As part of the annual meeting of IMF and World Bank, Central Bank Governor, Lic. Hector Valdez Albizu, the Secretary of State for Finance, Lic. Vicente Bengoa and the Secretary of State for Planning and Development Ing. Temístocles Montás, met on Tuesday, 6 October with the Managing Director of IMF, Dominique Strauss-Kahn and Murilo Portugal, Deputy Managing Director of that agency, to deliver the Letter of Intent of the Dominican Government to underwrite a Stand-By Arrangement with the IMF.  

The program agreed by the Dominican authorities and the IMF includes the design of anti-cyclical fiscal policy and maintaining the current monetary conditions in order to counteract the effect of international financial crisis. To this end, so far this year, the monetary authorities have taken steps to reduce interest rates in order to facilitate an expansion of credit in the economy. However, the capacity of implementing an expansionary fiscal policy to counter the economic cycle has been limited by the decline in tax revenues and the drastic reduction of international and domestic finance, resulting, largely, from the international financial crisis. In the area of taxation, it is proposed the design of a set of strategies to strengthen tax administration, in addition to a more comprehensive management of tax exemptions.

The structural aspects in the program have been incorporated to strengthen governance and better performance of the electricity sector, including further social policy elements that allow the State to assist the neediest.

This new Stand-By Arrangement with the IMF would have a duration of 2 years in the macroeconomic framework, medium term contained therein contemplated restore the pace of real GDP growth, further reduce inflation, reduce the deficit gradually current account balance of payments, and a gradual increase in primary surplus of the consolidated public sector.

With the signing of this Letter of Intent, the Dominican Government continues the process by which will be achieved in the remainder of this year, access to resources to finance the budget by USD $990 million (USD $390 million Inter-American Development Band (IADB), USD $300 million World Bank and USD $300 million more from the IMF). See Letter