Weekly Report - 9 December 2003

DOMINICAN REPUBLIC | Bid to force down the dollar rate. President Hipólito Mejí­a last week exacted from banks, exchange houses and remittance companies an agreement to bring down the dollar rate, which had been trading above RD$43, to RD$30 within one week (for results to the end of last week see table on page 13). A monitoring commission, headed by the chief of the armed forces, General José Miguel Soto Jiménez, has been set up to ensure implementation of the agreement. The basic theory is that the dollar rate has been pushed up by speculation; the commission's first step has been to demand from banks and exchange operators the identification of those involved in all transactions in the last 11 months. The government has said that the IMF demanded the lowering of the dollar rate as a condition for final approval of the standby agreement the Dominican Republic has been negotiating.

COSTA RICA | Bowing to US pressure. The US threat to leave Costa Rica out of Cafta appears to have succeeded. President Abel Pacheco has announced a climbdown on the two conditions demanded by the US [WR-03-39]. At the negotiating round this week in Washington, Costa Rica will present an offer to gradually open up its telecommunications sector to private enterprise, starting with the high-value-added activities. It is also preparing a proposal for `some degree of opening' of the insurance business, currently monopolised by the Instituto Nacional de Seguros (INS). This will begin with `the consolidation of some existing accesses.'

CUBA | Revised growth forecast. Interior minister Ricardo Cabrisas last week said that the Cuban economy was likely to register 1.5% growth this year. This comes only shortly after Osvaldo Martí­nez, chairman of the national assembly's economic affairs committee, predicted a growth rate of more than 2%. Cuba's growth rate last year was 1.1%. Whichever forecast comes true, this will be the third year running in which Cuba's economic growth falls well below the 4% target set to recover from the 30% contraction that took place in the 1990s.

GUATEMALA | Company closures multiply. In the first nine months of the year, 3,309 companies closed down in Guatemala; 25% more than in the same period of 2002. Among the closures were those of four foreign companies and 35 maquiladoras (assembly plants) — almost three times as many as in 2002. Only 11 new companies were registered in January-November, compared with 27 a year earlier.

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