Press Release No. 11/45

Press Release No. 11/45
February 15, 2011

An International Monetary Fund (IMF) mission led by Mr. Alejandro Santos visited Santo Domingo during February 1-14 to conduct discussions under the fifth review of the Stand-By Arrangement (SBA), which was approved by the IMF Executive Board in November 2009 (Press Release No. 09/393). The mission met with Vice-President Rafael Alburquerque, as well as members of the Economic and Social Cabinets, senior government officials, and representatives of the international community. At the conclusion of the visit, Mr. Santos issued the following statement:

“The mission made progress in the discussions of the fifth review and expects to conduct the final assessment in Washington in the coming weeks, along with discussions on a letter of intent (LOI) that reiterates policies for the rest of 2011, in line with the program.

“The authorities’ program continues to yield positive results. Real gross domestic product (GDP) is estimated to have grown by 7.8 percent in 2010, while headline inflation ended the year at 6.2 percent, within the Central Bank’s target range of 6-7 percent. Core inflation (which excludes food and fuels) reached 4.2 percent (year-on-year) in 2010, somewhat below the average of the last 5 years. The current account balance for 2010 is estimated to have posted a deficit of 8.5 percent of GDP driven mainly by higher imports, and financed by foreign direct investment and public borrowing. For 2011 the economy is expected to expand at a rate of between 5.5 and 6 percent, in line with trend output growth, while inflation is expected to decline to between 5 and 6 percent by the end of the year.

“Discussions advanced on policies to meet the targets of the program for 2011. The program envisions a fiscal adjustment of about 1 percent of GDP to be achieved through additional revenue measures and a reduction in the subsidy to the electricity sector. The Central Bank reaffirmed its commitment to achieve the inflation target of 5-6 percent using its policy instruments. While there is agreement on the main macroeconomic objectives of the program, there are remaining issues that require further consultation and discussion. It was agreed to continue discussions in Washington in the following weeks.

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