDP growth eased to 5.1 percent in 2019 (from 7.0 percent in 2018).
  - Inflation increased to 3.7 percent in 2019 (from 1.3 percent in 2018) and stayed at that level through February.
  - Consolidated public sector deficit fell to 3.3 percent of GDP (from 3.5 percent in 2018) with no change in the central government deficit.
  - The BCRD lowered its policy rate during Q3-2019 by 100 basis points (in 3 stages) to 4.5 percent and eased reserve requirements.
  - Banks remained well capitalized, profitable and liquid. NPL fell to 1.6 percent in 2019.
  - The current account deficit remained steady at 1.4 percent of GDP in 2019, fully financed by foreign direct investment (FDI).

### Impact of COVID-19 (health and macroeconomic effects)
- As of April 13, there were 3,167 confirmed cases with 177 fatalities.
- President Medina declared a national state of emergency on March 19 with a country-wide curfew, school and border closures, suspension of public activities and mass gatherings; non-essential businesses ordered to close for 15 days (exceptions: supermarkets, grocery stores, gas stations, pharmacies, and medical supply stores).
- Preliminary macro projections (2020 Pre-Post-COVID Δ Change):
  - GDP growth (%) 5.1 -1.0 -6.1
  - Inflation (%) 4.0 3.0 -1.0
  - Fiscal deficit -3.7 -6.0 -2.3
  - Public debt (NFPS) 53.4 60.9 7.5
  - Credit growth (%) 9.7 2.5 -7.2
- Staff preliminary estimates for 2020:
  - Real GDP projected to fall to -1 percent in 2020 (from an expansion of 5.1 percent in 2019).
  - Current account deficit could widen to 5.2 percent of GDP in 2020 (from 1.4 percent of GDP in 2019).
  - Fiscal deficit could increase to 6.0 percent of GDP in 2020 (from 3.3 percent of GDP in 2019).
- Balance of payments impact:
  - BOP impact for 2020 could amount to US$4.8 billion (5.7 percent of GDP).
  - BOP gap driven by deterioration in the current account (US$3 billion) and portfolio investment (US$1.3 billion).
  - External debt amortizations estimated at US$1.9 billion (2.3 percent of GDP) in 2020.
- Post-COVID assumptions used in projections:
  - Tourism decline of 50 percent compared to 2019.
  - Remittances and net re-exports from the free zone projected to fall by 20 percent and 10 percent, respectively.
  - Net portfolio investment and net FDI assumed to decline by 50 percent and 20 percent, respectively.
- Balance of Payments: COVID-19 Impact (in billions of U.S. dollars, 2020 Pre- Post- Δ Change)
  - Current account -1.4 -4.4 -3.0
    - Non-oil balance -9.4 -8.9 0.5
    - Oil balance -3.8 -2.0 1.8
    - Free zone 2.7 2.2 -0.5
    - Tourism 7.7 3.5 -4.3
    - Remittances 6.9 5.2 -1.7
    - Other current -5.5 -4.3 1.2
  - Foreign direct investment 2.9 2.4 -0.4
  - Portfolio investment 2.2 0.9 -1.3
  - BOP financing needs ...... -4.8 (In percent of GDP ...... -5.7)
  - Potential financing (In billions of U.S. dollars) ...... 4.8
    - IMF (RFI) ...... 0.7
    - Other IFIs ... 0.5
    - International reserves ...... 1.1
    - Unidentified support ... 2.5

### Fiscal implications and financing
- Staff expects the fiscal position to deteriorate by about 2¼ percent of GDP in 2020.
- The 2020 budget was fully financed, but additional resources are needed.
- Authorities approached the World Bank, IDB, and CAF to mobilize loans and commercial credit lines; disbursements expected soon.
- Staff estimate of central government revenue and expenditure impacts (2020 Pre- Post- Δ Change, percent of GDP):
  - Revenue 14.5 13.6 -0.9
    - o/w tax revenue 13.3 12.5 -0.8
  - Expenditure 16.8 18.0 1.2
    - Current 15.0 16.6 1.7
      - o/w goods and services 2.0 2.4 0.4
      - o/w social benefits 1.3 1.9 0.7
    - Capital 1.8 1.5 -0.3
  - Overall balance (CG) -2.3 -4.4 -2.1
  - Consolidated balance -3.7 -6.0 -2.3
  - (In billions of U.S. dollars) -3.5 -5.0 -1.5
  - (In billions of U.S. dollars) Potential financing ... 1.5
    - IMF (RFI) ...... 0.7
    - Other IFIs ...... 0.5
    - Unidentified support ...... 0.3
- Staff estimates conservatively that:
  - A shortfall of central government revenues could amount to about ¾ percent of GDP.
  - Central government expenditures could be 1¼ percent of GDP higher than before the shock.
  - Consolidated deficit of the public sector estimated at 6 percent of GDP in 2020 (some 2⅓ percent of GDP higher than before the COVID-19 shock).
  - Additional financing needs amount to some US$1½ billion, of which the RFI could cover almost one-half.

### Monetary and macroprudential measures
- BCRD monetary measures (extraordinary meeting of March 16):
  - Reduce the monetary policy rate by 100 basis points from 4.5 to 3.5 percent.
  - Reduce the (1-day) REPO facility rate from 6.0 to 4.5 percent.
  - Reduce the overnight deposit rate from 3.0 to 2.5 percent.
  - Ease other REPO operations in an amount of RD$50 billion (about 1 percent of GDP) to provide additional liquidity to the financial system.
  - Provide U.S. dollar liquidity for US$0.5 billion (about ½ percent of GDP), through REPO operations and allowing banks to use public instruments to cover reserve requirements on foreign currency deposits.
- Staff encouraged more flexible exchange rate policy at a measured pace, with interventions limited to preventing disorderly market conditions; noted that international reserves are below IMF’s recommended reserve adequacy metric (ARA) of 100–150 percent (for 2020, reserve coverage is estimated at 65 percent of the ARA metric).
- Macroprudential and supervisory measures by BCRD:
  - Allow banks to cover reserve requirement with public (and BCRD) bonds up to an amount of RD$36 billion (about ¾ percent of GDP), equivalent to a 3¼ percent reduction in reserve requirements; these resources are earmarked to provide credit to households and businesses at an interest rate capped at 8.0 percent.
  - Temporarily freeze debtor ratings and provisioning to the prevailing levels as of March 16.
  - Maintain debtor rating in case of loan refinancings during the emergency.
  - Classify as current overdue loans for a 60-day period.
  - Provide 90 days for debtors to update loan guarantees.
- Staff recommendation: ensure extraordinary measures are temporary and targeted to borrowers adversely affected by the COVID-19 outbreak; consider additional supervisory measures if needed, including:
  - (i) temporary suspend dividends, bonuses, and variable remunerations during the outbreak;
  - (ii) let banks draw upon existing capital buffers to absorb the costs of loan restructuring;
  - (iii) intensify reporting and monitoring requirements, especially for borrowers with modified loans;
  - (iv) help banks with capital restoration plans in case their minimum capital levels are compromised.

