Press Release No. 10/221

Press Release No. 10/221
June 1, 2010

An International Monetary Fund (IMF) mission led by Mr. Alejandro Santos visited Santo Domingo during May 18-28 to conduct discussions under the second review of the Stand-By Arrangement (SBA), which was approved by the IMF Executive Board in November 2009 (see Press Release No. 09/393). The mission met with Central Bank Governor Héctor Valdez, Minister of Finance Vicente Bengoa, Minister of Economy Temístocles Montás, Vice-President of the Public Electricity Corporation Celso Marranzini, as well as members of the Economic and Social Cabinet, senior government officials, representatives of the private sector, and the international community.

At the conclusion of the visit, Mr. Santos issued the following statement:

“The early results of the authorities’ economic program have been impressive. There is a clear economic expansion and real gross domestic product (GDP) is estimated to have grown by 7.5 percent in the first quarter of 2010 (year-on-year). Exports, imports, tax collections and private credit are expanding at healthy rates. While the 12-month inflation rate is above the 6-7 percent target of the Central Bank, this is mostly due to higher fuel and some food prices; core inflation (which excludes these prices) is still below 3 percent on an annual basis. It is expected that for 2010 as a whole, real GDP will grow between 5 and 5.5 percent, while inflation will be contained within the Central Bank’s target.

“All performance criteria and structural benchmarks for end-March 2010 have been observed. Progress continues in all areas of the structural agenda, although there are delays in implementing the electricity reform. The authorities have designed a strategy to improve tax collections through improvements in tax administration and rationalization of tax exemptions. The authorities have also designed a plan to achieve compliance with all Basel core principles for effective bank supervision.

“Discussions have been productive, and key measures for the rest of 2010 have been agreed in line with the authorities’ program. Significant progress has been made in reaching agreement on a letter of intent, and the mission expects to conduct the final assessment of the second review in Washington in the coming weeks.

“The mission would like to thank the authorities and the citizens of the Dominican Republic for their warmth and hospitality.”