Country Update
March 01, 2021- Albania
- Angola
- Argentina
- Armenia
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- Namibia
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- Turkey
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- Venezuela
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Market Prices
dominican republic sovereign| Security | Bid | Ask | Yield | Spread | Change | |
|---|---|---|---|---|---|---|
| DOMREP 7 1/2 05/06/21 | 100.45 | 100.95 | 3.27 | 309 | +49 | 2021-05-06 |
| DOMREP 7 07/31/23 | 112.60 | 113.10 | 1.54 | 126 | -26 | 2023-07-31 |
| DOMREP 6.6 01/28/24 | 112.95 | 113.45 | 1.90 | 154 | -6 | 2024-01-28 |
| DOMREP 5 7/8 04/18/24 | 107.90 | 108.40 | 3.12 | 104 | -5 | 2024-04-18 |
| DOMREP 5 1/2 01/27/25 | 109.95 | 110.45 | 2.72 | 215 | -3 | 2025-01-27 |
| DOMREP 6 7/8 01/29/26 | 116.65 | 117.15 | 3.13 | 237 | +0 | 2026-01-29 |
| DOMREP 5.95 01/25/27 | 112.65 | 113.15 | 3.51 | 257 | -6 | 2027-01-25 |
| DOMREP 8 5/8 04/20/27 | 122.05 | 122.55 | 4.43 | 280 | -6 | 2027-04-20 |
| DOMREP 6 07/19/28 | 113.60 | 114.10 | 3.83 | 268 | -7 | 2028-07-19 |
| DOMREP 4 1/2 01/30/30 | 101.55 | 102.05 | 4.25 | 291 | -8 | 2030-01-30 |
| DOMREP 7.45 04/30/44 | 120.00 | 120.50 | 5.84 | 409 | -12 | 2044-04-30 |
| DOMREP 6.85 01/27/45 | 111.85 | 112.35 | 5.90 | 413 | -12 | 2045-01-27 |
| DOMREP 6 1/2 02/15/48 | 107.40 | 107.90 | 5.93 | 414 | -12 | 2048-02-15 |
| DOMREP 6.4 06/05/49 | 106.60 | 107.10 | 5.90 | 410 | -12 | 2049-06-05 |
| DOMREP 5 7/8 01/30/60 | 97.90 | 98.40 | 6.00 | 420 | -13 | 2060-01-30 |
Market Map
dominican republic sovereignYield Curve
dominican republicMarket History
Market Intelligence
dominican republicDespite the drop in revenues due to the pandemic, investors maintain confidence in DOMREP bonds.
However, solvency indicators have deteriorated after the highest yearly increase in debt in five decades, which took the consolidated debt-to-GDP to 68.8%.
The debt is trading at similar levels to the pre-pandemic times, but if there is no progress with the electricity pact and fiscal reform. Confidence could deteriorate without developments.
We recommend to HOLD the credit, as we do expect progress on the tax reform promoted by Abinader that could provide support for prices.
Emerging markets faced massive capital flight as a result of the COVID-19 crisis.
However, there has been debate as to whether the severe initial shock was primarily the result of an interruption in liquidity flows and not the deterioration of macroeconomic variables.
Growth in emerging economies may have taken a permanent hit but, at the same time, emerging markets could become more attractive to those hunting for yield.
We believe that the deepness of the impact of the pandemic on EMs can be quantified.
The first months of Abinader’s mandate were focused on health, the fight against corruption, and COVID-19 social programs.
Abinader continues advocating for fiscal reform and in late October called CES to start discussions around the electric sector and fiscal reforms.
Despite the good intentions, so far fiscal accounts have continued deteriorating and we expect public debt to reach 55.3% of GDP by the end of 2020.
We expect that Abinader’s large popular support enables him to carry out the fiscal reform by mid-2021.
HOLD: A liability management operation and the retap of DOMREP 2032 show investors&rsquo...
We take a comprehensive look at political risk indicators in a group of Emerging Market countries, trying to identify potential sources of conflict.
We analyze the electoral scenarios in the four Latin American nations that will have electoral processes during the end of 2020 and all of 2021.
We review the scenarios in the parliamentarians of Argentina and El Salvador, we comment on the electoral process that will take place in Venezuela, and we review the perspectives of the presidential elections in Ecuador.
We evaluated the World Bank’s governance indicators for our sample countries in 2019 and share our view of thes...