### Risks to the outlook
- Main risk: greater-than-expected severity of the epidemic.
- High degree of uncertainty: staff projections assume containment at moderate levels and relatively rapid resumption of activity, but the situation could evolve more negatively, requiring additional health service strengthening and support to vulnerable populations.

### Policy discussions and authorities’ measures
- Government fiscal package announced on March 25 amounting to RD$32 billion (about ¾ percent of GDP, including reallocation of expenditures), focused on temporary relief to poor households.
- Social assistance program Quédate en casa (Stay at Home) aims to disburse funds and food rations to 5.2 million Dominicans through May 31 to support informal-sector workers, low-income families, formal-sector workers on furlough, students and the elderly.
- Temporary tax administration measures include extending deadlines for filing tax declarations.
- Health sector measures include:
  - Testing: finance at-home coronavirus testing via authorized private laboratories (for patients 59 and older, with health conditions, or with 2 or more symptoms).
  - Disinfection policy in public places.
  - Creation of a High Commission for the Prevention and Control of Coronavirus.
  - Increase hospital beds by 224 (to 600) starting in March.
  - Training medical personnel on COVID-19-specific case management, protection and treatment.
  - Repurpose former Airforce hospital (Ramón de Lara) and expand its capacity.
  - Communication policy: call center (*462) and weekly updates on Ministry of Health website.
- Staff assessment: announced expenditure package is vital and welcome; public spending measures should be targeted and temporary, focusing on protecting the most vulnerable and supporting demand; allow automatic stabilizers including support for the unemployed and means-tested transfers.

### Rapid Financing Instrument (RFI) rationale and terms
- RFI judged the most appropriate instrument given an urgent BOP need and high uncertainty on duration and scale of the COVID-19 impact.
- Staff proposes support for 100 percent of quota (SDR 477.4 million or about US$650 million), within applicable GRA limits.
- RFI resources will be disbursed to the Ministry of Finance to provide financing for virus-related spending.
- As RFI resources are being used for budgetary support, the authorities commit to adhere to best practices in procuring and awarding contracts related to the pandemic as well as publishing an externally audited report on virus-related expenditures once the crisis is over.
- Remaining financing needs are expected to be filled by other donors; in the absence of adequate financing, additional adjustments will be needed.

### Safeguards and institutional commitments
- The authorities commit to undergoing a safeguards assessment that would need to be completed before the Executive Board approval of any subsequent arrangement.
- The authorities will provide Fund staff with the most recently completed external audit reports and authorize the external auditors to hold discussions with staff.
- In their Letter of Intent, the authorities confirm they will establish a framework (e.g., through a memorandum of understanding) between the BCRD and the Ministry of Finance that clarifies responsibilities for timely servicing of the financial obligations to the IMF.
- Legal and emergency procurement context:
  - Law 340-06 establishes special rapid procedures in case of emergencies like COVID-19.
  - The government issued decrees 87-20 and 133-20 (2020) for purchases related to the fight against COVID-19.
  - Under these emergency procedures, the law establishes, inter alia, the publication of requirements and all documents related to emergency purchases, and requires each institution that used these emergency procedures to issue reports of their operations to the General Comptroller Office and the Accounts Chamber and to publish these reports on their own web pages and a special purchase portal.

### Debt sustainability and Fund exposure
- The Dominican Republic is assessed as having sustainable debt and adequate capacity to repay the Fund.
- The RFI resources would be the first time in a decade that the Dominican Republic uses Fund resources, and they only represent about 0.8 percent of GDP.
- The Fund’s risks from this RFI exposure will be low given the authorities’ excellent track record of servicing their debt obligations.
- The DSA (Annex I) shows debt to be sustainable with a sufficient buffer to remain sustainable even after the impact of the pandemic.
- The Dominican Republic has the capacity to repay the Fund (Table 8), with scheduled repayments of the RFI at no point in excess of 2 percent of exports or 4 percent of reserves.

### Authorities' views and staff appraisal
- Authorities:
  - Foresee a significant weakening in economic activity in 2020 due to COVID-19.
  - Are particularly concerned with the sharp decline in tourism receipts and the impact on foreign-currency liquidity.
  - Have been negotiating financial assistance with several IFIs, including the IDB, World Bank and CAF to cover budgetary and BOP needs.
  - Plan to reallocate resources from other budget items and reduce 2020 capital expenditure to ongoing high-priority projects.
  - Do not foresee granting tax exemptions but are providing relief by allowing postponements and incremental payments of income taxes.
  - Commit to continue consolidation efforts in the medium term, postponed until the pandemic recedes.
  - Acknowledge the need to ease policy stance while confirming commitment to the inflation targeting framework; BCRD prepared to provide additional monetary and financial stimulus if needed.
- Staff appraisal:
  - Near-term outlook: weakened significantly; growth prospects for 2020 severely curtailed by near standstill in economic activities.
  - Fiscal assessment: fiscal position will weaken but debt remains sustainable; staff supports fiscal measures including higher public healthcare spending and use of automatic stabilizers.
  - Monetary and macroprudential assessment: staff concurs with easing and considers the authorities’ more accommodative policy stance adequate; encourages continued monitoring and readiness to act further.
  - Exchange rate and reserves guidance: urge authorities to allow greater exchange rate flexibility as a shock absorber while preserving an adequate international reserve cover; intervene only to prevent disorderly market conditions.

### IMF staff recommendation and financing request
- Staff supports the authorities’ request for the RFI in the amount of SDR477.4 million (100 percent of quota).
- Assessment basis:
  - Severity of the COVID-19 outbreak.
  - Urgent BOP needs.
  - Authorities’ existing policies to mitigate this external shock, which include actively pursuing financing options with other IFIs.

