Press Release No. 04/229

The following statement was issued today in Santo Domingo by Jose Fajgenbaum, Deputy Director of the International Monetary Fund's (IMF) Western Hemisphere Department:

"During the last two weeks, an IMF mission and the authorities of the Dominican Republic have engaged in comprehensive discussions on an economic policy program that could be supported by a Stand-By Arrangement. Significant progress has been made in identifying policies that will consolidate macroeconomic stability and establish the basis for sustained economic growth.

"The authorities are appropriately considering: (i) an important fiscal adjustment, which is needed to stabilize public finances while protecting critical social expenditure; (ii) a strategy for meeting the country's financing needs; and (iii) the continuation of monetary policy designed to sustain the recent sharp reduction in inflation. The authorities' program also includes further strengthening in the banking sector, and they are also identifying measures to ensure the viability of the electricity sector. More broadly, the authorities have developed a set of institutional reforms to improve governance and ensure the implementation and effectiveness of their policies.

"The Dominican authorities are now specifying their plans in greater detail in a number of areas, including the electricity sector and the draft budget for 2005. The authorities expect to complete this work in the coming days, after which program discussions will continue, either in Santo Domingo or in Washington," Mr. Fajgenbaum stated.