As a result of the economic recovery, with good results in job-generating activities such as the construction sector, hotels, bars and restaurants, commerce and others, government revenues allowed for a greater amount of income.
Taken from Listín Diario
SANTO DOMINGO. – According to economic analysts in the country, the Dominican Republic will maintain moderate growth this year 2022, impacted by external factors such as high international prices for raw materials, intermediate inputs and finished goods.
Regarding inflation, which closed at 8% year-on-year in November 2021, they predict that the December closing figure would be between 8% and 8.3%, "influenced mainly by external factors (oil and food raw materials).".
Given this situation, the Government must ensure a good supply of locally produced food to counteract the high prices of imported raw materials until the flow of goods is normalized and freight costs decrease.
Nails"
However, it appears that the Government will adopt a card up its sleeve that it can use in difficult times.
“I’m referring to the sale of state assets. Raising US$2 billion by selling shares in many of its companies is a quick way to solve revenue problems if the optimistic projections for 2022 hit a snag,” he explained.
Tax pressure increased
As a result of the economic recovery, with positive performance in job-creating sectors such as construction, hotels, bars and restaurants, commerce, and others, government revenues increased, leading to higher tax income and, consequently, a rise in the country's tax burden. According to available data, the tax burden increased from 14% to 16.5% between 2019 and 2021.
In terms of revenue, at the close of 2021 the Dominican Government ended with a fiscal situation (December 2021) in terms of the original budget of RD$746,313.8 million.
Revenues grew by RD$90 billion (30.3%) compared to the original budget, but almost the same as the reformulated one (+0.4%), where the tax amnesty and the advance tax payments of the financial sector and Barrick Gold (RD$70 billion) had an influence, as explained.
Meanwhile, in terms of cash deficit: the closing figure for December is estimated at RD$156,396.4 million (2.9% of GDP)
The primary deficit amounts to RD$34,374 million (0.68% of GDP)
“Both the cash deficit and the primary surplus are within a satisfactory range, as they closed in 2020 at -6.7% and -3.4% of GDP respectively,” an economic report indicates.
Infrastructure
During 2020, one of the biggest complaints to the Government was the low investment in infrastructure works, a behavior that was later clarified by the General Directorate of Budget (Digepres) in the sense that there were works that did not meet the requirements of purchases and contracts, as well as not having the NIF code, so as the controls were met the works were flowing.
Last year, capital expenditure, which represented 13% of total spending, ended with a good execution rate of 92.2%, so it is expected to improve substantially in 2022.
Another positive piece of data was the savings achieved in public debt interest payments, which allowed the percentage to be lowered from 22.2% of tax revenues to 19%.
Regarding debt, 2021 ended with a total consolidated debt of US$59,495.7 million (66% of GDP). If intergovernmental debt is excluded, it would be 63% of GDP.
Consolidated
Consolidated debt stands at 63.5% of GDP (if the IMF methodology of excluding intergovernmental debt, which amounts to US$2,348.5), is applied. Including this debt, this percentage rises to 66% of GDP.
Non-Financial
The debt of the Non-Financial Public Sector (NFPS) fell from 56% to 52% of GDP between December 2020 and November 2021. This opens up significant room to keep NFPS debt below the 53% of GDP level in 2002 and consolidated debt below 65% of GDP.
Local
The Treasury carried out the first liability management operation in the local market, which allowed it to reduce public debt service by 75 billion in 2022-2027.
External
72.2% of the external debt is in sovereign bonds, says a local economic report.
