The Economist Henri Hebrard considered that to appease inflation in the Dominican Republic it would seem that the only thing that can continue to be done, despite the enormous cost it is having, is to maintain subsidies as far as possible, especially for fuel.
Hebrard reported that so far in 2022, more than 20 billion pesos have been dedicated to subsidizing them, an action that he considers fundamental because if it is not done, it would be necessary to increase RD$10 to the Liquefied Petroleum Gas (LPG), while for the rest of the fuels about RD$90 and that would have a double impact on inflation.
Work must be done on national production so that it is possible, especially in the case of food, to guarantee the availability of these, he specified when being interviewed on the Toque Final program with Julio Martínez Pozo, which is broadcast on Antena 7.
“You will see that in the second half of the year one of the problems is not going to be so much the price of food, but rather its availability and that is where the Dominican Republic it has the advantage of still having an agriculture that is producing a lot”, said the prominent economist.
Read more: Hebrard says the fiscal deficit would increase by $193.8 billion
However, he explained that he is a little concerned about the data published by the Central Bank in the first quarter of the year, where it indicates that the agricultural sector, which had grown by just 2.1% in the first quarter, in the month of April shows just 0.2%.
In this sense, he believes it is necessary to think about implementing very short-term policies, maintaining subsidies and working more decisively on national production, especially food.
Meanwhile, he explained that one of the objectives and consequences of the decision to increase the cost of money, which is the result of raising the interest rate, is that the pace of economic growth is going to be lower.
“This is what the government’s economic team has just taken into account when publishing the new macroeconomic framework dated June, which is the one that serves as a framework for the preparation of what would be the modification of the 2022 Budget Law, which I imagine that by the end of the month or the beginning of July, Congress will meet,” he said.
Hebrard stated that according to the initial projection in the official budget, a growth of 5.5% was estimated and now the authorities speak of a increase of 5%, taking into account that during the first four-month period growth was accumulated at 5.8%, which means that the authorities are projecting that growth for the rest of the year would be barely 4.6%.
He estimates that this projection may be slightly optimistic, taking into account that growth in April was 4.7% and has not yet had the full impact of the rise in interest rates.
He said that it is understood that inflation has already begun to have an impact on economic growth, among the affected sectors is the tradeobviously having less money available, certain sectors of commerce are going to be more affected than others.