### Selected projections and key figures (highlights)
- Real GDP growth (selected years/projections): 2015: 6.5; 2016: 7.0; 2017: 4.7; 2018: 7.0; 2019: 5.1; 2020: -1.0; 2021: 4.0; 2022: 5.0; 2023: 5.0; 2024: 5.0; 2025: 5.0.
- Unemployment rate (period average): 2015: 7.3; 2016: 7.1; 2017: 5.5; 2018: 5.7; 2019: 6.2; 2020: 9.0; 2021: 7.0; 2022: 5.5; 2023: 5.5; 2024: 5.5; 2025: 5.5.
- Inflation (end of period): 2015: 2.3; 2016: 1.7; 2017: 4.2; 2018: 1.2; 2019: 3.7; 2020: 3.0; 2021–2025: 4.0 (each year).
- Consolidated public sector debt (in percent of GDP): 2015: 44.7; 2016: 46.6; 2017: 48.9; 2018: 50.4; 2019: 53.6; 2020: 53.4; 2021: 60.9; 2022: 58.2; 2023: 57.6; 2024: 57.2; 2025: 55.7.
- Current account (in percent of GDP): 2015: -1.8; 2016: -1.1; 2017: -0.2; 2018: -1.4; 2019: -1.4; 2020: -5.2; 2021: -3.7; 2022: -3.4; 2023: -3.1; 2024: -2.9; 2025: -2.9.
- Net international reserves (US$ mn): 2015: 5,195; 2016: 6,047; 2017: 6,780; 2018: 7,627; 2019: 8,781; 2020: 9,016; 2021: 9,472; 2022: 10,060; 2023: 10,671; 2024: 11,335; 2025: 12,052.
- RFI drawing and Fund-related indicators:
  - Existing and Prospective drawings (RFI): 2020: 477.4 (in millions of SDRs).
  - (in percent of quota): 100.
  - Outstanding stock (SDR mn): 2020: 477.4; 2021: 477.4; 2022: 477.4; 2023: 358.1; 2024: 119.4; 2025: 0.0.
  - (in percent of GDP): 2020: 0.8; 2021: 0.7; 2022: 0.7; 2023: 0.5; 2024: 0.1; 2025: 0.0.

_ Source: EXECUTIVE SUMMARY, 1domea2020001 - EXECUTIVE SUMMARY_

### EXECUTIVE SUMMARY

### 1domea2020001 - EXECUTIVE SUMMARY

### Context
- The Dominican Republic experienced a prosperous decade with high growth, low inflation, a relatively strong external position and significant gains in poverty reduction.
- The economy was highly vulnerable to the outbreak of the COVID-19 pandemic because tourism is one of the most important activities.
- As the pandemic advanced and travel restrictions intensified globally:
  - The Dominican economy lost an important source of foreign exchange and employment.
  - Weaker domestic activity is having a negative impact on tax receipts while the government needs to provide additional health services, creating budgetary pressures that will require additional financing.
  - As businesses struggle, their ability to service their credit lines would be diminished, putting a strain on the financial position of banks.

### Request for Fund support
- Authorities requested financial support under the Rapid Financing Instrument (RFI) in the amount of SDR 477.4 million (about US$650 million), equivalent to 100 percent of quota; which is within applicable limits under the GRA.
- The full amount will become available upon Board approval and will be used for budgetary support.
- The authorities stand ready to continue cooperating with the Fund in finding solutions to the balance of payments and fiscal imbalances.

### Macroeconomic policies and immediate priorities
- Main short-run policy challenge: minimize the loss of human lives as the COVID-19 pandemic advances.
- The macroeconomic policy response includes a fiscal package, monetary easing and liquidity provision, and supportive macroprudential measures; staff considers the response adequate but authorities need to stand ready to calibrate and expand these measures as needed.
- The Government declared a National Emergency and the Ministry of Public Health has designed a plan to face the pandemic.

### Recent developments (pre-COVID context)
- The Dominican Republic had been the fastest growing economy in Latin America (6½ percent) over the last several years.
- 2019 outcomes:
  - Real GDP growth eased to 5.1 percent in 2019 (from 7.0 percent in 2018).
  - Inflation increased to 3.7 percent in 2019 (from 1.3 percent in 2018) and stayed at that level through February.
  - Consolidated public sector deficit fell to 3.3 percent of GDP (from 3.5 percent in 2018) with no change in the central government deficit.
  - The BCRD lowered its policy rate during Q3-2019 by 100 basis points (in 3 stages) to 4.5 percent and eased reserve requirements.
  - Banks remained well capitalized, profitable and liquid. NPL fell to 1.6 percent in 2019.
  - The current account deficit remained steady at 1.4 percent of GDP in 2019, fully financed by foreign direct investment (FDI).

### Impact of COVID-19 (health and macroeconomic effects)
- As of April 13, there were 3,167 confirmed cases with 177 fatalities.
- President Medina declared a national state of emergency on March 19 with a country-wide curfew, school and border closures, suspension of public activities and mass gatherings; non-essential businesses ordered to close for 15 days (exceptions: supermarkets, grocery stores, gas stations, pharmacies, and medical supply stores).
- Preliminary macro projections (2020 Pre-Post-COVID Δ Change):
  - GDP growth (%) 5.1 -1.0 -6.1
  - Inflation (%) 4.0 3.0 -1.0
  - Fiscal deficit -3.7 -6.0 -2.3
  - Public debt (NFPS) 53.4 60.9 7.5
  - Credit growth (%) 9.7 2.5 -7.2
- Staff preliminary estimates for 2020:
  - Real GDP projected to fall to -1 percent in 2020 (from an expansion of 5.1 percent in 2019).
  - Current account deficit could widen to 5.2 percent of GDP in 2020 (from 1.4 percent of GDP in 2019).
  - Fiscal deficit could increase to 6.0 percent of GDP in 2020 (from 3.3 percent of GDP in 2019).
- Balance of payments impact:
  - BOP impact for 2020 could amount to US$4.8 billion (5.7 percent of GDP).
  - BOP gap driven by deterioration in the current account (US$3 billion) and portfolio investment (US$1.3 billion).
  - External debt amortizations estimated at US$1.9 billion (2.3 percent of GDP) in 2020.
- Post-COVID assumptions used in projections:
  - Tourism decline of 50 percent compared to 2019.
  - Remittances and net re-exports from the free zone projected to fall by 20 percent and 10 percent, respectively.
  - Net portfolio investment and net FDI assumed to decline by 50 percent and 20 percent, respectively.
- Balance of Payments: COVID-19 Impact (in billions of U.S. dollars, 2020 Pre- Post- Δ Change)
  - Current account -1.4 -4.4 -3.0
    - Non-oil balance -9.4 -8.9 0.5
    - Oil balance -3.8 -2.0 1.8
    - Free zone 2.7 2.2 -0.5
    - Tourism 7.7 3.5 -4.3
    - Remittances 6.9 5.2 -1.7
    - Other current -5.5 -4.3 1.2
  - Foreign direct investment 2.9 2.4 -0.4
  - Portfolio investment 2.2 0.9 -1.3
  - BOP financing needs ...... -4.8 (In percent of GDP ...... -5.7)
  - Potential financing (In billions of U.S. dollars) ...... 4.8
    - IMF (RFI) ...... 0.7
    - Other IFIs ... 0.5
    - International reserves ...... 1.1
    - Unidentified support ... 2.5

