According to economic analysts from the country, the Dominican Republic will maintain moderate growth this year 2022, impacted by external factors such as the high international prices of raw materials, intermediate inputs and finished goods.
As for inflation, which as of November 2021 closed at 8% year-on-year, they forecast that the end of December would be between 8% and 8.3%, “basically influenced by external factors (oil and food raw materials)”.
Against this background, the Government should ensure a good supply of locally produced food to offset the high prices of imported raw materials until the flow of merchandise is regularized and freight rates drop.
However, it is outlined that the Government adopts a card up its sleeve that it can use in difficult times.
“I mean the sale of state assets. Raising US$2 billion dollars by selling part of the shares of many of its companies is a quick way out to solve income problems, if the optimistic projections for 2022 suffer any setback”, it was explained.
The fiscal pressure increased
As a result of the recovery of the economy, with good results in job-generating activities such as the construction sector, hotels, bars and restaurants, commerce and others, the Government’s collections allowed a greater amount of tax revenue, which in turn once raised the percentage of the country’s tax burden. According to data obtained, the tax pressure rose from 14% to 16.5% between 2019 and 2021.
In terms of income, at the end of 2021 the Dominican Government closed with a fiscal situation (December 2021) in terms of the original budget of RD$746,313.8 million.
Revenues grew by RD$90,000 million (30.3%) with respect to the original budget, but almost the same as the reformulated one (+0.4%), where the fiscal amnesty and tax advances from the financial sector and Barrick Gold (RD$70,000 million) influenced, as explained.
In terms of cash deficit: the end of December is estimated at RD$156,396.4 million (2.9% of GDP)
As a primary deficit, an amount of RD$34,374 million (0.68% of GDP) is recorded.
“Both the cash deficit and the primary surplus are in a satisfactory range since in 2020 they closed with -6.7 and -3.4% of GDP, respectively,” indicates an economic report.
During 2020, one of the biggest complaints to the Government was the low investment in infrastructure works, a behavior that was later clarified by the General Budget Directorate (Digepres) in the sense that there were works that did not meet the purchase and contracting requirements. , nor did they have the NIF code, so as the controls were fulfilled, the works flowed.
Last year, capital spending, which represented 13% of total spending, ended with a good execution of 92.2%, so it is expected to improve substantially in 2022.
Another positive fact was the savings achieved in interest payments on the public debt, which allowed the percentage of tax revenues to drop from 22.2% to 19%.
Regarding indebtedness, 2021 closes with a total consolidated debt of US$59,495.7 million (66% of GDP). If intergovernmental debt is excluded, it would be 63% of GDP.
The consolidated debt stands at 63.5%% of GDP (if the IMF methodology of excluding the intergovernmental debt that amounts to US$2,348.5 is applied). Including this debt, this percentage amounts to 66% of GDP.
The debt of the Non-Financial Public Sector (SPNF) fell from 56% to 52% of GDP between December 2020 and November 2021. This opens an important space to keep the NFPS debt below 53% of GDP in 2002 and the consolidated at 65% of GDP.
The Treasury carried out the first liability management operation in the local market, which allowed it to reduce public debt service by 75,000 million in 2022-2027.
72.2% of the external debt is in sovereign bonds, says a local economic report.