GDP fell 8.5% y-o-y in 1H20, reflecting the impact of extended lockdowns.
In the first nine months, remittances amounted to USD 5.8 mn (+10.5% yoy). This performance has caused the current account deficit to be lower than previously expected.
In 1H20, the current account deficit (USD 749 mn) was financed by a surplus in the financial account (USD 657 mn).
We kept our GDP forecast for 2020 unchanged at -5.9% and we expect a recovery of 5.0% in 2021.
HOLD: Solvency indicators look neutral, while liquidity looks negative. Nonetheless, the strengthening of hard currency reserves, upon the issuance of the new 2032 bond, ...
The Dominican Republic has far more room for maneuver in fiscal terms than Jamaica.
Once the fiscal responsibility argument is taken out of the equation, we believe JAMAN’s yields should adjust accordingly to its lower rating.
In a 1-year horizon, our base scenario considers DOMREP’s curve remaining around current levels, while JAMAN experiences a significant widening.
We find the DOMREP 6.4 2049’s low price/high yield mix attractive.
We also think JAMAN 8 2039 trades too rich and its current yield does not reflect the deterioration in debt and fiscal metrics to come.
To offset the decline in the economic activity, the central bank (BCRD) started loosening its monetary stance.
Core inflation has been growing in recent months and, given the recent monetary stimulus, we could see growing pressure on prices in the months to come.
A point to keep in mind is that recent cuts to the monetary policy rate have taken it to negative territory in real terms.
The expansionary monetary policy has been a good tool in the past to spur the Dominican economy; however, there are risks that it may be reaching its limit.
We maintain our HOLD rating for DOMREP bonds as pricing will depend on the evol...
Abinader’s fiscal package to cushion the impact of the pandemic amounts 3.2% of GDP.
The new projected deficit expands from previous 5.5% to 9.3% of GDP, while the primary deficit went from 1.5% in June to 5.7% of GDP.
The 2020 financing gap is now estimated at USD 10.2 bn, USD 3.4 bn additional to what was established last June. We estimate that by the end of the year, total debt to GDP will jump to 53.6% of GDP from last year’s 40.4% of GDP.
HOLD: The market remains open for Eurobond issuances, but we are seeing liquidity and solvency indicators deteriorating, and suggest keeping a close eye on bo...
Up to April of this year, fiscal revenues have declined 7.3%, while expenditures have increase 17.3% year-to-date, according to Central Bank figures.
Our estimates point to a fiscal gap of 6.2% of GDP in 2020 (from previous 5.8%).
This puts our estimated gross financing needs for the year at 7.8% of GDP (USD 6.6 bn).
The new government will have a USD 2.5 bn room to issue new external debt.
Preliminary results show an overwhelming victory for the opposition, which obtained 52.5% of the votes in the presidential race and 56.3% of seats in the senate.
Abinader’s results stands above the 51% necessary to become president.
PRM's presidency does not represent a great ideological change against the 16 years of PLD government, given that both are center-left parties.
Abinader said during his campaign that the recovery plan prepared by his team will be financed through indebtedness.
We estimate that the government has covered 53.4% of its USD 6.4 bn gross financing needs, which means it still h...
On June 17, the government halted the phased reopening of its economy due to the spike in new coronavirus cases in the last weeks.
Abinader’s vote intention is 47.4%, while Castillo’s is 33.7% and Fernández 14.4%.
Abinader’s lead over Castillo averages 13.7 pp, 7.5 pp less than in our previous report (21.2 pp).
Given the current trend, we see a runoff as very likely with the final victory of the opposition candidate Luis Abinader
Dom Rep has been one of the region's debts in which investors have returned capital more quickly
Low interest rates and the hunt for yields of the last decade has left broad swaths of EMs overindebted and vulnerable.
The first half of 2020 is not yet over and we already have 3 countries in default.
The recent record of most defaults on Eurobonds on a single year was 4 in 2017, so 2020 is not far from setting new records.
Eurobond restructuring processes are usually among the most complicated due to the variety of holders and the different interests they represent.
Suriname, Zambia, Belize, Sri Lanka and Angola are in the most risk to engross the default-statistic for the year.
May was one of those months that feels like a year. We had a default in Argentina, a tense election in Suriname, a deadly pandemic still spreading around the world, and yet, it was a good month for emerging market debt
Our EMFI Core Index went up for the first time in 6 months. The biggest winners were Argentina, Angola and Ecuador, while Venezuela, Suriname and Sri Lanka were among the negative outliers that went against the general risk-on mood
The macro and fiscal situations deteriorated further for all countries covered, and we chronicled the dramatic economic crash in our Country Reports
We’ve been preparing fo...
