Economic situation in the Dominican Republic deteriorates

Friday, October 24, 2003

SANTO DOMINGO, Dominican Republic: "Given the deterioration of the economy of the Dominican Republic [D.R.], it appears inconceivable that President Hipolito Mejia will win re-election in 2004," reported the Economist Intelligence Unit (EIU) in its most recent update on the situation there. 

"The Mejia administration has refused to trim the bloated state-sector payroll to curb spending, eyeing next year's presidential elections," observed the EIU, referring to the presidential elections on May 16, 2004. Mejia is a self-proclaimed candidate but is being challenged for the nomination of the ruling Dominican Revolutionary Party (PRD) by seven of its leaders, including Vice President Milagros Ortiz Bosch. Efforts at resolving the stalemate are currently under way within the party. 

"It will be left to his successor to pick up the pieces," said the EIU. In its latest report, the organization warns that the debt load of the D.R. "is becoming excessive and the government's spending reckless." The EIU expressed "general concern that the composition of the debt has shifted under the Mejia administration from one that was primarily owed to multilateral and bilateral lenders to one that is predominantly owed to foreign commercial banks and other private lenders, with short-term external debt also on the rise." 

The EIU concurred with the recent report by J.P. Morgan (CB Oct. 2) that "with the president hoping to secure his party's presidential nomination to run for re-election, he is unlikely to change his course and impose austerity measures any time soon. As a consequence, the government could have difficulties meeting commitments made to the International Monetary Fund [IMF]." 

President Mejia responded to a recent report by J.P. Morgan that his government was paying more attention to his re-election bid than to the IMF agreement. He dismissed the report as interlinked with the results of a poll by the Cima Institute in Uruguay that rated Mejia's government as having the poorest performance in Latin America. "If that wasn't J.P. Morgan's interpretation, then so be it," said Mejia. "In this country, sovereignty is mine, not theirs." 

In the meantime, according to the results of a poll published Wednesday, former Dominican President Leonel Fernández will win another term in elections set for next year, regaining the highest office in a landslide victory over incumbent Hipolito Mejia.

The survey, conducted by the U.S. firm Penn, Schoen & Berland Associates, revealed that if the election were today, Fernández, a member of the Dominican Liberation Party (PLD), would receive 58 percent of the vote.

Mejia, a member of the Dominican Revolutionary Party (PRD), would grab 20 percent of the vote, and Social Christian Reformist Party (PRSC) candidate Eduardo Estrella would garner 14 percent, with 8 percent undecided, according to the poll.

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