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Santo Domingo.- The Dominican Republic will need an important fiscal adjustment to guarantee debt sustainability, given the risks created by policies of partner such as the United States, rising prices of oil, interest rates and the dollar.

The warning is from the International Monetary Fund (IMF) mission that was evaluating the Dominican economy during two weeks, which affirmed that the government has managed to improve its fiscal position, although high projected deficits for the consolidated public sector will generate pressures on the debt, as global financial conditions harden.

"The adoption of a robust fiscal framework for the medium term will ensure that annual fiscal policies are consistent with sustainability objectives," the IMF said.

It said fiscal consolidation should be based on a comprehensive reform that broadens the narrow tax base, simplifies the tax system and makes it more equitable. "This should be accompanied by reforms to address the fiscal cost of the electricity sector and increase the efficiency of public spending.

Growth

The IMF said the country is in a strong position in the economic cycle.

It adds that the economy has been growing above its potential, reaching an average expansion of 7% of GDP in the last three years, while positive shocks on supply have contained inflationary pressures and strengthened the external position. "Growth will remain solid."

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COMMENTS
2 comment(s)
Written by: zooma, 14 Feb 2017 8:32 AM
From: United States, and Dominican Republic

tweak translates to "raise".

This is more financial burden the middle class will carry that will swallow them into poverty levels.



Written by: chillinout, 14 Feb 2017 9:57 AM
From: Dominican Republic
A report last year stated 85% of workers in the formal sector earn less than RD$15,000 a month ($12,000 for females)then 85% of workers don't have to pay an income tax because they don't meet the min threshold. They do pay a 14% social security tax and the lovely 18% ITBIS tax on most every product and service plus any import taxes on imported things.

For people earning up to US$250k a year the income tax in the DOM is actually higher than the tax in the USA. For those earning more than US$250k the income tax is cheaper in the DOM maxing out at 25% vs 39.6% in the USA.

Like to see how it gets tweaked.

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