For the Central Bank, the provision of liquidity seeks to ensure that the financial system has resources to lend, especially to sectors intensive in employment and productive linkages, such as construction, but it does not imply that credit will flow with the same intensity towards real estate projects.
SANTO DOMINGO. – While public attention is usually focused on whether the Central Bank of the Dominican Republic (BCRD) raises or lowers the monetary policy rate, there is a less visible but key component for the construction sector: liquidity provision programs and their real effect on credit.
In 2025, the Dominican Republic faced an economically challenging year for the construction sector. Although there were occasional periods of growth, the overall balance for the year was negative or, at best, moderate according to economic activity measurements, reflecting a general slowdown in construction activity.
The challenge of turning liquidity into work
The performance of the construction sector in 2025 provides the necessary context to understand why the monetary policy of the Central Bank of the Dominican Republic does not always translate, immediately, into greater real estate activity.
According to the Monthly Indicator of Economic Activity (IMAE), construction was one of the most volatile sectors during 2025, alternating periods of growth with months of year-on-year contraction.
The Central Bank itself has indicated, in its economic outlook reports, that the sector failed to maintain a sustained pace throughout the year, reflecting a more cautious investment environment.
This behavior contrasts with the strategic importance of construction in the national economy, both for its contribution to employment and for its links with key industries such as cement, steel, transport and professional services.
The construction industry is, by its very nature, highly dependent on credit. Medium- and long-term projects require stable, predictable, and competitive financial conditions, so monetary policy decisions have a direct impact on the sector's dynamics, although not always immediately.
Throughout 2025, the Central Bank maintained a policy aimed at preserving macroeconomic stability in a still-restrictive international context. Within this framework, measures were adopted to ensure adequate levels of liquidity in the financial system, with the objective of supporting economic activity without compromising inflation control.
However, the existence of liquidity does not automatically guarantee a greater flow of credit towards construction.
One of the least addressed aspects in economic coverage is the difference between available liquidity and credit effectively channeled to construction projects.
Although the financial system has resources, banking entities evaluate construction financing under strict prudential: project risk, level of pre-sales, guarantees, term and market absorption capacity.
In practice, this translates into financing conditions that many developers perceive as "demanding," especially in medium and small projects, so the transmission of monetary policy to the sector tends to be slower and more selective.
Another key point is the gap between the monetary policy rate and the effective rates faced by developers. The central bank's rate sets the general framework, but the final cost of credit incorporates risk premiums, project structure, and specific real estate market conditions.
For a sector with tight margins and long cycles, that difference is crucial, because small variations in financial costs can redefine the viability of a project, alter its schedule, or postpone its start.
The sector's erratic behavior in 2025 has been reflected in more conservative investment decisions: projects phased in stages, revision of square footage, price adjustments, and a greater emphasis on pre-sales before starting construction.
From this perspective, monetary policy has less influence through the announcement of interest rates and more through how it translates into timely and predictable credit. For builders, the debate is not whether monetary policy has been correct in macroeconomic terms, but rather how effective its transmission to productive financing has been.
In a year like 2025, marked by a slowdown in construction activity, the challenge lies in ensuring that available monetary instruments reach viable projects more effectively, without compromising financial stability.
More than just abstract liquidity, the construction sector needs credit aligned with its cycles, its risks, and its strategic role in the economy. This is the aspect that remains unresolved on the public agenda, and it is key to planning the sector's recovery by 2026.
