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DOMINICAN REPUBLIC REFORMS FAIL, COULD COST THE COUNTRY CAFTA AND IMF FUNDS.

Article Excerpt
The Dominican Republic came late to the Central America Free Trade Agreement (CAFTA) party, but ratified it nonetheless, largely because, as President Leonel Fernandez was to say later, the country had no other market for its goods. But now the country is in some jeopardy of not being aboard when the treaty comes into effect in January 2006. The issue is fiscal reform (see NotiCen, 2005-09-08), with the Congress and the presidency at odds on the question.

On Dec. 2, the Chamber of Deputies, where the opposition Partido Revolucionario Dominicano (PRD) dominates, passed a fiscal-reform law that the government says does not compensate for the resources lost to the treasury from tariffs and a 13% import tax (comision cambiaria) bargained away in the CAFTA negotiations.

Temistocles Montas, presidential technical secretary, said the reform package only guarantees income to the government of US$761.2 million, short of the US$906.2 million the government says it needs. "The government cannot afford the luxury of accepting a fiscal reform under these terms, nor does it have the possibility of reducing spending programmed for the coming year in view of the accords agreed to with the International Monetary Fund (IMF)," said the secretary.

The government must now look to the Senate, where the PRD also rules, to amend the bill. Otherwise,...