### Fiscal implications and financing
- Staff expects the fiscal position to deteriorate by about 2¼ percent of GDP in 2020.
- The 2020 budget was fully financed, but additional resources are needed.
- Authorities approached the World Bank, IDB, and CAF to mobilize loans and commercial credit lines; disbursements expected soon.
- Staff estimate of central government revenue and expenditure impacts (2020 Pre- Post- Δ Change, percent of GDP):
  - Revenue 14.5 13.6 -0.9
    - o/w tax revenue 13.3 12.5 -0.8
  - Expenditure 16.8 18.0 1.2
    - Current 15.0 16.6 1.7
      - o/w goods and services 2.0 2.4 0.4
      - o/w social benefits 1.3 1.9 0.7
    - Capital 1.8 1.5 -0.3
  - Overall balance (CG) -2.3 -4.4 -2.1
  - Consolidated balance -3.7 -6.0 -2.3
  - (In billions of U.S. dollars) -3.5 -5.0 -1.5
  - (In billions of U.S. dollars) Potential financing ... 1.5
    - IMF (RFI) ...... 0.7
    - Other IFIs ...... 0.5
    - Unidentified support ...... 0.3
- Staff estimates conservatively that:
  - A shortfall of central government revenues could amount to about ¾ percent of GDP.
  - Central government expenditures could be 1¼ percent of GDP higher than before the shock.
  - Consolidated deficit of the public sector estimated at 6 percent of GDP in 2020 (some 2⅓ percent of GDP higher than before the COVID-19 shock).
  - Additional financing needs amount to some US$1½ billion, of which the RFI could cover almost one-half.

### Monetary and macroprudential measures
- BCRD monetary measures (extraordinary meeting of March 16):
  - Reduce the monetary policy rate by 100 basis points from 4.5 to 3.5 percent.
  - Reduce the (1-day) REPO facility rate from 6.0 to 4.5 percent.
  - Reduce the overnight deposit rate from 3.0 to 2.5 percent.
  - Ease other REPO operations in an amount of RD$50 billion (about 1 percent of GDP) to provide additional liquidity to the financial system.
  - Provide U.S. dollar liquidity for US$0.5 billion (about ½ percent of GDP), through REPO operations and allowing banks to use public instruments to cover reserve requirements on foreign currency deposits.
- Staff encouraged more flexible exchange rate policy at a measured pace, with interventions limited to preventing disorderly market conditions; noted that international reserves are below IMF’s recommended reserve adequacy metric (ARA) of 100–150 percent (for 2020, reserve coverage is estimated at 65 percent of the ARA metric).
- Macroprudential and supervisory measures by BCRD:
  - Allow banks to cover reserve requirement with public (and BCRD) bonds up to an amount of RD$36 billion (about ¾ percent of GDP), equivalent to a 3¼ percent reduction in reserve requirements; these resources are earmarked to provide credit to households and businesses at an interest rate capped at 8.0 percent.
  - Temporarily freeze debtor ratings and provisioning to the prevailing levels as of March 16.
  - Maintain debtor rating in case of loan refinancings during the emergency.
  - Classify as current overdue loans for a 60-day period.
  - Provide 90 days for debtors to update loan guarantees.
- Staff recommendation: ensure extraordinary measures are temporary and targeted to borrowers adversely affected by the COVID-19 outbreak; consider additional supervisory measures if needed, including:
  - (i) temporary suspend dividends, bonuses, and variable remunerations during the outbreak;
  - (ii) let banks draw upon existing capital buffers to absorb the costs of loan restructuring;
  - (iii) intensify reporting and monitoring requirements, especially for borrowers with modified loans;
  - (iv) help banks with capital restoration plans in case their minimum capital levels are compromised.

### Risks to the outlook
- Main risk: greater-than-expected severity of the epidemic.
- High degree of uncertainty: staff projections assume containment at moderate levels and relatively rapid resumption of activity, but the situation could evolve more negatively, requiring additional health service strengthening and support to vulnerable populations.

### Policy discussions and authorities’ measures
- Government fiscal package announced on March 25 amounting to RD$32 billion (about ¾ percent of GDP, including reallocation of expenditures), focused on temporary relief to poor households.
- Social assistance program Quédate en casa (Stay at Home) aims to disburse funds and food rations to 5.2 million Dominicans through May 31 to support informal-sector workers, low-income families, formal-sector workers on furlough, students and the elderly.
- Temporary tax administration measures include extending deadlines for filing tax declarations.
- Health sector measures include:
  - Testing: finance at-home coronavirus testing via authorized private laboratories (for patients 59 and older, with health conditions, or with 2 or more symptoms).
  - Disinfection policy in public places.
  - Creation of a High Commission for the Prevention and Control of Coronavirus.
  - Increase hospital beds by 224 (to 600) starting in March.
  - Training medical personnel on COVID-19-specific case management, protection and treatment.
  - Repurpose former Airforce hospital (Ramón de Lara) and expand its capacity.
  - Communication policy: call center (*462) and weekly updates on Ministry of Health website.
- Staff assessment: announced expenditure package is vital and welcome; public spending measures should be targeted and temporary, focusing on protecting the most vulnerable and supporting demand; allow automatic stabilizers including support for the unemployed and means-tested transfers.

### Rapid Financing Instrument (RFI) rationale and terms
- RFI judged the most appropriate instrument given an urgent BOP need and high uncertainty on duration and scale of the COVID-19 impact.
- Staff proposes support for 100 percent of quota (SDR 477.4 million or about US$650 million), within applicable GRA limits.
- RFI resources will be disbursed to the Ministry of Finance to provide financing for virus-related spending.
- As RFI resources are being used for budgetary support, the authorities commit to adhere to best practices in procuring and awarding contracts related to the pandemic as well as publishing an externally audited report on virus-related expenditures once the crisis is over.
- Remaining financing needs are expected to be filled by other donors; in the absence of adequate financing, additional adjustments will be needed.

