Caribbean & Central America - February 2011 (ISSN 1741-4458)

The IMF warned the government of President Leonel Fernández that rising food and oil prices were looming risks to the economy. The IMF, which has just made its fifth visit to the country to monitor a standby agreement which began in November 2009, said that it was basically optimistic about the economic outlook.
The IMF endorsed forecasts from the economy minister, Temí­stocles Montás, who reckons that the economy will grow by between 5.5% and 6% in 2011, one of the highest growth rates in the region. In 2010 the economy grew by an estimated 7.8% and inflation was 6.2%. This year inflation is likely to be between 5% and 6%, the government forecast.
The IMF did warn that the balance of payments would come under pressure from rising food prices and rising oil prices. It advised the government to prepare for “shocks" and to work out how to deal with them. The IMF noted that even in 2010 the balance of payments was in deficit to the tune of 8.5% of GDP.
Once the IMF board has approved the findings of the mission, which was in the country in the first part of February, the IMF will advance the country another US$150m. The IMF supported the government's plan to tighten fiscal policy by the equivalent of 1% of GDP by increasing taxes and reducing subsidies on electricity. The IMF said that discussions about these two issues, tax rises and electricity subsidies would continue at a series of meetings with Dominican officials in Washington.