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Investment climate

Situation and Perspective

(1-10) •

Economic Aspects (11-14)

16) •


Politic aspects (15-

> Investment Climate >Clima de Inversiones<

Legislative aspects (17-19)

1- Agree to budget of RD $390 thousand 375 Million


Budget of RD 2011


Budget deficit 2011 will be covered with bonds


Government will reduce expenses


Internal economy


propel 4

Fernández attend to the UN Regional capacity


competitive 6

Fraud against ment Treasury

2 0 1 0

Govern- 7

End to Bancrédito Litigation


IDB expects efficiency in 9 Electric Distribution Dominican Week in the US


Agreement with the IMF 11 Baja el IPC 12

The Minister of Finance, Vicente Bengoa, reported on the 20th of September, after a session of the Government Council that lasted more than three hours, that the National Budget for 2011 will be of RD $ 390.37 Million, RD $ 11,478 Million more than in 2009, and projects the exchange rate at 39 pesos for 1 US Dollar and the petroleum at 83.50 Dollars the barrel. The Government’s economic team forecasts a growth for the coming year of 5 to 6 percent and the more favored sectors were education and health. Education has a budget of RD$ 37, 428.7 Million and will increase to RD$ 41,568

Million, which represents RD$ 4,139 Million more. Although the budget of income and law of public expenses for 2011 will surpass in RD$11,000 Million this year’s budget, with respect to the gross domestic product (GDP) it shall be less, due to the fact that it will decrease from 20.1% to 18.6%. Published by: El Caribe Newspaper.

2- Budget deficit 2011 will be covered with bonds The government is proposing to place another US$500 Million sovereign bonds in 2011 to finance this year’s budgetary deficit, which will be of 1.6% of the Gross Domestic Product, as reported on September 9th Temístocles Montás, minister of Economy, Planning and Development. He explained that the financing is part of the agreement reached with the International Monetary Fund to reduce almost one percent

(0.8%) the budget deficit, and begin to moderate debt. He explained that the deficit is equivalent to some US$800 Million, amount to which they will reduce the US$500 Million from the placement of the bonds, also the access to financing of the IDB and the World Bank.

Subsidio of eléctrico Inflation august 2010

13 12

Turismo sigue creciendo DGA exceeded estimates in collections Recaudaciones de DGII Exchange rate aumentan

14 13

Aspiring candidates to Tasa de Cambio the presidency Entrevista entre LF y

15 16

3- Government will reduce expenses


3plataforma para la competitividad-país TheIIBI: Dominican Government agreed with the International

15 14

Candidature for mem- 16 Captura deJCE Figueroa 18 bers of the Will introduce to ConCandidaturas presidengress Reform Bill

17 19

Legislación contra el Ministers will be merged clientelismo DGII establishes norms Aprueban consejos PJ y

18 20 19 21

Leyes crean “incentivos” 22 Ley de reestructuración mercantil


Published by: Hoy Newspaper.

Monetary Fund (IMF) to contain the subsidies to the electricity and to moderate other expenses in whatLais competitividad left of this year,de in las empresas dominicanas, en el marco de la apertura anticipation to the signing of a new standby agreement, whoseglobal, está garantizada en el Instituto de Innovación Biotecnología e Industria (IIBI), a partir letter of intention may be known in Washington before theyend de procesos de investigación biotecnológica y de calidad of the month of September. internacional reconocidos en Estados Unidos y Europa. En el funciona el These adjustment measures are destined “toIIBI strengthen theúnico laboratorio de República Dominicana la certificación de la norma de calidad 17025, government’s income” and also to “achieve thecon fiscal consolila cual dation foreseen in the program to maintain thegarantiza growth in eltheacceso a mercado de los productos internal demand in a sustainable path. industrializados que asuman esa certificación para entrar sin problemas a los países más exigentes del mundo, afirmó la directora del organismo, Bernarda Castillo. Published by: Listín Diario Newspaper. Publicado por: Periódico Listín Diario




4- Internal lines propel economy The 2010 is proposed as the year of the recovery in the Dominican Republic, whose economy evidences a growth of its gross domestic product of a 7.5% that “originates more from the endogenous or internal engines of growth than from the external engines”. The affirmation is from the economists Frederic Emám- Zadé and René Villarreal, who explain that the economic growth of the country is headed by the expansion of

the activities oriented to satisfy the internal demand. The construction and telecommunications industries evidence a greater reactivation than tourism and free zones, explain the economists in the second edition of the magazine Observe- DR (ObservaRD). Published by: Listín Diario Newspaper.

5- Fernández warns that DR will not meet millennium goals The Dominican President Leonel Fernandez traveled to the United States on September 21st to attend to the General Ordinary Assembly of the United Nations Organization (UN).

up in a worrisome manner and the rate of unemployment went up from a 13 percent to a 19%.

The Dominican Chief of State headed several activities on the side of the events linked to the UN meeting, to which presidents of the countries that are members of such organization attended.

