The macroeconomic goals of the first program year were largely met, although growth accelerated somewhat less than expected. Objectives for the second program year (FY2008) are to create conditions for higher growth and consolidate stabilization gains achieved so far. Monetary policy will focus on quantity management, with a market-determined policy interest rate. The authorities plan to further strengthen their monetary policy framework. Macroeconomic policies contained in the program are consistent with the central objective to boost growth while maintaining economic stability.
International Monetary Fund. Western Hemisphere Dept.
This 2019 Article IV Consultation discusses that driven by popular frustration with high levels of corruption and inequality, Haiti has been experiencing a protracted political crisis and prolonged civil unrest. The baseline scenario assumes some stabilization in the political situation by early 2020 but no major political or economic reforms. This would allow growth to recover only gradually and in the absence of sustained implementation of good policies and structural reforms, potential growth would remain low at about 1.4 percent over the medium term. Downside risks, both domestic and external, remain elevated. A prolongation of political instability, extreme natural disaster, drop in remittances, and/or a contraction in exports because of trade tensions would worsen the outlook, particularly given the absence of buffers and fragile social conditions. The challenge is to stabilize the macroeconomic situation in an unstable political context. The IMF Staff encourages the authorities to continue their efforts to contain the fiscal deficit and its monetary financing by the central bank. Improving domestic revenue collection and redirecting current spending would help create space for much needed social and capital expenditures. Together with steps to strengthen the central bank’s autonomy and legal framework, this would help reduce fiscal dominance.
A 28-month Stand-By Arrangement (SBA) for the Dominican Republic was introduced against the global recession. The main objective of the program is to limit the procyclicality of policies. The countercyclical macroeconomic program improved confidence and fostered aggregate demand. Monetary policy remained accommodative with a record low policy rate. Fiscal policy became countercyclical. All structural benchmarks were observed. IMF staff supports the waiver requests and the completion of the first SBA review given the proposed actions and satisfactory performance.
In this study, against the background of deteriorating external conditions owing to the global crisis, a 28-month Stand-By Arrangement (SBA) for the Dominican Republic is reviewed. The objective is to limit the procyclicality of policies in the short term. The macroeconomic situation has improved significantly. All performance criteria and structural benchmarks were observed. IMF staff supports completion of the second and third SBA reviews and the targets proposed for 2011 in view of the positive macroeconomic performance. Additional measures have been introduced to meet program targets.
Mr. Armando Méndez Morales and Maria del Mar Cacha
Bank borrowers' currency mismatches often result from unhedged foreign currency borrowing in economies where there is significant dollarization, exposing the financial sector to disguised credit risk. In the absence of standard tools or guidelines to counteract this risk, countries have resorted to outright regulatory limits in cases of moderate dollarization and to undesirable exchange controls in other cases. This paper proposes a "specific-to-group" provision rule based on the effective borrowing cost differential between domestic and foreign currency. Such a rule would help internalize the corresponding risks for banks and their borrowers in line with internationally accepted prudential and accounting standards.