According to preliminary data from the Central Bank, the GDP registered a 0% yoy variation in 1Q20, down from 5.8% in 4Q19.
We expect to see further declines in the months to come. This outlook led us to adjust our GDP forecast downwards from a 0.5% to a 2.5% contraction.
The new president will have to face a health crisis and the economic slowdown generated by the COVID-19 pandemic, combined with a complicated political outlook.
We believe there is room for further tightening in bond spreads if markets regularize. We suggest long-end, low coupon bonds to profit from yield compression.
As of May 22, 8 countries have at least one USD-denominated sovereign bond trading below 50 cents on the dollar.
The Covid-19 crisis could lead to a new wave of sovereign defaults from prolonged confinements.
We discuss the worst debt restructuring events so far this century.
Argentina 2005 remains at the forefront of these events if we exclude the exceptional cases of countries at war or leaving them.
The countries with the most compromised solvencies that could generate problems with their debt are Angola and somewhat behind, Sri Lanka, El Salvador, Egypt and Pakistan.
A pandemic year was on the cards, the dramatic magnitude of its effects was not.
The global economy is expected to shrink by 3% in 2020, but leading indicators are pointing to a deeper downturn.
Emerging countries with a history of volatile economic growth will show the worst results.
Some economies may experience a period of above-trend growth during the recovery, although the level of GDP will remain, in most cases, below the pre-virus level.
Pakistan is the weakest among the EMFI Countries, in terms of the spread of the virus. Lebanon, Sri Lanka and Barbados are the strongest, with a controlled increase rate and a persistent lockdown.
The countries that we evaluate with the worst economic performance year-to-date are Angola, Venezuela, Lebanon, Barbados, El Salvador, Ecuador, Sri Lanka, Argentina and Suriname.
Since the end of 2019, the local currency has depreciated -70.5% in Venezuela, -52.4% in Lebanon, -43.5% in Argentina and -40% in Suriname.
El Salvador and Argentina launched the most ambitious fiscal program among our sample, which will cost 6% and 5.6...
The safest rung of EM hard-currency sovereign bonds fell on March but has already retraced all their losses.
Mid-quality EMs plunged over March and have risen somehow since, but haven’t fully recovered.
This segment has seen a 320 bps rise in average yield in 2020, going from an average 6.1% yield to 9.3%.
We believe high-yield bonds in our mid-quality group have significant upside if they avert a credit event.
After a dry March, markets are again open for fresh bonds, but only from relatively high-quality issuers.
US stocks rose 12.7% in April, while US investment grade bonds rose 4.6% and EM bonds 4.0%.
Our EMFI Core Index fell 0.9% over the month and is 27.1% down YTD.
The best performers of April were Egypt (+4.7%), Sri Lanka (+4.0%) and Turkey (+3.8%).
The worst performers were Suriname (-26.9%), Lebanon (-14.0%) and El Salvador (-11.3%).
The IMF has approved just over USD 16.0 bn for 61 countries.
Of the 16 countries we follow, 6 have already been granted financing for a combined USD 3.5 bn.
Lebanon and Argentina presented restructuring proposals asking for large debt relief but not offering much adjustment.<...
The IMF Executive Board approved the Dominican Republic’s request for emergency financial assistance under the Rapid Financing Instrument (RFI).
So far, with the approval of the RFI plus a USD 150 mn World Bank loan, we estimate that the government has covered 53.4% of its USD 6.4 bn gross financing needs.
We expect the government to primarily rely on domestic market funding to cover the remaining amount of USD 2.9 bn.
The latest report from the Health Ministry, as of April 29, indicates a reduction in the average increase of new cases during the last week but it is not yet possible to say that the pandemic is ...
Dominican Republic has relatively solid fundamentals that have guarded its bonds against the debt freefall in other emerging markets
Nonetheless, the global risk aversion has pushed EM yields up, placing Dominican Republic in an interesting relative position.
A wide difference between the short and long ends of the curve sets DOMREP 7.45 2044 as one of the outliers in the curve.
The country's fiscal accounts will be affected by the impact of the pandemic in 2020, but external and domestic financing should be enough to bridge the projected fiscal gap.
The Debt to GDP ratio, just over 50% in 2020, is relatively lo...
