IMF describes economic situation in Dominican Republic as “positive”

Santo Domingo, DR
The Governor of the Central Bank, Héctor Valdez Albizu, received the mission of the International Monetary Fund (IMF), headed by Esteban Vesperoni, which for two weeks has carried out, in compliance with Article IV of the Fund’s Constitutive Agreement, an evaluation of the economy of the Dominican Republic, reviewing its current state through interaction with departments of the Central Bank, as well as with other public and private economic institutions of the country.

Vesperoni told the Governor that the IMF’s assessment of the performance of the Dominican economy is positive, “demonstrating a remarkable resilience, due in large part to the successful response in monetary and fiscal policy that has been sequenced in the country.”

He explained the impulse that the monetary policy has given to the recovery of the economy and the agility of the Government in offering aid to the most vulnerable sectors in moments of weakness during the pandemic.

The IMF official emphasized that “this year may present challenges due to a combination of elements such as the invasion of Ukraine, the pandemic that is gaining strength again in relevant countries such as China, or the necessary normalization of monetary policy by the Federal Reserve (FED) of the United States, having been able to confirm for our part that the Dominican Republic enters this period in a situation of strength.”

Vesperoni also noted that the Dominican economy had a significant recovery in 2021 at the sectoral level, highlighting tourism for its importance and the steady growth in the number of tourists received.

He also stressed that “it is clear that the recovery of the Dominican economy in 2021 was not a statistical rebound, it was a real recovery of 5% concerning the pre-pandemic, achieved in a climate of stability, in a period in which the external sector has shown strength”. He also indicated that he was able to confirm in his two weeks of meetings in the country that “the private sector understands and appreciates what has been achieved in terms of monetary policy.”

Vesperoni said that the most critical challenge ahead is to face inflationary pressures, “there is no country in the world that is exempt from this, since we are talking about energy, food, production chains, transportation, among other challenges of the global economy.” He emphasized the wisdom of the Central Bank’s decisions on monetary policy rate increases to keep the expectations of economic agents regarding the evolution of this variable anchored.

Regarding the outlook, the head of the mission stated that “we see its economy converging to its potential level in a situation of a stable external sector and financial system.”

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Stimulus
Valdez Albizu highlighted that the economic reactivation process benefited from the broad monetary stimulus program of approximately 5% of the gross domestic product (GDP) implemented at the beginning of the Covid-19 crisis and the significant improvement in the health situation.
In addition, he pointed to the rapid recovery of tourism. “During the first quarter of 2022, more than 1.7 million tourists have been received, which projects that close to 7 million visitors will arrive this year.”