Between 2008 and 2022, the electricity sector deficit has accounted for between 40% and 50% of the central government deficit, said the former head of the General Directorate of Taxes
The Economist Magin Diaz predicted yesterday that the electricity deficit could reach US$2,000 million next year, due to the price that natural gas would reach.
At the conference on “Global environment and perspective of the Dominican economy”, organized by the Cibao Savings and Loan Association (ACAP), Díaz said that natural gas represents 40% of the country’s electricity matrix.
He pointed out that the cash recovery index of the electricity distribution companies (Ede) went from 70.8% in 2020 to 62.8 this year.
Between 2008 and 2022, the power sector deficit has been between 40% and 50% of the central government deficit, he said.
He stated that the level of public spending is above the levels observed before the covid-19 pandemic, but now with more current spending and less investment. The public sector appears to be converging to a deficit of 5% of gross domestic product (GDP), she noted.
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He added that the pandemic doubled the problem and in 2021-2023 it has returned to the historical average.
The debt will not go down unless the economy grows more than 6-8% real every year, but subject to what happens with interest rates.
The government and the central bankhe stated, have annual financing needs between 6% and 9% of GDP.
The discussion of whether the tax pressure is low is irrelevant, but the issue is that expenses are structurally higher than income by 5 points of GDP.
He stated that in the short and medium term there is no risk of a macroeconomic crisis, since the government has financed 2022 and the Central Bank has high international reserves.
He considered that it is unlikely that the Bank will allow a greater appreciation of the peso and this year it has made net purchases of foreign currency for US$1,500 million to avoid further appreciation.
Government subsidies have cushioned inflation and the estimate is that they will end up at RD$59 billion this year, he said.
The economy has exhibited robust growth this year and during January-September activity grew above its trend.
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The economy of USA it is not in recession yet, but it is slowing down, which will impact the country.
He highlighted the country’s resilience to external shocks, with prudent management of fiscal and monetary policy.
He affirmed that this year there has been a strong contraction of liquidity to control inflation.