He pointed out that “at the time we made efforts to overcome the internal financial crisis, we were affected by the increase in the prices of petroleum and foods, which constrained us to move away resources which normally would have been available for complying with the millennium goals”.

In the framework of the 65th Session of the General Assembly of the United Nations Organization (UN), the Dominican president Leonel Fernandez affirmed that the Dominican Republic will be impeded to meet certain goals of the Millennium Development Goals “due to unforeseen circumstances, both internal as external”. As first element that negatively impacted in the Dominican economy, the chief of state mentioned the internal financial crisis, which occurred in the year 2003, that as a consequence the currency devaluated in more than 100 percent, the inflation shoot

Fernandez said that the global financial crisis, originating in the United Stated, was a second factor so that the Dominican Republic was delayed in complying with the goals proposed by the United Nations. Published by: El Caribe Newspaper.

6- DR: second to last place in regional competitive capacity The Dominican Republic retreated six positions in the classification of the competitive capacity index of the World Economic Forum. In the report for 2009-2010 the country was in the 95th place, from among 139 world economies, but in this report it occupies the 101 place.

ciency of the government bureaucracy and the access to financing. Published by: Hoy Newspaper.

With respect to the more problematic business factors in the country, the report reveals that they are mainly corruption, ineffi-

7-Fraud of RD$500 Million against Government Treasury The General Internal Tax Administration (DGII) and the District Attorney’s Office of the National District made public on September 9th an investigation surrounding a fraud estimated until now in 500 Million pesos, in damages against the government Treasury. The fraud was made by eight enterprises identified in the first phase of the investigation, those of which were dedicated to manufacturing fiscal support documents. “It was a factory of making invoices (valid support documents for fiscal purposes) with the only purposes that other enterprises would set off those

expenses and reduce the taxes payable. As linked enterprises, acquirers of the false support documents, until now 80 enterprises have been identified. In describing the form of how the fraud was made, the sub director of the General Internal Tax Administration and functioning director general, licenciada Germania Montás, explained that the issuing enterprises would create and request their fiscal support documents and would begin to invoice but would not sell anything. Published by: Hoy Newspaper.





8- Authorities reach an agreement that puts end to Bancrédito Litigation The Central Bank and the Bank Superintendence reached an agreement with Manuel Arturo Pellerano, the Pellerano Group and Juan Felipe Mendoza Gomez, which ends a judicial litigation among both parties for the bankruptcy of the Banco Nacional de Crédito (Bancrédito). The indicted will pay more than 22 billion pesos that the State invested in the rescue of such banking entity. For that motive recognizes a debt for 17 thousand, 769,905,971 Million, as a result of subtracting to the 22 Billion some 4 Million 961,469,281 received through the Banco León.Also, Pellerano, Mendoza and the Pellerano Group will tender their shares in the Zona Franca San Isidro, S.A., and in the Empresa de Generación Haina (Ege Haina), valued at RD$2,617,682,849 and in RD$3,948,797,055. Published by: Listín Diario Newspaper.

9– The IDB expects more efficiency in Electric Distribution Enterprises The expectations surround the term in office that the new managers of the electricity distributor enterprises (Edes) may make. On September 30th the Vice-President of the CDEEE, Celso Marranzini, designated three Chilean experts as managers of the Edes. Manuel Labrado, representative in the country of the Inter American Development Bank (IDB), declared that such organ expects from the new designations a reduction in the losses and an increase in the billing, especially in moments in which the deficit of the sector is an estimated US$750 Million for this year. Published by: Listín Diario Newspaper.

10-Dominican Week in the United States The Dominican Week took place from the 20th to the 24th of the month of September in the cities of Washington, D.C. and New York, and completed a day’s journey designed to facilitate the analysis of priority topics in the Dominican- American agenda and achieve strengthening the economic, cultural and political ties between the United States and the Dominican Republic. Following the tradition of prior day journeys, academic, artistic and business evens were made which stood out for their professional quality, destined to serve as stimuli and support to the professionals that in a growing manner, dedicate themselves to the specialized study of Dominican matters in educational institutions of the

> Economic Aspects: 11-Reach agreement with the IMF The International Monetary Fund (IMF) announced on Thursday September 2nd in Washington, DC, United States, that it reached an agreement on budget austerity with the Dominican authorities, as part of the Stand- by loan agreement for 1,700 Million dollars granted on the past November. "We have reached an agreement with the Dominican Republic about the politics and the program to follow for 2010 and 2011, to company in that manner with the agreed program within the stand- by agreement”, pointed out the communication of the vice director of the entity, Murilo Portugal. Published by: Hoy Newspaper.

United States. The agenda of the XVIII version of Dominican Week was approached by an interdisciplinary group of scholars coming from different professional areas, such as historians, sociologists, economists, businessmen and cultural animators of high intellectual level Published by: Diario Digital RD Newspaper.





