IMF Approves Stand-By Arrangement with Dominican Republic

The Central Bank of the Dominican Republic announced that the Executive Board of the International Monetary Fund (IMF) approved the Stand-By Arrangement with the Dominican Republic.

With this new accord, the DR will immediately receive $300 million dollars from the IMF…

The accord, in effect for a period of 28 months, allows the Dominican Republic to have access to $1,095 billion (equivalent to $1.7 billion dollars) in IMF Special Drawing Rights (SDRs) funds once the arrangement is approved.

With this new accord, the DR will immediately receive $300 million dollars from the IMF, earmarked for the government, as was stipulated in the recently published Letter of Intention. In addition, this arrangement frees up disbursements from the Inter-American Development Bank and the World Bank.

The main objective of the program is to stimulate recovery of the Dominican economy in a stable macroeconomic climate and to strengthen growth perspectives through the implementation of an anti-cyclical, short term policy in order to achieve long term sustainability.

The IMF technical team and the Dominican representatives to the IMF presented the agreement. One of the most relevant elements put forward was the need for the DR to implement a fiscal policy that stimulates the economy, limited by the tight fiscal situation stemming from the more than a 10% drop in tax revenue for the period from January to September 2009, which has caused a 30% reduction in cost and spending.

With a drop in demand added to the impact of rising prices for natural resources, inflation has remained low, at 0.2% and in accumulated terms only 4.5 percent.