The IMF praises the Dominican Republic’s response to the pandemic
But at the end of the consultation, the organization asked to make the economic recovery sustainable.
A team from the International Monetary Fund (IMF), headed by Esteban Vesperoni, highlighted that the Dominican Republic had been one of the most dynamic economies in the region during the last decade in the context of robust growth, macroeconomic stability, a solid external position and a notable improvement in social indicators.
He noted that this strength enabled a decisive economic policy response to the pandemic, allowing firm access to global markets to finance the emergency.
During virtual meetings with authorities, development agencies, and private sector representatives in the Dominican Republic from April 21 to May 5, 2021, to prepare the 2021 Article IV Consultation, Vesperoni noted that performance was supported by continued improvement in macroeconomic frameworks, the investment climate, and financial stability.
Among the recommendations made after the meeting, he called for near-term economic policy priorities to balance support for the recovery with solid signals to ensure sustainability.
“As in most countries, the pandemic has highlighted the need to ensure medium-term debt sustainability,” he stresses.
He notes that in this context, the pace of phasing out support should be guided by available policy space, control of non-priority spending, and contingency planning.
He understands that the authorities’ fiscal plans, including the commitment to prioritize social and health spending through the vaccination campaign and the extension of social programs until early 2021, are moving toward achieving the right balance of economic policy objectives.
He advises that a careful balance between monetary policy support and an exit strategy from regulatory flexibility measures based on intense supervision and transparency would also contribute to the recovery.
He argues that as the impact of the pandemic recedes, the economy would benefit from reforms to reinforce medium-term policies.
In this regard, it notes that a commitment by the authorities to fiscal and electricity sector reforms adequately addresses the need to ensure debt sustainability.
The mission also recognizes efforts to improve public financial management, transparency in public expenditure execution and reporting, and reforms to improve efficiency in public administration, which can generate social support for other reforms.
“Well-sequenced reforms would strengthen the drive for sustained and inclusive growth and accelerate convergence toward the income levels of advanced countries,” he adds.
Fiscal Responsibility Act
The IMF team also suggests that a fiscal responsibility law would help anchor budgetary policies over the medium term, signaling a commitment to debt sustainability to help build support for other budgetary reforms.