*Source: EXECUTIVE SUMMARY, 1domea2020001 - EXECUTIVE SUMMARY*

### 16.      A safeguards assessment of the BCRD will be needed. The authorities commit to

### 16.      A safeguards assessment of the BCRD will be needed. The authorities commit to

### Safeguards and institutional commitments
- The authorities commit to undergoing a safeguards assessment that would need to be completed before the Executive Board approval of any subsequent arrangement.
- The authorities will provide Fund staff with the most recently completed external audit reports and authorize the external auditors to hold discussions with staff.
- In their Letter of Intent, the authorities confirm they will establish a framework (e.g., through a memorandum of understanding) between the BCRD and the Ministry of Finance that clarifies responsibilities for timely servicing of the financial obligations to the IMF.
- Legal and emergency procurement context:
  - Law 340-06 establishes special rapid procedures in case of emergencies like COVID-19.
  - The government issued decrees 87-20 and 133-20 (2020) for purchases related to the fight against COVID-19.
  - Under these emergency procedures, the law establishes, inter alia, the publication of requirements and all documents related to emergency purchases, and requires each institution that used these emergency procedures to issue reports of their operations to the General Comptroller Office and the Accounts Chamber and to publish these reports on their own web pages and a special purchase portal.

### Debt sustainability and Fund exposure
- The Dominican Republic is assessed as having sustainable debt and adequate capacity to repay the Fund.
- The RFI resources would be the first time in a decade that the Dominican Republic uses Fund resources, and they only represent about 0.8 percent of GDP.
- The Fund’s risks from this RFI exposure will be low given the authorities’ excellent track record of servicing their debt obligations.
- The DSA (Annex I) shows debt to be sustainable with a sufficient buffer to remain sustainable even after the impact of the pandemic.
- The Dominican Republic has the capacity to repay the Fund (Table 8), with scheduled repayments of the RFI at no point in excess of 2 percent of exports or 4 percent of reserves.

### Authorities' views on the 2020 shock and policy stance
- Economic outlook and external liquidity:
  - The authorities foresee a significant weakening in economic activity in 2020 due to COVID-19.
  - They are particularly concerned with the sharp decline in tourism receipts and the impact on foreign-currency liquidity.
  - The government has been negotiating financial assistance with several IFIs, including the IDB, World Bank and Development Bank of Latin America (CAF) to cover budgetary and BOP needs.
- Fiscal challenges and measures:
  - There is an urgent need to support health and social sectors at a time tax revenue are softening, leading to a widening of the fiscal deficit.
  - Authorities recognize mounting fiscal pressure from unbudgeted current expenditure—namely on healthcare needs and announced fiscal stimulus measures—while facing declining receipts, especially from consumption taxes.
  - They plan to reallocate resources from other budget items and reduce 2020 capital expenditure to ongoing high-priority projects.
  - The authorities do not foresee granting tax exemptions but are providing relief by allowing postponements and incremental payments of income taxes.
  - They underscore commitment to continued consolidation efforts in the medium term but expect these efforts must be postponed until the pandemic recedes.
- Monetary and macroprudential stance:
  - The authorities acknowledged the need to ease their policy stance while confirming their commitment to the inflation targeting framework.
  - The BCRD is prepared to provide additional monetary and financial stimulus if needed.
  - They believe recent trends—soft commodities prices, weak economic activity, and contained inflationary expectations surveys—point to the absence of any meaningful inflationary pressures in 2020.
  - Authorities are taking macroprudential policies to ensure proper functioning of the financial system, providing additional liquidity to avoid financial stress and agreeing on the need to carefully monitor the financial system.

### Staff appraisal: outlook and policy guidance
- Near-term outlook:
  - The outlook has weakened significantly in the near term.
  - Growth prospects for 2020 have been severely curtailed by a near standstill in economic activities following lockdowns and health concerns; tourism and re-exports from the free zone have dwindled significantly following border closures, heightened risk aversion and deterioration in global trade.
- Fiscal assessment:
  - The fiscal position will weaken but debt remains sustainable.
  - Staff supports fiscal measures, including higher public healthcare spending and the use of automatic stabilizers (support to the unemployed and transfer programs).
  - Despite sizable fiscal pressures and a rising debt burden, the country’s debt repayment capacity is assessed as robust (see the DSA for more details).
- Monetary and macroprudential assessment:
  - Staff concurs with the monetary and macroprudential policy easing at this juncture and considers the authorities’ decision to have a more accommodative policy stance adequate.
  - Staff encourage authorities to continue monitoring the situation closely and be prepared to take additional measures if necessary.
- Exchange rate and reserves guidance:
  - Staff urges the authorities to allow greater exchange rate flexibility as a shock absorber while preserving an adequate international reserve cover.
  - Foreign exchange market interventions should be limited to preventing disorderly market conditions.
  - The exchange rate is highlighted as a powerful tool that can serve to cushion the economy in times of crisis.

### Key statistics and references cited in the text
- RFI resources represent about 0.8 percent of GDP.
- Scheduled RFI repayments: at no point in excess of 2 percent of exports or 4 percent of reserves.
- Documents and analyses referenced: DSA (Annex I); Table 8.

*Source: IMF country document excerpt (content unit 1domea2020001).*

### 26.      Against this background, staff supports the authorities’ request for the RFI in the

### 1domea2020001 - 26.      Against this background, staff supports the authorities’ request for the RFI in the

### IMF staff recommendation and financing request
- Staff supports the authorities’ request for the RFI in the amount of SDR477.4 million (100 percent of quota).
- Assessment basis:
  - Severity of the COVID-19 outbreak.
  - Urgent BOP needs.
  - Authorities’ existing policies to mitigate this external shock, which include actively pursuing financing options with other IFIs.