On April 15, the G20 agreed on a standstill for bilateral debt service during 2020. Nonetheless, the agreement only applies to IDA-eligible countries. The suspension will be NPV-neutral and will involve repayment over 4 years, including a 1-year grace period.
Multilaterals haven’t found a way to implement a similar standstill. In fact, Fitch Ratings warned them that joining in on the G20 standstill could result in rating downgrades if not appropriately compensated by shareholder countries.
On aggregate, official creditors account for almost 90% of the debt of low-income, and 60% of that of lower middle-income countries, b...
The OAS published the results of the audit conducted on the voting machines used in February 16 suspended municipal election.
The audit showed that there was no sabotage or external attacks on the voting machines, but rather that "the failure was the result of mismanagement by the JCE's IT area.”
President of the electoral commission (JCE), Julio Castaños, indicated that they are going to undertake a restructuring process of their IT department.
This call for restructuring may not be enough to regain the trust of the population in a country that is going through a crisis of confidence in democratic i...
On March 15, a month after their suspension, municipal elections took place in the country. Six days later, the electoral commission announced the final results. Electoral authority figures show 3.7 mn votes, with 1,184,222 votes for PRM candidates (37.2% of total votes cast), 1,369,359 for those of PLD (32.2%).
If current trends continue, it is possible that there will be a victory in the first round for PRM presidential candidate Luis Abinader. Abinader’s lead over Castillo averages 21.2 points across our summary of polls, but rises 3.9 points for surveys made in late February or after.
According to ABC marketing p...
Two weeks ago, we singled out some early calls for a generalized global debt moratorium in our Global Strategy Viewpoint: Force Majeure. The idea has gained significant traction and is becoming one of the main themes in economic and financial discussion.
While we don’t think a generalized moratorium on commercial bonded debt is likely to succeed, investors should be aware that it is a growing theme and bondholders will probably be under increased pressure to accept attempts at restructuring bond terms.
There are some indications that China is a significant roadblock for the IMF-World Bank initiative for a bilateral debt m...
The COVID-19 crisis is raising a difficult question of public policy for emerging market economies with low fiscal space, which have to reconcile economic and social policy with debt service.
The relation between liquidity and solvency problems is not straight-forward: the COVID-19 shock, which presents liquidity challenges first and foremost, can unearth underlying solvency problems and can also turn liquidity problems into solvency ones if improperly managed.
We’re already seeing some early calls for an international debt holiday to exempt countries from paying during the COVID-19 crisis. Multilateral organizations are ...
The current crisis will translate into twin demand and supply shocks, with an oil price war on top of it.
The demand shock driven by declines in the world’s main trading partners will particularly affect emerging markets which are characterized by low diversification of exports and production.
Supply chains around the world have been disrupted by factory closures, first in China and now in Europe and the US.
The markets most exposed to a potential slowdown are the major commodity exporters: Venezuela, Ecuador, Angola and the markets most reliant on Chinese and US tourism.
In most EMFI countries the tourism act...
Our EMFI Core Index has fallen 27.6% year-to-date (YTD), while Our EMFI Expanded Index has fallen 19.2%. The last two weeks have been particularly bad, with consecutive 10% declines.
Unsurprisingly, countries heavily reliant on oil have suffered the most. Among our 34-country group, almost every oil-reliant one has fallen more than the 18.3% median.
The second thing that jumps to the eye is that the riskier countries have fared proportionally worse than relatively safer countries, when excluding oil-dependent countries.
We’re also seeing several countries crossing the 10% yield threshold, usually associated with dis...
This Sunday, March 15, despite the panic that exists due to the Covid-19, the extraordinary municipal elections took place.
Elections took place in an atmosphere of calm with a low turnout.
The Citizen’s Participation (Participación Ciudadana) group said it registered claims of vote-buying in 19% of the voting centers.
So far, the electoral board has delivered results for 82 of the 158 municipalities in the country.
With votes still being counted, opposition party PRM is ahead in key major cities, including the two main mayorships of the capital.
Local media is speculating that the ruling party wi...
The outbreak of the Coronavirus, as well as the “oil price war” between Saudi Arabia and Russia have triggered almost complete certainty that a global recession is coming over the next quarter.
Some economists are expecting a 2-quarter rolling recession, but there is potential for the downturn to extend further if the virus reemerges after activity is unfrozen.
