Dominican Republic: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Dominican Republic

IMF Staff Country Reports, August 15, 2019

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Canonical URL: Dominican Republic: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Dominican Republic

The economy rebounded to a record high growth of 7 percent in 2018.
The positive momentum carried into early 2019.
The strong economic and policy performance has strengthened resilience to downside risks, but vulnerabilities remain.
The fiscal position is under moderate sustainability and affordability pressures.
Key structural bottlenecks have not been addressed.
Social outcomes can be further strengthened.
Upcoming elections in 2020 are likely to dominate the near-term policy landscape.

Outlook: favorable, with growth moderating to potential.
Inflation: picking up toward target with fading supply shocks.
External position: normalizing.
Risks: moderate and balanced.
- Upside risk: solid income and credit growth could sustain domestic demand.
- Downside risk: external risks are building up.

Fiscal position: under moderate sustainability and affordability pressures.
Recommendation: tighter fiscal policies are warranted by demand, sustainability and affordability considerations.
Recommended strategy: a frontloaded adjustment, anchored on widening the tax base and mindful of the distributional effects of the adjustment measures, would help reverse the upward debt dynamics.

Structural bottlenecks remain unaddressed.
Social outcomes: scope to be further strengthened.
Policy design emphasis: widen tax base while being mindful of distributional effects.