### Real sector developments
- Growth and output:
  - Real GDP growth (selected years/projections): 2015: 6.5; 2016: 7.0; 2017: 4.7; 2018: 7.0; 2019: 5.1; 2020: -1.0; 2021: 4.0; 2022: 5.0; 2023: 5.0; 2024: 5.0; 2025: 5.0.
  - Real and potential GDP: Trend GDP vs Actual GDP (figures shown; activity slightly above trend in 2019).
- Demand composition (contributions to growth):
  - Consumption (selected years): 2015: 5.2; 2016: 4.7; 2017: 3.5; 2018: 4.4; 2019: 3.7; 2020: 2.2; 2021: 2.4; 2022: 4.3; 2023: 4.3; 2024: 4.1; 2025: 4.0.
  - Investment (selected years): 2015: 3.6; 2016: 3.6; 2017: -2.1; 2018: 4.3; 2019: 1.3; 2020: -1.2; 2021: 0.0; 2022: 0.4; 2023: 0.5; 2024: 0.5; 2025: 0.7.
  - Net exports (selected years): 2015: -2.4; 2016: -0.8; 2017: 2.1; 2018: -0.6; 2019: -1.2; 2020: -5.3; 2021: 2.0; 2022: 0.5; 2023: 0.6; 2024: 0.5; 2025: 0.4.
- Labor and productivity:
  - Labor productivity and real wages indices (2000Q2 = 100) show productivity rising and wages recovering from post-banking-crisis dip.
  - Unemployment rate (period average): 2015: 7.3; 2016: 7.1; 2017: 5.5; 2018: 5.7; 2019: 6.2; 2020: 9.0; 2021: 7.0; 2022: 5.5; 2023: 5.5; 2024: 5.5; 2025: 5.5.
- Inflation:
  - Consumer price inflation (end of period): 2015: 2.3; 2016: 1.7; 2017: 4.2; 2018: 1.2; 2019: 3.7; 2020: 3.0; 2021–2025: 4.0 (each year).
  - Headline inflation remained close to the BCRD target mid-point before COVID-19; core inflation was below the lower bound.
  - Inflation dynamics driven by food and energy prices.

### Fiscal developments and public debt
- Central government and consolidated balances:
  - Central government overall balance (in percent of GDP): 2015: 0.0; 2016: -3.1; 2017: -3.1; 2018: -2.2; 2019: -2.2; 2020: -4.4; 2021: -2.9; 2022: -2.8; 2023: -2.7; 2024: -2.4; 2025: -2.5.
  - Consolidated public sector overall balance (in percent of GDP): 2015: -1.7; 2016: -4.1; 2017: -4.1; 2018: -3.5; 2019: -3.3; 2020: -3.7; 2021: -6.0; 2022: -4.3; 2023: -4.1; 2024: -3.9; 2025: -3.5.
- Public debt:
  - Consolidated public sector debt (in percent of GDP): 2015: 44.7; 2016: 46.6; 2017: 48.9; 2018: 50.4; 2019: 53.6; 2020: 53.4; 2021: 60.9; 2022: 58.2; 2023: 57.6; 2024: 57.2; 2025: 55.7.
  - Increase in consolidated debt is mostly due to the nonfinancial public sector.
- Electricity sector and quasi-fiscal:
  - Electricity sector deficits after government transfers have been widening, eroding public accounts; electricity sector deficit and debt figures shown (e.g., Electricity sector deficit series 2014–2019 include values such as 0.3, 0.3, 0.4, -0.10, -0.4, -0.5, -2.3, -1.4, -1.4, -1.8, -1.7, -1.6).
  - Quasi-fiscal deficit expected to shrink gradually in the medium term; central bank quasi-fiscal deficit (in percent of GDP) series (e.g., 2003–2025 projections) and BCRD securities stock shown.

### Monetary policy, reserves, and banking system
- Monetary policy actions:
  - To mitigate COVID-19 shock, BCRD cut monetary policy, deposit facility, and repo rates.
  - Policy interest rate (selected): 2015: 5.0; 2016: 5.5; 2017: 5.3; 2018: 5.5; 2019: 4.5.
- Reserves and liquidity:
  - Gross international reserves stand at a record high of about US$10 billion (examples: NIR in US$ mn: 2015: 5,195; 2016: 6,047; 2017: 6,780; 2018: 7,627; 2019: 8,781; 2020: 9,016; 2021: 9,472; 2022: 10,060; 2023: 10,671; 2024: 11,335; 2025: 12,052).
  - Banks’ legal reserves for deposits denominated in national currency slightly exceed required levels; higher excess reserves for foreign currency deposits.
- Banking system summary (selected indicators):
  - Credit to the private sector (percent growth): 2015: 12.7; 2016: 12.1; 2017: 10.1; 2018: 11.1; 2019: 11.8; 2020: 2.5; 2021: 7.7; 2022: 9.2; 2023: 9.2; 2024: 9.2; 2025: 9.2.
  - Broad money (M3) growth (percent): 2015: 12.3; 2016: 9.8; 2017: 11.2; 2018: 7.0; 2019: 11.7; 2020: 0.7; 2021: 8.3; 2022: 9.6; 2023: 9.8; 2024: 9.7; 2025: 9.7.

### Exchange rate, sovereign spreads, and FX intervention
- Exchange rate dynamics:
  - In 2020 the pace of depreciation of the Dominican Peso accelerated on January 17, shortly after the start of the COVID-19 outbreak.
  - The BCRD intervenes to avoid disorderly market conditions, selling about US$20 million daily, on average.
  - The Dominican peso slightly depreciated in REER terms relative to main trading partners and in nominal terms (indices shown).
- Sovereign spreads and interventions:
  - After the local COVID-19 outbreak, Dominican spreads grew fast, in line with peers (EMBI spread comparisons shown).
  - BCRD FX interventions (examples of net purchases/sales dates and amounts shown): BCRD FX interventions: sales and purchases series include values such as 180, 295, 460, 535, 564, 51.35, 52.73, 53.15 on listed dates.
- Reserves composition and liabilities:
  - Gross international reserves components (Free Reserves; Liabilities to residents; Liabilities to IMF) shown; gross reserves reached about US$10 billion.

### External sector and balance of payments
- Current account and financing:
  - Current account (in percent of GDP): 2015: -1.8; 2016: -1.1; 2017: -0.2; 2018: -1.4; 2019: -1.4; 2020: -5.2; 2021: -3.7; 2022: -3.4; 2023: -3.1; 2024: -2.9; 2025: -2.9.
  - Current account is relatively low and more than financed by FDI.
- Components (selected, in percent of GDP):
  - Goods, net: 2015: -10.5; 2016: -10.0; 2017: -9.5; 2018: -10.9; 2019: -10.8; 2020: -11.2; 2021: -10.5; 2022: -10.4; 2023: -10.2; 2024: -9.9; 2025: -10.0.
  - Services, net: 2015: 6.1; 2016: 6.5; 2017: 6.9; 2018: 6.9; 2019: 6.1; 2020: 3.8; 2021: -3.6; 2022: 5.4; 2023: 5.7; 2024: 5.8; 2025: 6.4; 2026: 6.5 (chart context).
  - Income, net: 2015: 2.5; 2016: 2.4; 2017: 2.4; 2018: 2.6; 2019: 3.3; 2020: 1.4; 2021: -2.2; 2022: 1.3; 2023: 1.1; 2024: 1.0; 2025: 0.7; 2026: 0.4.
- Capital and financial accounts:
  - Foreign direct investment, net (in percent of GDP): 2015: -3.1; 2016: -3.2; 2017: -4.5; 2018: -3.0; 2019: -3.4; 2020: -2.9; 2021: -3.4; 2022: -3.4; 2023: -3.4; 2024: -3.4; 2025: -3.4.
  - Portfolio investment, net (in percent of GDP): 2015: -4.9; 2016: -2.3; 2017: -2.2; 2018: -3.1; 2019: -2.0; 2020: -1.0; 2021: -2.0; 2022: 0.4; 2023: -0.7; 2024: -0.2; 2025: -0.1.