Emerging market debt is taking a beating in 2020 so far. The countries we cover registered a median 14.3% fall year-to-date, with the worst performer doing as bad as 60.3% down (Ecuador) and 38.5% down (Angola).
We compare indicators on 4 major categori...
February was a bad month for EM debt, as the market went into risk-off mode pushing bonds to backtrack on the gains made over the previous two months. 11 out of the 15 countries in our EMFI Core Index fell on the month, while the weighted index itself fell 5.8%, retracing below December levels.
Our Expanded Index ex. Core confirms February’s sell-off, registering declines in 21 out of 25 countries and an aggregated fall of 0.9%. Nonetheless, this fall is significantly below that of our EMFI Core Index.
Our selection of countries is clearly biased towards some large and risky high-yielders, which translates to an expectabl...
The country’s municipal elections were suspended on Sunday February 16, due to a problem with the electronic voting system, four hours after voting had begun.
The municipal elections were to be the country’s first with the new automated voting system, and were regarded as a test for the upcoming May 17 presidential and congressional elections.
The Electoral Board announced that municipal elections are now rescheduled for March 15.
The rescheduled election will be conducted with paper ballots, instead of the automated system.
After the suspension, hundreds joined in demonstrations demanding the resignatio...
Next Sunday 16, municipal election will take place in the country. The contest will be the first electoral event after October’s primaries. The significance of the next municipal elections transcends its immediate importance; with just 3 months for the presidential and legislative assembly elections, the results will serve as an electoral thermometer for the May elections.
Polls suggest that the ruling party holds a wide margin for the municipal elections. However, when taking only the three polls carried out in January, we find that the gap in vote intention between the two leading parties decreases to 6.6 pp (40.2%-33.6%) whi...
In 2019 the country began registering a moderation in the economic activity, going from a growth of 6.3% in the last quarter of 2018 (7% in the whole year) to 3.7% in the second quarter of 2019 (2Q19), the first result below its potential in 6 quarters. Up to November, the economic activity has expanded 4.9% and we expect to close the year at the same level, mainly driven by an 5.3% expansion in the domestic demand and 4.3% in private consumption.
We are optimistic about the Dominican Republic’s economic performance in 2020. We expect the growth to be around 5.5%, as the tourism sector stabilizes. This year’s performance ...
By 2020, the government plans to increase its expenses by 9.4% compared to what was estimated for 2019. Being 2020 an electoral year, it is not surprising the projected increase in expenditure.
In the 2020 draft budget it is estimated that the fiscal deficit will be USD 2.05 bn (2.2% of GDP), however, in EMFI securities we estimate a fiscal deficit of 2.9% of GDP, since our projected revenues are 0.2% of GDP lower than those estimated in the 2020 budget and the expenses are 0.6% of GDP higher (see Table 1).
Financing needs are estimated at USD 3.6 bn (4% of GDP), while financing sources, at USD 4.5 bn, would fully cover the fis...
On October 12, country’s electoral authority (JCE) announced the official candidates elected in the simultaneous primaries held on October 6 by the Dominican Liberation Party (PLD) and the Modern Revolutionary Party (PRM).
As we indicated in our previous report "Divide and conquer", despite fraud allegations raised by Leonel Fernández against PLD pre-candidate Gonzalo Castillo and current President Danilo Medina (also of PLD), the JCE did not change the results. Gonzalo Castillo was announced as the PLD official candidate with 48.7% of votes, while Luis Abinader is the official PRM candidate with 74.1%.
H...
Last Sunday October 6, the two principal parties of the country, the Dominican Liberation Party (PLD) and Modern Revolutionary Party (PRM), conducted for the first time in history simultaneous primaries organized by the country’s electoral authority (JCE).
For PRM, Luis Abinader won the presidential candidacy with 74.1% of the votes, against 21.2% for Hipólito Mejía. For rulling party PLD, electoral authority figures show Gonzalo Castillo above Leonel Fernández by a tight 1.4 percentage points margin (26,960 votes), having gathered 48.7% against Fernández’ 47.3%. The tight margin has led the la...
The Dominican economy has been the fastest-growing economy in the region during the last 5 years. However, poor electric supply is a prime structural impediment to growth and a major drag on the fiscal balance. National distribution companies generate significant deficits due to below-cost tariffs, significant maintenance requirements, and a high share of unbilled electric energy.
Another factor weighing on the fiscal balance is a regressive tax system characterized by a narrow tax base and high evasion.
