Government reduces public debt by almost two percentage points of GDP

The Minister of Finance, Jochi Vicente, highlighted this Tuesday the reduction registered by the Dominican public debt in 2022, as a percentage of the gross domestic product (GDP), stating that it is less than that received by the Government in August 2020.

Vicente reported that during the aforementioned period the current administration managed to lower the public sector indebtedness by almost two percentage points, going from 61% to a 59.1%

He specified that the reduction in the debt of the non-financial public sector has been greater than the consolidated one. He highlighted that in August 2020 the debt ratio was one 49.7% as a percentage of GDP and at the preliminary close of 2022 ended with a 46.1%.

“And we did this despite having faced the largest external shock in history and the inflation caused by the invasion of Russia. The proactive debt strategy that we have implemented is evidenced in the three liability management transactions, which have decreased the cost of debt and increased the average maturity of the portfolio.”he explained.

The official pointed out that the Government was recognized in article four of the International Monetary Fund (IMF) for the timely management of debt, a document in which it was concluded that the country’s public debt is sustainable and that the policies that have been adopted are adequate.

He cited as an example that on page 55 of the aforementioned report it is indicated that: “Public debt is sustainable and risks have decreased compared to the previous DSA, due to a lower debt burden and gross financing needs.”

“In 2023 we will continue with our proactive management of the debt to continue guaranteeing its sustainability and get even closer to our goal of obtaining the Investment Grade from the risk rating agencies,” concluded the minister, responsible for the country’s public finances. ., according to a press document.

Data
In its quarterly report to September of last year 2022, the General Directorate of Public Credit explains that the total debt of the SPNF as of September 30, 2022 was US$52,264.4 million, of which US$15,888.7 million corresponded to internal debt and the rest to external debt.

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It indicates that 69.2% corresponds to external debt, which presented an unpaid balance of US$36,453.4 million, reflecting an increase of US$18.2 million compared to June 30, 2022 (US$36,435.3 million), as a result of positive net flows11, per US $20.8 million, and a negative exchange rate variation of US$2.7 million.

On the other hand, 30.8% of the NFPS debt at the end of the third quarter of 2022 corresponds to internal debt, which totaled RD$865,415.2 million (equivalent to US$16,211.9 million12), of which RD$846,773.4 million (equivalent to US$15,862.6 million) correspond to indebtedness of the Central Government, represented by the Ministry of Finance (MH), and RD$18,641.7 million (equivalent to US$349.2 million) belong to the rest of the non-financial public sector institutions, it indicates.

The balance of the internal debt as of September 30, 2022 reflected an increase of US$842.7 million with respect to its value as of June 30, 2022 (US$15,369.1 million), as a result of positive net flows of US$524.2 million and an exchange variation positive of US$318.6 million

In dollars

As of September 30, 2022, the debt portfolio showed a composition mainly in foreign currencies, mainly the US dollar (68.4%), in Special Drawing Rights13 (1.2%), in Euro (0.5%), and other currencies represent (0.1 %); the remaining 29.8% is debt denominated in local currency. the lowest average interest rate was with bilateral agencies.

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External debt with organizations

Detail

The country’s external debt has been arranged with multilateral organizations such as CABEI, the Inter-American Development Bank (IDB); with the IBRD, the EIB, the Development Bank of Latin America (CAF); with the International Monetary Fund (IMF), among other bilaterals, commercial banks and the issuance of bonds.

internal debt

The internal debt of the Dominican Republic has been arranged with commercial banks, financial institutions, recapitalization bonds of the Central Bank (BCRD), according to the quarterly report of the Department of Public Credit, of the Ministry of Finance.

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