SANTO DOMINGO.- The package of measures submitted by the Dominican Government and approved yesterday, Wednesday the 17th, by the Senate of the Republic could provide temporary relief to public finances, but it is far from correcting the fiscal deficit and the structural problems that for years have limited the sustainability of the State's accounts.
Three economists consulted by El Inmobiliario believe that the package would alleviate short-term fiscal pressures, but warn that it does not correct the structural problems of public finances and leaves more far-reaching reforms pending.
While the Government projects raising an additional RD$40 billion to RD$50 billion, specialists believe that these resources would only allow for a reduction in some of the immediate pressures and do not represent a definitive solution to a budget deficit that amounts to RD$280.575 billion, equivalent to 3.2% of the gross domestic product.
Clear costs, uncertain benefits
One of the main criticisms comes from economist Haivanjoe Cortiñas, who argues that the proposal clearly explains how much the State intends to collect, but does not offer metrics that allow for evaluating what the real benefits to the economy will be.
“The project does not quantify how much GDP will grow, how much additional employment will be generated, how much inflation will decrease, or how much public debt will be reduced. The tax costs are defined in the law, while the economic benefits remain as unverified expectations,” he stated.
In his view, the Government must demonstrate that the tax sacrifices being asked of taxpayers will effectively translate into better economic conditions for the population.
A reform to manage the crisis
Francisco Taveras, an academic at the Autonomous University of Santo Domingo, goes further and defines the initiative as a “low-intensity reform” or “without rupture”, designed to manage current pressures without modifying the most sensitive pillars of the tax system.
The economist argues that the Government avoided touching aspects such as the ITBIS, tax exemptions and selective taxes, keeping the current tax structure practically intact.
“Without a comprehensive reform that addresses the roots of the fiscal imbalance, the country will remain trapped in the cycle of temporary adjustments and incomplete solutions,” he warned.
He even believes that the additional resources expected to be raised are already committed by obligations such as subsidies and other public spending pressures.
The structural problem remains unresolved
For his part, economist Alejandro Arredondo agrees that the measures can help preserve macroeconomic stability and strengthen public revenues in an uncertain international environment, but he understands that they alone are not enough to address the fiscal problem.
“The deficit is a structural challenge that the country has been grappling with for years. The sustainability of public finances will require a broader strategy that includes a significant reduction in tax evasion, an improvement in the quality of spending, and a deeper discussion on modernizing the tax system,” he said.
Coincidences
Although each proposes different solutions, the three specialists converge on several points: they consider the package insufficient to resolve the fiscal imbalance, they advocate a greater fight against tax evasion, and they understand that the country continues to postpone a more profound reform.
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