Press Release No. <a name="P16_75"></a> 05/258

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 that visited Santo Domingo during November 9-18, 2005 held productive discussions with the authorities on the draft budget for 2006 and other issues related to the third review of the Dominican Republic's program supported by the Stand-By Arrangement with the IMF.

"The IMF's Executive Board approved the first and second reviews of the Stand-By Arrangement in mid-October, and subsequent progress in implementing the program remains favorable. Recent developments in economic activity and financial markets point to continuing sound macroeconomic policies. As a consequence, all quantitative targets for end-September 2005 were met and envisaged structural reforms are on track. The outlook for the remainder of the year is positive. It was agreed that sustaining this prudent course of policies would require that the budget for 2006 build upon the progress already made in restoring a sustainable fiscal position. Discussions focused on measures needed to underpin the envisaged fiscal adjustment. These include implementing a revenue-neutral tax reform consistent with early entry into DR-CAFTA, and improving the performance of the electricity sector, while reducing the necessary government subsidy.

"The authorities are expected to submit the 2006 budget to congress next week, consistent with the agreed program objectives. Once this step has been taken, the authorities' Letter of Intent describing the government's policies will be finalized and submitted to IMF Management."