A successful reform program that cuts electricity subsidies, broadens the tax base and decreases evasion would bridge the fin...
On September 14, the governor of the Central Bank (DRCB) Héctor Valdez announced that starting September 16 the Central Bank will intervene in the foreign exchange market with amounts above USD 100 mn in coordination with commercial banks. The governor said the intervention will be progressive in cases of high volatility and he estimates that the total intervention amount will reach USD 150 mn.
This measure aims to stabilize the FX market and allay fears of a negative shock in the country due to global growth moderation and US-China trade tensions. Also, it seek to reduce uncertainty among the agents for the next general elect...
On August 31, the Central Bank of the Dominican Republic (DRCB) decided in the last monetary policy meeting to reduce the monetary policy rate for the third consecutive month by 25 basis points, from 4.75% to 4.50%.
In the statement the DRCB described the domestic performance as positive given the fact that “the expansive monetary measures have begun to boost private credit, through the channeling of more than RD$ 17 bn of resources of the legal reserve as financing to the productive sectors,” despite the tensions between US and China and the global economic slowdown.
The Central Bank estimates that the reductions i...
In a press release published on August 26, the Central Bank of the Dominican Republic (BCRD, by its acronym in Spanish) offered an analysis of the challenges that the domestic economy is facing given the turbulent global context. The BCRD also highlighted the preventive measures taken so far and described the macroeconomic outlook for the country.
The Bank pointed out that the Dominican Republic would continue leading regional growth although the pace of expansion has moderated more than expected.
The document concluded stating that "despite facing adverse external and domestic shocks, the Dominican economy once again demo...
According to recent figures published by the Central Bank (BCRD), the Dominican economy grew 5.7% y-o-y in the first quarter of 2019. This result was mainly driven by the good performance in the construction and services sector, especially by the increase in energy and water. Also, in the January-June period, the growth was 4.7% according to the maximum authority of BCRD.
The president of the BCRD projects that the economy will end 2019 with a growth between 5% and 5.5%, placing Dominican Republic as the fastest growing economy in Latin America.
Meanwhile, ECLAC published on July 31 the update of Perspectives for the economies ...
Through a press release published on Tuesday, July 30, the Central Bank (BCRD) informed that in its most recent monetary policy meeting the board decided to reduce, for the second consecutive month, the monetary policy interest rate (MPR) by 25 basis points going from 5% to 4.75%. The MPR is used as a reference rate for expansion and contraction monetary operations within one business day.
Also, in line with the BCRD short-term liquidity management scheme, the overnight rate was reduced from 3.50% to 3.25% per year and the repo rate went from 6.50% to 6.25% per year.
The monetary authority justified its decision based on the de...
According to the Monthly Indicator of Economic Activity (IMAE) released by the Central Bank, the performance of the Dominican economy in May reached 5.3% in interannual terms. This figure is in line with the economic growth of 5.5% projected by the International Monetary Fund (IMF) for 2019.
On the other hand, the IMF Executive Board in Article IV emphasized that the main challenge facing the Dominican authorities is to improve the sustainability of the public debt. The debt has increased steadily in recent years. Public debt as a percentage of GDP went from 23.3% in 2008 to 39.6% in 2018.
According to the most recent report of the International Monetary Fund (IMF), World Economic Outlook presented on Tuesday, the economic growth of the Dominican Republic will be 5.1% this year. This figure is lower than the 5.5% presented a few weeks ago in the annual review of the agency to the Dominican economy.
The reduction in the growth projection is due to the slowdown in the world economy. The IMF reduced its prospects for the world economy to 3.3% -the smallest projection next to 2016 since the recession of 2009- mainly due to the greater deceleration expected for the United States this year, which affects not only trade but a...
The economic growth of the Dominican Republic will moderate to 5.5% in 2019, after registering the highest rate in Latin America in 2018, of 7%, the International Monetary Fund (IMF) reported today.
However, despite the robust economic performance, there is one aspect that has remained anchored in all the agency's latest reports: its concern, as the debt continues to grow as a result of important structural deficits.
In this regard, the Non-Financial Public Sector Debt Report (SPNF) recently published by the General Directorate of Public Credit states that the level of indebtedness of the SPNF at the end of February totaled...
On February 26, President Danilo Medina has presented his presentation of accounts from the Congress. For much of it, he highlighted the good economic performance that the country has achieved in the last six years, exhibiting an average growth of 6.3% with price stability. In 2018, it registered an increase of 7% of its Gross Domestic Product (GDP), while in the region the average was 1.2%. For this 2019, the government has a growth projection that is between 5 and 5.5%.