12- Central Bank affirms inflation for the month of August was of.22% The Central Bank of the Dominican Republic reported that the inflation rate for the month of august, measured by the variation of the Consumer Price Index, was of 0.22% with respect to the month of July, situating the accumulated inflation rate for the current year in only 3.45 percent. The institution pointed out that this accumulated inflation rate of 3.45% during the period of January- august 2010 was inferior to the 4.19% reached in the same period of 2009. Published by: Hoy Newspaper.

13-The DGA exceeded estimates in collections Up to the 20th of September of this year the General Customs Office (DGA) evidences a compliance of a 107% of the estimate of income contemplated for this period by reaching income for concept of collections of more than RD$ 37,734 Million, with which it exceeds the goals established before the International Monetary Fund (IMF) and the budgeted amount. Published by: Listín Diario Newspaper.

14– Exchange rate and fuel prices: During the course of the month of September, the Dollar of the United States has remained between RD$ 36.91 and RD$ 37.08, while the euro has remained between the RD$ 45.83 and RD$49.35. With respect to gasoline, the price of the gallon of Premium until October 6th was of RD$163.20 and the price of the gallon of regular was RD$154.60.

> Politic Aspects < 15– There are 20 aspiring candidates to the presidency of the DR The premature beginning of the promotion of public figures for the elections of 2012 forecasts a campaign extraordinarily long, especially because the start of some aspiring candidates does not leave any alternative to others, which have had to do the same. Among the “non declared” applicants are the president Leonel Fernandez and his wife Margarita Cedeño. The other contenders of the PLD party are taking on a campaign work more open each time, although some clarify that they will go on with their projects so long as the Chief of State decides not to seek his reelection. In the PRD Party there are eight aspiring candidates, while in the emerging parties there are also willing and in preparation, including forces allied to the greater parties, such as the Progress National Force (FNP) that is beginning to promote Pelegrín Castillo. Other public figures could add themselves to the competition, such as José Miguel Soto Jimenez and the president of the Revolutionary Social Democrat Party (PRSD), Hatuey De Camps. Published by: El Caribe Newspaper.

“Exchange rate and gasoline prices”





16–136 register candidature for members of the JCE A total of 136 candidate applications were registered upon the deadline of September 14th for the presentation of aspiring candidates for the election of the new five members of the Central Electoral Board (JCE) and its substitutes. The senator Cristina Lizardo, who heads the Special Commission for the Selection of the Substitute Members of the JCE, informed that concluded such first process is followed by the evaluation of each of the files. Of those 136 they preselected a group of 64. The senator for the Espaillat Province, José Rafael Vargas, announced that a report will be presented on the 6th of October to the Senate with 15 or 20 of the candidates that qualified to be members of the new Central Electoral Board (JCE), of the group of 64 that had been preselected, and denied that the Senate will make

a distribution among the politicians, as is feared by some sectors. The new five judges of the JCE and their substitutes shall be chosen by the senate, as established by the new Carta Magna, which reduced from 9 to such quantity. Meanwhile, for the Accounts Chamber, which will go from having nine members to five, there are 230 candidates that shall also be purged by the Chamber of Deputies and present a list for selection to the senate. Published by: El nuevo Diario Newspaper.

>Legislative Aspects< 17– Will introduce to Congress Reform Bill The National Congress will be presented with a draft bill for the reform of the National Police that will allow putting that institution in better conditions to accomplish its objectives, as is the fight against delinquency. For that motive the Chief of the National Police, major general José Armando Polanco Gomez, visited yesterday the president of the Chamber of Deputies, Abel Martinez, to whom he explained that a commission of the Police is working on the draft bill that will be compliant with the Constitution of the Republic. Published by: Listín Diario Newspaper.

18– Ministers will be merged and vice ministers will be eliminated The minister of the Presidency, César Pina Toribio, informed that within the plan of modernization and reform of the State the central government is concluding the final details for a draft bill that would merge ministries and eliminate vice ministers from the public administration. Pina Toribio said that there is a commission that is being coordinated by the Ministry of the Presidency, and that includes also the Ministry of Public Administration and the Internal Legal Counsel of the Executive Branch, that is in charge of drafting the draft bill for the reform of the Public Administration. Published by: Listín Diario Newspaper.

19– DGII establishes other norms for reporting expenses The General Internal Tax Administration (DGII) issued a series of new measures with which it assures to seek an increase of the transparency, the security and the control in the expenses reports of business enterprises, when establishing that all contributors that make payments above RD$50,000, in addition to the fiscal documents to support expenses and tax credits, they shall utilize any of the modes [of payment] established in the banking and financial intermediation system.

The decision, communicated through the General Norm 06-10, consists in that the modes of payment utilized shall individualize the beneficiary and be different from payments in cash, to be able to support costs and deductible expenses or that constitute fiscal credits and other payments with tax implications. Published by: Hoy Newspaper.


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Sitation and Perspective  

Sept. 2010

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