### Key socio-economic and fiscal indicators (Table highlights)
- GDP per capita 2019 (U.S. dollars): 8,596.
- Quota: 477.40 millions SDRs / 0.1% of total.
- Poverty (2018, share of population): 22.8.
- Extreme poverty (2018, % of pop.): 2.9.
- Adult literacy rate (percent, 2018): 93.
- Main export product: tourism, gold, tobacco.
- Key export markets: U.S., Canada, Haiti.
- Population (millions, 2019): 10.4.
- Nominal GDP (US$ billion) listed for selected years (e.g., 2015: 71.3; 2016: 75.8; 2017: 80.1; 2018: 85.6; 2019: 89.0).
- Consolidated public sector debt (in percent of GDP) and balances provided (see Fiscal table values above).
- Net international reserves (NIR in millions of U.S. dollars): 2015: 5,195; 2016: 6,047; 2017: 6,780; 2018: 7,627; 2019: 8,781; 2020: 9,016; 2021: 9,472; 2022: 10,060; 2023: 10,671; 2024: 11,335; 2025: 12,052.

### IMF credit and debt-service projections (Indicators of Fund Credit)
- Existing and Prospective drawings (RFI): 2020: 477.4 (in millions of SDRs).
  - (in percent of quota): 100.
- Projected debt service to the Fund based on existing and prospective drawings:
  - Amortization: 2020: 0.0; 2021: 0.0; 2022: 0.0; 2023: 119.4; 2024: 238.7; 2025: 119.4.
  - GRA charges: 2020: 4.8; 2021: 8.3; 2022: 8.3; 2023: 7.8; 2024: 4.3; 2025: 0.6.
  - Total debt service (SDR mn): 2020: 8.3; 2021: 9.8; 2022: 9.8; 2023: 128.7; 2024: 244.5; 2025: 121.5.
  - Total debt service (in percent of exports of G&S): 2020: 0.10; 2021: 0.10; 2022: 0.10; 2023: 0.81; 2024: 1.40; 2025: 0.6.
- Projected level of credit outstanding (based on existing and prospective drawings):
  - Outstanding stock (SDR mn): 2020: 477.4; 2021: 477.4; 2022: 477.4; 2023: 358.1; 2024: 119.4; 2025: 0.0.
  - (in percent of quota): 2020: 100.0; 2021: 100.0; 2022: 100.0; 2023: 75.0; 2024: 25.0; 2025: 0.0.
  - (in percent of GDP): 2020: 0.8; 2021: 0.7; 2022: 0.7; 2023: 0.5; 2024: 0.1; 2025: 0.0.
  - (in percent of GIR): 2020: 7.3; 2021: 6.9; 2022: 6.5; 2023: 4.6; 2024: 1.5; 2025: 0.0.
- Memorandum items:
  - Exports of goods and services (US$ mn): 2020: 15,601; 2021: 18,604; 2022: 20,107; 2023: 21,985; 2024: 23,743; 2025: 25,916.
  - GDP (US$ mn): 2020: 83,254; 2021: 88,186; 2022: 98,600; 2023: 105,506; 2024: 112,998; 2025: 121,100.
  - Gross International Reserves (US$ mn): 2020: 9,017; 2021: 9,472; 2022: 10,060; 2023: 10,672; 2024: 11,335; 2025: 12,053.
  - Quota: 477.4 (consistent across projection years).

*Source: IMF staff calculations and national authorities as presented in the provided document.*

### Annex I. Public Debt Sustainability Assessment (DSA)

### Annex I. Public Debt Sustainability Assessment (DSA)

### Baseline
- Bottom line: Sustainable.
- Consolidated public sector debt trajectory:
  - 2019: 53.6 percent of GDP
  - 2020 (projected): about 60.9 percent of GDP
  - 2025 (projected): 55.7 percent of GDP
- Gross financing needs (GFN) over projection horizon: average 10.4 percent of GDP.
- Growth and macro assumptions:
  - 2020 growth: -1.0 percent (y/y)
  - Growth converges to potential of 5 percent from 2022 onwards
  - Headline inflation: around 4 percent in the medium term (consistent with BCRD target)
- Fiscal aggregates:
  - Overall deficit of the consolidated public sector: projected to rise to 6 percent of GDP in 2020, then fall to 3.5 percent of GDP over the medium term
  - Medium-term fiscal path assessed as realistic