With regard to the economic area, he announced an increase in the minimum salary for officials and pensioners. As of April 1, officials will have a minimum wage tha...
The fiscal results of 2018 were positive. The Ministry of Finance indicated that according to the Results Report of Public Finances 2018, revenues amounted to RD $ 601,257 million, including donations of RD $ 960 million, for a 13.1% increase compared to the amount collected in 2017, which meant an additional RD $ 69,775 million.
The Non-Financial Public Sector Debt Report (SPNF) published by the General Directorate of Public Credit this month, states that the level of indebtedness of the SPNF as of December 31 totaled USD 32,157.9 million, representing 39.7% of the Gross Domestic Product. (GDP) estimated.
The Financing Plan fo...
The Dominican economy has positive growth prospects. In our previous report we presented the internal challenges that the Caribbean country had to face in order to maintain the growth path above its potential. These were: the management of debt and the fight against corruption. In addition to internal risks, there are external risks that could affect the Dominican Republic. Among the main ones are interest rates in the United States, trade relations between the US and China, and the behavior of oil prices. The latter has recently presented a change of trend, which is why it is worth revising it.
From its lowest point, on January 4, t...
According to the Monthly Indicator of Economic Activity (MIEA) released by the Central Bank, the performance of the Dominican economy closed 2018 with an increase of 7%, announced the Governor of the Central Bank, Hector Valdez Albizu. With this result, the Dominican Republic would be the fastest growing country in all of Latin America.
Another positive result of the Dominican economy is that inflation in 2018 stood at 1.17%, which is in line with the goal set between 1% and 4%. This figure is the lowest recorded in the last 34 years.
Despite these results, the Dominican economy has some challenges to face in order to improve t...
Yesterday, in what was its last session this year, the Senate of the Dominican Republic approved the project that allows President Danilo Medina through the Ministry of Finance, the issuance and placement of public debt bonds for 190,000 million pesos, (equivalent to USD 3,770.5 million) in order to supply the General State Budget of 2019.
In addition, in the same session, the senators approved in one reading the loan contract for USD 300 million, granted by the Inter-American Development Bank (IDB) to the Dominican Republic, to be used as an emergency contingency fund and mitigate disaster areas.
On the other hand, according t...
The commercial truce between the United States and China generated a positive impact on the different economies worldwide. However, it is not a conclusive answer to the trade war between the United States and China, so that, if a definitive agreement is not reached, in three months the increase in tariffs could be applied and we would again find ourselves in a situation of tension between both countries.
On the other hand, the Dominican peso continues to depreciate. In the last two weeks, the local currency showed a variation of 0.3%, going from 50,115 DOP / USD to 50,226 DOP / USD. At the beginning of the year, the Dominican peso wa...
A mission of the International Monetary Fund (IMF) concluded its visit to the Dominican Republic on November 20. In his usual ordinary assessment of the country's economy, he held a closing meeting with the Central Bank of the Dominican Republic (BCRD), in which the governor of the Central Bank, Héctor Valdez Albizu, reiterated that Dominican economic growth for 2018 would be in around 6.5%, maintaining inflation levels within the target range defined by the monetary program.
Valdez Albizu assured that the mission affirmed that the exchange rate is in line with the strong macroeconomic fundamentals and praised the achievem...
Earlier this week, the Inter-American Development Bank announced a USD 400 million loan to the Dominican Republic, with the objective of boosting the financial sustainability and efficiency of the electricity sector.
Additionally, in the visits made by the president of the nation, Danilo Medina to the Republic of China, the president announced that he would also have obtained a loan from the Asian country for an amount of USD 600 million, which will also be destined to improve the electrical distribution system.
This debt is added to USD 31,526.7 million, which is the balance of the debt of the non-financial public sector (SPNF...
The Dominican debt market was shaken in recent weeks when on September 3rd, the representative of the World Bank, Alessandro Legrottaglie, commented that debt burden should be considered by authorities when establishing investment projects. He clarified that it is not that the debt is unsustainable at this point in time, but that the trend of public indebtedness is growing. Legrottaglie added that "it is important that the country show efforts to control the debt burden." The markets reacted negatively and discussions about the handling of the debt by the Dominican government have grown in recent days. Currently, debt s...
