The President of the Republic, Luis Abinader, reports to the country on the achievements of his government for the second time since he came to the Executive Branch, drawing a bleak economic outlook further complicated by the war crisis in Europe, with the Russian military intervention in Ukraine, which will have serious repercussions on the world economy.
Since before the start of 2022, the country already felt strongly the wave of an inflationary process with great impact on the products of the basic basket, an inflation that the economists of the Central Bank and international organizations estimated would stop in mid-2021, but that did not happen. In the months prior to the end of last year, the authorities indicated that inflation would take longer than expected to return to its target range, that the country of 4 +/-1.
The full recovery of economic dynamism and savings achieved in public finances, Until now, it has allowed the Government to manage the economy without major shocks, but things are beginning to get a little more complicated.
Come 2022, the hostilities between Russia and Ukraine They have put a little more tone to the fluctuations in the prices of a barrel of oil, adding considerable pressure to the execution of the General State Budget. Although in October 2021, according to data from Bloomberg, a barrel of oil reached US$84, in January it was close to US$75, and with the uncertainty created by the conflict between Ukraine and Russia, the price of a barrel threatens to reach or exceed the limit of US$100 and what does this imply?
It implies that, in addition to continuing to increase inflationary pressures on the domestic economy, which creates discontent in the population and gives “arguments” to the political opposition, it puts a burden on the Government over the management of public finances, since It is estimated that with a barrel of oil at that price, the country’s oil bill would increase by 40% and Abinader would be forced to pass on at some level the rises in the international prices of hydrocarbons and to ask the National Congress for greater approval of resources in the Budget, which would bring with it a higher level of deficit.
Expectations
All the eyes and ears of the different sectors of the population will be focused today on President Luis Abinader’s speech, not only in attention to what he will say about the execution of promised and announced works, but also to the expectation of the actions that must be announced to face the strong wave of economic crisis that is coming and how the most vulnerable sectors will be protected. What a challenge facing the management of President Luis Abinader! Let’s hope he knows how to grab the bull by the horns, for the good of the country.