### Stress tests and risk assessment
- Standardized macro-fiscal stress tests:
  - Debt path maintains a downward trajectory in all standardized tests except the combined macro-fiscal shock.
  - Debt is vulnerable to a Real GDP Growth Shock: a slow recovery in 2021–22 would cause gross nominal public debt to rise in 2022 and remain above the baseline through the projection period.
- Heat map indicators and benchmarks (as described):
  - Bond spread shocks considered: 200 and 600 basis points
  - External financing requirement benchmarks: 5 and 15 percent of GDP
  - Change in share of short-term debt benchmarks: 0.5 and 1 percent
  - Public debt held by non-residents benchmarks: 15 and 45 percent
  - Share of foreign-currency denominated debt benchmarks: 20 and 60 percent
- Figure summary (selected tabular projections, in percent of GDP unless otherwise indicated):
  - Nominal gross public debt: 2018: 43.0; 2019: 50.4; 2020: 53.6; 2021: 60.9; 2022: 58.2; 2023: 57.6; 2024: 57.2; 2025: 56.4; 2025 (final column): 55.7
  - Public gross financing needs: 2018: 5.3; 2019: 8.4; 2020: 7.4; 2021: 10.5; 2022: 9.5; 2023: 9.8; 2024: 11.1; 2025: 10.6; 2025 (final column): 10.5
  - Net public debt: 2018: 40.9; 2019: 49.0; 2020: 52.3; 2021: 59.5; 2022: 57.0; 2023: 56.4; 2024: 56.1; 2025: 55.4; 2025 (final column): 54.8
  - Real GDP growth (in percent): 2018: 4.8; 2019: 7.0; 2020: 5.1; 2020 (projection row) -1.0; 2021: 4.0; 2022–2025: 5.0 (each year)
  - Inflation (GDP deflator, in percent): 2018: 4.7; 2019: 4.1; 2020: 2.5; 2021: 3.5; 2022: 3.6; 2023–2025: 4.0 (each year)
  - Nominal GDP growth (in percent): 2018: 9.7; 2019: 11.4; 2020: 7.7; 2021: 2.5; 2022: 7.7; 2023–2025: 9.2 (each year)
  - Effective interest rate (in percent): 2018: 5.1; 2019: 9.0; 2020: 8.8; 2021: 6.6; 2022: 6.8; 2023: 7.7; 2024: 8.1; 2025: 8.6; 2025 (final): 9.2
  - Cumulative change in gross public sector debt (projection horizon sample): 2018: 1.7; 2019: 1.5; 2020: 3.1; 2021: 7.3; 2022: -2.6; 2023: -0.7; 2024: -0.4; 2025: -0.8; 2025 (final): -0.7; cumulative: 2.2
- Identified debt-creating flows (selected):
  - Primary deficit (levels, percent of GDP): 2018: 0.4; 2019: -0.4; 2020: -0.8; 2021: 1.6; 2022: -0.2; 2023: -0.4; 2024: -0.6; 2025: -0.9; 2025 (final): -0.9; cumulative: -1.4
  - Primary (noninterest) revenue and grants (percent of GDP): 14.0; 14.2; 14.4; 13.6; 14.1; 14.2; 14.2; 14.4; 14.3; cumulative: 84.7
  - Primary (noninterest) expenditure (percent of GDP): 14.4; 13.7; 13.6; 15.1; 13.9; 13.8; 13.6; 13.5; 13.5; cumulative: 83.3
- Automatic debt dynamics (percent of GDP contribution): 2018: -0.8; 2019: 0.0; 2020: 1.9; 2021: 2.1; 2022: -0.6; 2023: -0.8; 2024: -0.6; 2025: -0.3; 2025 (final): 0.0; cumulative: -0.1
- Residual, including asset changes (percent of GDP): 2018: 2.1; 2019: 2.0; 2020: 2.0; 2021: 3.6; 2022: -1.9; 2023: 0.5; 2024: 0.8; 2025: 0.5; 2025 (final): 0.2; cumulative: 3.7

### Assumptions and coverage
- Definition of public debt: debt of the consolidated public sector, which includes:
  - quasi-fiscal balance of the central bank (BCRD)
  - fiscal operations of the public utility
  - social security institutions
  - functionally decentralized nonfinancial institutions
  - municipalities
  - in addition to the central government
- Public sector debt accounting: includes contingent liabilities of these public entities.
- Baseline macro-fiscal assumptions aligned with WEO and authorities’ views.
- COVID-19 shock assumptions:
  - Negative growth expected in 2020Q2–Q3, with recovery starting in 2020Q4.
  - A more protracted shock could:
    - weaken aggregate demand longer
    - lower tax revenues and increase fiscal deficit
    - widen current account deficit by hampering tourism receipts
    - lower GDP growth

### Coverage and contingent liabilities
- Contingent liabilities included for the consolidated public sector entities listed under “Assumptions and coverage.”
- Table entries for contingent liabilities: 0.0 (no explicit additional contingent liability items quantified in the table).

### Key policy responses, financing, and authorities’ commitments (from Letter of Intent and Appendix)
- Emergency and fiscal measures:
  - Economic measures amounting to RD$ 32 billion (US$576 million) including:
    - COVID-19 tests in private laboratories financed by the government
    - food for those most in need, including elderly and students
    - “Solidarity Card” benefits for 811,000 families at RD$5,000 (US$90) per month until May 31
    - subsidy for affected formal and informal workers up to RD$ 8,500 (US$153) per month for two months
  - Central Bank allocation to support productive sectors, including tourism: US$229.4 million
  - Emergency monetary policy actions:
    - Monetary policy rate cut by 100 basis points (from 4.5 percent to 3.5 percent)
    - Provision of around US$1 billion in liquidity to the banking system
    - Release of banks’ statutory reserves by around US$0.4 billion (0.6 percent of GDP); 55 percent directed to credit for tourism and other productive sectors
  - Additional Central Bank measures (monetary and liquidity support):
    - Reduction of reserve requirements in domestic and foreign currency by 3.2 and 2.5 percentage points respectively
    - Liquidity provision aimed at SMEs: more than DOP 20 billion
    - DOP 50 billion and USD 400 million via short-term repo operations up to 90 days
    - Package of monetary policy measures: more than DOP 100 billion and USD 600 million
- Fiscal outlook and financing request:
  - Consolidated fiscal deficit projected to rise by more than 2½ percentage point of GDP from 2019 level (2019 deficit reported elsewhere as 3.3 percent of GDP)
  - Government requests emergency financing from the IMF under the Rapid Financing Instrument (RFI) in the amount of SDR477.4 million, equivalent to 100 percent of quota
- Commitments and safeguards:
  - Authorities commit to gradual tightening of fiscal policies once the pandemic recedes to keep public debt-to-GDP ratios sustainable and on a clear downward path in the medium term
  - Commitment to strengthen public financial management, oversight of entire public sector including state-owned enterprises, and to consider establishing a medium-term fiscal framework
  - Authorities will undergo a safeguards assessment in connection with the RFI and provide BCRD’s most recently completed external audit reports
  - The Central Bank and the Ministry of Finance will sign a Memorandum of Understanding to establish responsibilities for timely servicing IMF obligations
  - Commitment to publish an externally audited report on virus-related expenditures once the crisis is over
- Pandemic impacts and estimates:
  - Tourism sector could lose around US$400 million (0.5 percent of GDP) if the situation extends beyond June
  - As of April 13, 2020: confirmed COVID-19 cases: 3,167; fatalities: 177 (authorities’ letter)
  - As of April 24, 2020: confirmed COVID-19 cases: 5,749; confirmed deaths: 267 (epidemiological surveillance system)
- Other macro indicators and 2019 status (authorities’ statement):
  - 2019 current account deficit: 1.4 percent of GDP
  - Gross reserves: 5.2 months of imports and 10.7 percent of GDP
  - Private sector credit expanding at a 12 percent rate in February (year not separately stated)
  - Non-financial public sector deficit in 2019: 2.3 percent of GDP

_ Source: IMF staff._

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1domea2020001.pdf_