{
  "title": "IMF Executive Board Concludes 2019 Article IV Consultation with the Dominican Republic",
  "publication": "IMF News, June 11, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/06/11/pr19209-dominican-republic-imf-executive-board-concludes-2019-article-iv-consultation",
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  "summary": "The economy rebounded to a record high growth of 7 percent in 2018.",
  "publishDate": "2019-06-11",
  "sections": [
    {
      "heading": "Economic performance in 2018–early 2019",
      "content": "- The economy rebounded to a record high growth of 7 percent in 2018.\n- Growth rebound reflected:\n  - strong private investment and consumption response to a timely monetary impulse after the slowdown in 2017,\n  - favorable external conditions,\n  - continued strengthening of labor markets.\n- Strong economic performance contributed to substantial reduction in poverty and inequality and continued income convergence to advanced economy levels.\n- Acceleration in activity did not put pressures on internal or external balances:\n  - inflation remained subdued,\n  - the external position remained strong.\n- Monetary and fiscal policies moved to neutral-to-tightening stance in 2018 to guide activity toward potential levels."
    },
    {
      "heading": "Outlook and risks",
      "content": "- Growth projections:\n  - Growth is expected to moderate to around 5½ percent in 2019.\n  - Growth is expected to be 5 percent over the medium-term.\n  - Both projections are within the estimated potential range.\n- Drivers of moderation:\n  - slowdown in credit expansion,\n  - a less supportive external environment,\n  - higher oil prices.\n- Inflation outlook:\n  - Inflation is expected to rise gradually to the central bank’s target range of 4±1 percent with the pickup in food and oil prices.\n- External position:\n  - Projected to remain broadly consistent with fundamentals and more than adequately financed by FDI.\n- Main risks:\n  - Downside: weaker-than-expected external demand and higher energy prices.\n  - Upside: domestic demand momentum in the near term could be stronger than anticipated, reflecting solid income growth."
    },
    {
      "heading": "Executive Board assessment and priorities",
      "content": "- Directors commended authorities for:\n  - dynamic growth,\n  - low inflation,\n  - stable external position,\n  - improved social outcomes.\n- Directors noted the favorable outlook is subject to risks and encouraged using the favorable environment to build resilience by:\n  - building fiscal and reserve buffers,\n  - strengthening long‑term growth and social outcomes through reforms addressing structural bottlenecks.\n- Fiscal policy and debt sustainability:\n  - Welcomed authorities’ commitment to improve the fiscal position, including ambitious tax administration reforms to curb evasion, mobilize revenues, and improve governance.\n  - Noted public debt is trending up despite strong growth; called for further efforts to improve debt sustainability.\n  - Underscored need for a front‑loaded fiscal adjustment aimed at widening the tax base and curtailing the electricity sector’s drag on the budget, while safeguarding fiscal space for growth‑enhancing public investment and social spending.\n  - Supported adoption of a medium‑term fiscal framework with a clear policy anchor and fiscal responsibility elements to ensure policy credibility and limit fiscal risks.\n- Monetary policy and reserves:\n  - Given subdued inflation, supported maintaining the current neutral monetary policy stance, while remaining data dependent should pressures emerge.\n  - Welcomed continued efforts to strengthen the monetary policy framework, including plans to recapitalize the central bank and introduce the foreign exchange trading platform to increase transparency and efficiency.\n  - Encouraged continued accumulation of international reserves in light of the favorable external position.\n- Financial sector and supervision:\n  - Welcomed financial system stability and wide‑ranging reforms to enhance financial resilience.\n  - Supported modernization of institutional framework for systemic risk oversight, strengthening of banking regulation and supervision, and cybersecurity reforms.\n  - Encouraged further action to strengthen supervisory oversight of non‑bank financial institutions.\n  - Welcomed recent progress in updating the AML/CFT legal framework and encouraged enhancing the effectiveness of the regime.\n- Structural reforms:\n  - Emphasized continued structural reforms to address impediments to higher productivity, income convergence, and social inclusion.\n  - Encouraged measures to improve the business environment, remove trade and investment barriers, and continue reforms to education, health, and the pension system.\n  - Reiterated need to decisively address long‑standing structural weaknesses weighing on potential growth, particularly losses in the electricity sector and inefficiencies in the product and labor markets.\n  - Noted the need to broaden and strengthen the social security system, which will require additional fiscal space."
