The International Monetary Fund (IMF) projects that for this year, the Dominican Republic will experience a rebound in economic recovery, supported by the massive vaccination of the population, the postponement of the tax reform and the increase in social transparency.
The Executive Board of the organization concluded the 2021 Article IV Consultation with the Dominican Republic, in which indicates that the recovery will have balanced risks, but it will be favored by the spill-over effects of the United States.
The IMF points out that, although the recovery in tourism activity will be gradual, manufacturing exports, investment, and consumption would be supported by global growth, the resilience of Foreign Direct Investment (FDI), and the dynamism of remittances will have an impact. in which the country quickly returns to normality.
The organization, based in Washington, United States, recognizes that in 2020, the local economy contracted by 6.7%, but “in the second half of the year, a positive momentum in growth began”.
Directors agreed and at the same time recommended that monetary policy support remains appropriate as long as inflation expectations remain anchored, while exchange rate flexibility would help provide a buffer against shocks.
“While the financial system remains resilient and well supervised, it will benefit from moving closer to international supervisory and regulatory standards and improving the set of macro prudential and crisis management tools”, the document states.
Similarly, they highlighted the need to mobilize revenues in the medium term by broadening the tax base and reviewing tax exemptions.
In addition, they emphasized the importance of structural reforms to improve social outcomes and increase productivity and noted that new reforms in the electricity sector will help grow fiscal space to reduce debt sustainability risks, while protecting investment. and social spending.
Likewise, improving competitiveness and reducing the regulatory burden.
IMF directors insisted that adapting to and mitigating the risks of climate change remains a priority.
“Ensuring inclusive and sustainable growth will require more effective social programs focusing on increasing labor market participation and supporting education, modernization and the labor code to enable more flexible and formal work arrangements, reduce rural gaps and gender inequality”, states the International Monetary Fund.