Santo Domingo, DR.- President Luis Abinader detailed the Fiscal Responsibility Law this Monday, explaining that it means that the government will reduce debt accumulation and will have an appropriate framework for obtaining fiscal policy and giving it greater predictability and reliability.
During LA Semanal with the Press in the Las Cariátides room of the National Palace, the Dominican ruler highlighted that the law It will be a milestone of transparency for the Dominican Republic and that it ensures the investment of resources in a disciplined and correct manner.
In addition, Abinader He pointed out that this law guarantees in the coming years of economic, financial stability and that brings confidence to the markets.
The head of state was accompanied in the analysis of this law by the ministers of Finance, Jochi Vicente; Industry and Commerce, Victor (Ito) Bisonó; Economy, Planning and Development, Pavel Isa; Public Administration, Sigmund Freund; the General Director of Internal Revenue, Luis Valdez and the Commissioner for State Reform, Darío Castillo.
Why is it important?
He said that the law establishes clear rules for public spending, in order to achieve a reduction in debt.
A milestone of transparency in the country
“Until its enactment, we were one of the few countries that did not have an explicit framework of fiscal rules for the management of public finances.”
Fiscal Responsibility Law was enacted on July 17, 2024.
Internationally recognized
Its approval has been highlighted by organizations such as the IMF, World Bank and risk rating agencies, as a further step to ensure the sustainability of public finances and the application of international best practices.
A safe path
The Head of State stated that the aim is to achieve efficient and controlled public spending, and that the allocation of resources prioritises the impact on the well-being of citizens.
Government commitment
Prudent and predictable growth in public spending and borrowing.
In expenditure monitoring:
The aim is to promote transparency in resource management and ensure long-term financial stability.
Fiscal rule
“It sets a ceiling on the growth of the government’s primary public spending of 3% plus the expected inflation for the year. With this, it is expected that in 2035 the government’s debt-GDP ratio will be below 40%.”
Key to sustainability of public finances
Of every 100 pesos, 22 are used to pay interest on the debt. On average, our peers only use 13.7
This frees up resources currently used to pay debt and can be used for social protection and public investment.
Only exceptions
First, a natural disaster occurs, such as a hurricane or flooding, the response to which requires costs exceeding 0.3% of GDP.
Second, the economy is projected to grow by less than 1%.
Jochi Vicente
The Minister of Finance, Jochi Vicente, explained that this law imposes fiscal discipline on the government itself and that President Abinader has broken the mold with it, since it has great significance. He specified that this law establishes clear rules for public spending and debt in the future.
