Valdez elected president of the Central American Monetary Council

Valdez elected president of the Central American Monetary Council

The Governor of the Central Bank of the Dominican Republic (BCRD), Hector Valdez Albizuwas chosen by fourth time President of Central American Monetary Council (CMCA), during the 296 Ordinary Meeting of that regional organization, a meeting in which Odalis Marte, the first Dominican to hold that position, was also elected executive secretary of the CMCA.

Valdez Albizu also participated in the IX Joint meeting of the CMCA and the Central American Council of Superintendents of Banks, Insurance and other Financial Institutions.

Both meetings were held in a hybrid mode, on November 24 and 25, in the city of San José, Costa Rica, with the participation of the presidents and governors of the region’s central banks, as well as officials and government officials, who evaluated the performance and economic prospects of the Central American countries and the Dominican Republic, among other aspects.

The 296 Meeting of the CMCA began with the welcome words of the president of the Central Bank of Nicaragua and outgoing president of the CMCA, Ovidio Reyes Ramírez, by those of Róger Madrigal, president of the Central Bank of Costa Rica, and those of Domingo González, outgoing executive secretary of the CMCA.

In the introduction, Ovidio Reyes took the opportunity to give some parting words of his position as president of the CMCA, thanking the support received from the Executive Secretariat of the CMCA and from the member countries of the CMCA.

In this sense, according to the order of succession of the Presidency of the CMCA, it corresponds to the governor of the Central Bank of the Dominican Republic hold office for the term 2023-2024.

Situation of the regional economy

During the meeting, each central bank was given the opportunity to present the macroeconomic context current and its outlook for 2023. In this regard, they took into account the evolution of the gross domestic product, inflation, national and international financial conditions, the fiscal situation and the current complex international environment.

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In particular, the authorities emphasized the inflationary pressures Derived from the increase in international prices of oil and other raw materials, disruptions in global supply chains, the uncertainty associated with the conflict between Russia and Ukraine, the persistent effects of the pandemic, especially in China, and the tightening in the international financial conditionsas well as the possible impact of a recession derived from the increase in interest rates by the US Federal Reserve.

All countries showed improvements in their growth rates Y in foreign currency inflows, highlighting the behavior of the remittances; however, some have had more difficulties than others in facing inflation, this being the biggest challenge.

Dominican perspectives

The governor of the BCRD Valdez Albizu pointed out that after the rapid recovery in 2021, the dominican economy has maintained a good performance by registering an average expansion of 5.4% in the period January-November 2022.

He indicated that, despite the complex international environment, the dominican economy It has been shown resilient in the face of adverse shocks, for which growth is projected between 5.0 and 5.5% at the end of 2022, close to its potential growth; while for 2023 it is expected that economic activity will have an expansion of 4.5%.

Regarding the external sector, Valdez Albizu highlighted the notable dynamism of the sightseeingwhich recorded some $6.3 billion during the first nine months of the year.

Similarly, the family remittances accumulated some 8.125 million dollars in January-October, while the total exports grew up around 14.2% year-on-year; likewise, flows of the order of 2,870.4 million dollars for foreign direct investment (FDI).

In addition, he highlighted that this favorable performance of the activities that generate foreign currency has contributed to maintaining the stability of the exchange marketpresenting an appreciation of approximately 5.3% accumulated until November 2022.

In the same way, it has contributed to continue strengthening the levels of international reservesstanding above the $13.5 billion at the end of October, equivalent to a 12% of GDP and approximately six months of imports.

During his appearance at the meeting, Valdez Albizu pointed out that, to counteract the inflationary pressures in the country, the BCRD has continued with the plan of monetary normalization started at the end of last year, reversing the expansive stance implemented at the beginning of the pandemic.

In this sense, he informed that the monetary policy rate when passing from 3.00 to 8.50% per yeartogether with open market operations and the gradual return of resources to reduce the excess liquidity of the financial system.

He concluded his participation by highlighting the importance of this type of event, which provides the opportunity to share ideas and valuable experiences, facilitating greater coordination in the region policies.

On the second day, the joint meeting was held, where the report of Regional Financial Stability 2022 which includes the recent performance of banks in the region.

Likewise, the financial situation of the regional banks to November 2022 and the importance of cyber-resilience in payment systems, among other relevant topics.

In the activity, the governor Valdez Albizu He was accompanied by Julio Andújar Scheker, economic adviser to the Government, and Brenda Villanueva de Cardoza, director of the BCRD International Department.

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