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Satisfactory Results for 2007 Economy in Dominican Republic, says the Central Bank












RD Economia
Satisfactory Results for 2007 Economy in Dominican Republic, says the Central Bank

Governor of the Central Bank, Héctor Valdez Albizu, reported that the Dominican economy of 2007 ended on a positive note with widely satisfactory results, showing significant growth and low inflation. While offering preliminary economic data from last year, Valdez Albizu also reported that the gross domestic product (GDP) grew not less than 8% in real terms, the results of which are very positive while taking into consideration that it is compared to the high growth of 10.7% from 2006. He added that 2007 results are much higher than originally estimated in the Stand-By Agreement with the International Monetary Fund (IMF) and the Monetary Plan of the Central Bank, as stated in a press release from the Central Bank.

He added that the Dominican economy has grown an average of 9.3% in the last three years, making our country’s economy one of the fastest growing in Latin America.

In terms of inflation, Central Bank Governor Valdez Albizu said single-digit inflation figures, between 8 and 9 percent, are still being enjoyed despite the inflationary effects caused by Tropical Storms Noel and Olga and skyrocketing international oil prices that pushed up the cost of domestic products and services. He added that in November, 2007 the effect of rising international oil prices on the inflation index was 3.29%. He explained that if this price jump had not occurred, the country’s inflation up until this time would have been only 4.36%. He said this tendency would have continued until the end of the year thus corresponding with projections found in the IMF agreement. Doubtless, this would also have reflected the effectiveness of the country’s monetary policies in terms of inflation control.

He also pointed out that the Central Bank accumulated international cash reserves equaling well in excess of US $1.6 billion dollars, an unprecedented amount that, when added to the influx of capital -, especially Direct Foreign Investment – has guaranteed currency stability. In 2007 currency remained around 33 pesos per dollar, similar to that of 2006.

Deficit Under Control

The Central Bank governor confirmed that the fiscal debt provoked by the past bank bailout is under control and indeed has dropped 2.9% below the GDP in August of 2004 to approximately 1.9% of the GDP at the close of 2007, signaling that the government has been punctual in servicing the debt with transfers and the application of monetary policies regarded “prudent” by international organisms.

He added that thanks to good faith on the part of President Leonel Fernández and the country’s lawmakers, the Law of Recapitalization of the Central Bank is being implemented. The law contemplates the idea of support from the Central government with the goal of gradually eliminating the deficit.

Referring to the external sector, the governor said that in the year 2007, the amount of money in saving accounts in proportion to the GDP closed lower, between 4 and 5%, indicating that while economic growth was a fact this past year, so too was there a rise in commercial exports. On the other hand, the economy was affected by the persistent increase in international oil prices, the deterioration of duty free zones and the slowdown of the US economy.

He said, nevertheless, the deficit was financed with massive capital infusions into the country, mainly from direct foreign investment, repatriation of capital, tourism and national exportation thus assuring that the global balance of payment will close with a positive credit balance in keeping with the registered growth in the Net International Reserves.

Finally bank governor Valdez Albizu called on all economic sectors to maintain their confidence in the current monetary policy with the final goal of preserving microeconomic stability necessary to continue along the path to economic growth that contributes to the improvement of people’s buying power.

 

Date of Publication: January 4, 2008

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