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DR among countries in the region with lower public debt risk

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DR among countries in the region with lower public debt risk

The Dominican Republic I know is among the countries with the least risk for the fulfillment of the service of the debt for the period 2023-2028, because more than 50% of the composition of the debt includes a high participation of local currency, reducing the impact of exchange risk, highlighted the Economic Commission for Latin America and the Caribbean (ECLAC).

In countries for which information is available, the participation of foreign coins It is high, since it reaches 50% or more of the total service, while the variable rates are moderate, so they could be affected by risks related to the exchange rate, alerted the ECLAC in its annual report: “Preliminary balance of the economies of Latin America and the Caribbean 2022”.

The change in the exchange rate in Chili, Ecuador, Brazil Y Mexico they could cause the devaluation of the local currency against the dollar to increase the financial cost of the debt, influenced by changes in local monetary conditions.

“On the contrary, in Colombia, Costa Rica, Honduras, Peru, Uruguay Y Dominican Republic the maturity of the debt service for the period 2023-2028 includes a high participation of local currency (over 50%) and fixed rates, which should limit the external risks linked to the exchange rate and interest rates of the external monetary policy”, indicates the document.

The ECLAC displays the external and internal conditions in which the actions were developed economies of the region this year, which present challenges as a result of a new inflationary process and an economic slowdown that will continue during the first periods of 2023.

In this context, the rates of variation of the issue of international debt at a global level were reduced from 5.5% to 1.2%, and those corresponding to the developing world, from 9.0% to 5.5%. In addition, rising global borrowing costs are increasing the risk of financial stress among some emerging market and developing economies.

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Balance of payments

The international organization highlighted that, during the last decade, developing and emerging countries have accumulated debt at a faster rate than has been recorded in more than half a century.

“By 2022, it is expected that, in the region as a whole, the deficit in the current account of the balance of payments, which would reach 1.9% of the gross domestic product (GDP), maintaining the upward trend that has been observed during three years consecutive”, highlighted the ECLAC.

This increase in the deficit is mainly explained by the balance of goodswhich would be slightly in deficit, said the agency in the preliminary balance of the economy of Latin America and the Caribbean.

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