The governor of Central Bank of the Dominican Republic (BCRD), Hector Valdez Albizuavoided giving statements to the press about the project Tax Modernization Law which is currently being debated in the National Congress, and which includes the recapitalization of this entity, which this Friday celebrates 77 years of operations.
“This is a monetary institution“, snapped Valdez Albizu when approached on the subject, shrugging his shoulders, after having completed a speech on the dominican economy in the framework of the anniversary of Central Bank.
In addition to searching for increase of the state revenue above 122,000 million pesos annually, the proposal of tax reform submitted by the Government also proposes eliminating the scale of items to be included in the Income Budget and Public Expenditure Law for the recapitalization of the Central Bank.
Article 34 of the draft Tax Modernization Law establishes that the items included in the budget for this purpose “are not less than 0.9% of the gross domestic product estimated nominal value for the year”, replacing the annual scale with a minimum percentage.
As of August of this year, the quasi-fiscal debt of the Central Bank stood at 18,627.5 million dollars, representing 15.0% of the public debt consolidated, which in that period stood at 76,226.4 million dollars, representing 61.2% compared to the gross domestic product (GDP), according to data from the Regional Center for Sustainable Economic Strategies (Do you believe), which cites statistics from the General Directorate of Public Credit and from the Central Bank.
debt of Central Bank grows 312.6% between 2004 and 2024
The quasi-fiscal debt of the Central Bank has been increasing over time. Its greatest aggravating factor was financial crisis of 2003 that triggered it, if it were 5% compared to the gross domestic product to the year 2000 (with 1,156.1 million dollars), to 19.5% in 2004 (4,514.5 million dollars), points out the Do you believe.
From that year – in which the debt reached 4,514.5 million dollars – until August 2024, the debt of the Central Bank has grown 312.6%standing at 18,627.5 million dollars. However, if the amount is compared with the year 2000, the expansion is 1,511.2%.
The amount as of August represents 223.6 million dollars more than the 18,403.9 million dollars registered in December 2023, for an increase of 1.21%.
For all of the above, international organizations such as the International Monetary Fund (IMF) have recommended that the recapitalization of the Central Bank be one of the Government’s priorities, in order to reinforce the autonomy of the monetary entity by freeing it from its debt, as stated after concluding the Article IV consultation with the Dominican Republic in September of this year.
During his speech this Friday, the governor pointed out that the country’s productive system remains resilient, with economic growth that stood at 5.6% in August, and 5.1% accumulated as of January 2024. He indicated that this result places the country as the “fastest growing economy in Latin America to date.” Official projections expect the Dominican economy to reach 5.0% at the end of this year, a conservative perspective compared to other estimates, such as those of the International Monetary Fund (IMF), which predict economic growth between 5.1% and 5.2%.
