Gold could give the Dominican Republic more than RD $ 5 billion than projected in 2020

“In the face of a deep crisis, people seek to protect their assets and again we return to the situation that gold is the best refuge in economic crises. That is the reason why gold prices have been rising due to the coronavirus crisis,” said economist Henri Hebrard.

On the other hand, the DGA indicates that the kilograms of gold exported decreased by 42.5%, an absolute variation of -6,435.9 kilograms, this in the same period.

In the monthly bulletin published by Customs, he explains that the raw gold exported during the period January – March 2020 averages a price of US $ 1,550.10 per ounce, while gold bars average a price of US $ 1,262.85 per ounce.

Also, the General Directorate of Customs (DGA) publishes that for the period January – March 2020, the FOB value of silver exports decreased slightly, from US $ 16.25 million to US $ 15.16 million, representing a variation of -6.8%.

It adds that the exported kilograms of silver shows a negative relative variation of -11%, totaling 28,064.79 kilograms in January – March 2020.

The economist Henri Hebrard explains that the increase in the price of gold favors the Dominican Republic because it will have a contribution above the budget in this sector for 2020.

“Gold-supported mining will be one of the few sectors whose collections will be above the budget and will help finance part of the budget that will have to be dedicated to the health sector and the social assistance sector,” said the economist.

As for collections, he argues in the 2020 budget based on this price, which has US $ 1,390.80 an ounce of gold this year, collections of RD $ 8.2 billion were projected and if it is projected with an average price of US $ 1,700 an ounce of gold, the State would be keeping more or less 50% of any additional profit as a result of the price.

“That could have a very significant impact on collections, which according to the price at present, I have a range between RD $ 5 billion and RD $ 7 billion more than budgeted,” he said.

The behavior of gold has an impact on the Dominican Republic in two aspects: the balance of payment and the other the fiscal part, the collection part.

“If we look at it from the balance of payments aspect, it is interesting to see that according to the latest report from the Central Bank, gold exports closed in 2019 with US $ 1.5 billion, that is, there was an increase of 13.5% compared to the year 2018 when US $ 1.4 billion had been exported. This is very interesting because already in 2019 with the lowest price, it represented 87% of the increase in total exports. This means that already in 2019 without mining we would not have had export growth,” argued the economist.

In the fiscal case, Henri Hebrard said that in the 2020 budget a collection of RD $ 8.2 billion was projected with the ounce at US $ 1,390.80. But that currently if the price of US $ 1,700 is taken as a reference, it could have more than RD $ 5 billion.

On Friday morning, the price of gold was quoted in international markets at $ 1,754.70 an ounce.

Dominican authorities

Last week the Minister of Energy and Mines, Antonio Isa Conde, considered that in the midst of the economic and sanitary destruction of the COVID-19 pandemic, metal mining could be – especially with the exploitation of gold – oxygen for the finances of the countries that exploit this metal.

Antonio Isa Conde bases his opinion that while the different sectors of the economic chain are in decline – with the exception of some of the pharmaceutical, medical instrument and food industries – gold prices continue to climb in the international market, as a result of the future protection that investors seek.

“Gold producing countries have, in this situation, an important advantage that they must take advantage of to lessen the effects of the crisis,” argued Isa Conde through a statement.

The official stressed the importance of continuing to exploit gold as a non-renewable resource, always under a line of social, environmental and economic sustainability.

“Metal mining, especially gold mining, is a lever that can help us raise our economy, but for that it is necessary to create awareness among the people that this sector can be beneficial, provided they execute their projects responsibly” he insisted.

Barrick Pueblo Viejo

Through a document issued by Barrick Pueblo Viejo, it indicates that in the first four months of 2020, Barrick Pueblo Viejo has paid the Dominican State US $ 185 million dollars (approximately RD $ 9.9 billion pesos) for concept of direct taxes and US $ 9 million for indirect taxes. These payments include advances on income tax, net income tax and royalties on the sales of gold and silver corresponding to the first quarter of 2020 as well as the final settlement of the fiscal year of 2019.

The document further explains that in a previous payment this month to contribute to the stability of the Dominican economy and to help the country fight and contain the spread of the COVID-19 pandemic, Pueblo Viejo paid US $ 113 million ( equivalent to RD $ 6.1 billion pesos ) to the General Directorate of Internal Taxes (DGII), despite the fact that the Dominican Government extended the term for the declaration of certain taxes.

The document details that the aforementioned increases the total payment of taxes from Pueblo Viejo to the State to more than US $ 2 billion (equivalent to RD $ 93.8 billion) since 2013.

He points out that Pueblo Viejo’s exports in the first quarter of this year represented 37% of the country’s total exports of national goods, with a value of US $ 399 million out of a total of US $ 1.1 billion.