    },
    {
      "heading": "Key statistics (Selected Economic Indicators)",
      "content": "- Output (Annual percentage change, unless otherwise stated)\n  - Real GDP: 2016: 6.6; 2017: 4.6; 2018: 7.0; 2019: 5.5; 2020: 5.2\n  - Contributions to growth:\n    - Consumption: 2016: 3.8; 2017: 3.6; 2018: 4.0; 2019: 3.9; 2020: (not listed)\n    - Investment: 2016: -0.6; 2017: 3.7; 2018: 1.3; 2019: (not listed)\n    - Net exports: 2016: 0.2; 2017: 2.0; 2018: -0.7; 2019: -1.1; 2020: -0.4\n  - Output gap (in percent of potential output): 2016: 1.0; 2017: -0.3; 2018: 0.9; 2019: 0.8; 2020: 0.6\n- Unemployment and Prices (In percent)\n  - Unemployment rate (period average): 2016: 7.1; 2017: 5.7\n  - Consumer price inflation (end of period): 2016: 1.7; 2017: 4.2; 2018: 1.2\n  - Consumer price inflation (period average): 2016: 1.6; 2017: 3.3; 2018: 2.1; 2019: 4.1\n- Consolidated public sector 1/ (In percent of GDP)\n  - Debt: 2016: 48.7; 2017: 51.5; 2018: 53.1; 2019: 54.3; 2020: 54.9\n  - Primary balance: 2016: 0.1; 2017: 0.0; 2018: (not listed)\n  - Overall balance: 2016: -4.2; 2017: -4.5; 2018: -3.8; 2019: -4.6\n  - Central government balance: 2016: -3.2; 2017: -3.4; 2018: -2.4; 2019: -3.3\n  - Revenues and grants: 2016: 14.5; 2017: 14.7; 2018: 14.9; 2019: 15.0; 2020: 15.1\n  - Primary spending: 2016: 15.5; 2017: 14.6; 2018: 15.3; 2019: 15.2\n  - Interest expenditure: 2016: 2.6; 2017: 2.7; 2018: 3.1\n  - Central bank quasi-fiscal balance: 2016: -1.3; 2017: -1.2\n  - Rest of NFPS: 2016: 0.3\n- Financial sector\n  - Broad money (M3): 2016: 9.8; 2017: 11.2; 2018: 7.6; 2019: 10.9\n  - Credit to the private sector: 2016: 12.1; 2017: 10.1; 2018: 11.1; 2019: 8.2\n  - Policy interest rate 2/: 2016: 5.3; 2017: …\n- Balance of payments\n  - Current account, of which: 2016: -0.2; 2017: -1.4; 2018: -1.5; 2019: -1.7\n  - Trade balance: 2016: -3.6; 2017: -2.7; 2018: -4.0\n  - Financial account, of which: 2016: -2.2; 2017: -1.8; 2018: -2.3\n  - Foreign direct investment, net: 2016: -4.7; 2017: -3.1\n  - NIR (in millions of U.S. dollars): 2016: 6,047; 2017: 6,780; 2018: 7,627; 2019: 8,016; 2020: 8,622\n  - NIR in months of imports: 2016: 3.4\n  - Total external debt (in percent of GDP): 2016: 40.7; 2017: 43.2; 2018: 41.5; 2019: 41.6; 2020: 40.1\n    - of which: Public sector: 2016: 26.9; 2017: 29.2; 2018: 28.7; 2019: 29.5\n\nSource: IMF Executive Board Concludes 2019 Article IV Consultation with the Dominican Republic (Press Release No. 19/209), June 11, 2019.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Dominican Republic and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/06/11/pr19209-dominican-republic-imf-executive-board-concludes-2019-article-iv-consultation"
    }
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    "Published: June 11, 2019",
    "The economy rebounded to a record high growth of 7 percent in 2018.",
    "Growth rebound reflected:",
    "Strong economic performance contributed to substantial reduction in poverty and inequality and continued income convergence to advanced economy levels.",
    "Acceleration in activity did not put pressures on internal or external balances:",
    "Monetary and fiscal policies moved to neutral-to-tightening stance in 2018 to guide activity toward potential levels.",
    "Growth projections:",
    "Drivers of moderation:",
    "Inflation outlook:",
    "External position:",
    "Main risks:",
    "Directors commended authorities for:",
    "Directors noted the favorable outlook is subject to risks and encouraged using the favorable environment to build resilience by:",
    "Fiscal policy and debt sustainability:",
    "Monetary policy and reserves:",
    "Financial sector and supervision:",
    "Structural reforms:",
    "Output (Annual percentage change, unless otherwise stated)",
    "Unemployment and Prices (In percent)",
    "Consolidated public sector 1/ (In percent of GDP)",
    "Financial sector",
    "Balance of payments",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Dominican Republic and the IMF](http://www.imf.org/external/country/DOM/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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