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Daily News - 24 November 1998

Budget accord reached
To the surprise of many, the Congress and government officials announced yesterday a consensus on the national budget for 1999. With the many political battles now underway between the Dominican Revolutionary Party (PRD) and Dominican Liberation Party (PLD), few expected an accord to be reached only one week after the PRD-controlled Congress created a bicameral committee to examine PLD-controlled Executive Branch's budget proposal. In fact, many interested parties in the outcome of budget negotiations - mayors, economic sectors, etc. - were only just gearing up to lobby Congress on the proposal this week.
Chamber of Deputies President Héctor Rafael Peguero Méndez (PRD) says that the accord reached by the bicameral congressional committee with the Administration's National Planning Office (ONAPLAN) and Budget Office accounts for 95% of the budget proposal. Senate President Ramón Alburquerque (PRD) promised to have the Senate debate the bill just as soon as it arrives from the Chamber of Deputies, which constitutionally must initiate a budget bill. Toward this end Peguero Méndez has called a plenary session of the Chamber of Deputies for this Thursday to begin debate toward the bill's passage.
Under the deal reached between the Senate-Deputies joint committee and ONAPLAN and the government's Budget Office, the following entities will receive more money than originally contemplated in the government's budget proposal: RD$30 million more to the Judicial Branch (12.4% more than in 1998, but RD$320 million less than the Supreme Court had asked for), RD$20 million more to the Chamber of Deputies, RD$10 million more to the Senate.
Although the Judicial Branch did not get the increase it was looking for, the Fernández Government pledged to use some of its own funds to complete the works (particularly buildings) foreseen in the project to modernize the Dominican justice system. The government also agreed to use funds assigned to the Ministry of Public Health to further work on the Plaza de la Salud. The Central Election Board (JCE) will receive no more than already foreseen in the Administration's budget proposal, even though the JCE said last week that without more funds it could not complete issuance of the new identity cards ("cedulas") and prepare for the presidential elections in the year 2000.

Central Bank defends the peso
The Central Bank's Communications Director, Ricardo Rojas León, announced yesterday that the Bank was putting at commercial banks' disposal another US$20.6 million in dollars to ensure that this week's commercial bank demand for dollars is met and the dollar-peso exchange rate remains stable. He also stressed that the Bank has a US$620 million in reserves, and will intervene in the market as much as necessary in order to defend the peso. Last week the unofficial exchange rate hit RD$16=US$1 in spite of a US$15 million injection by the Central Bank into the local exchange market. This led Bank Governor Héctor Valdez Albizu to call in the press and insist that in the above-board market overseen by the Central Bank the exchange rate remains stable at RD$15.50=US$1, and that the rate should actually improve as the holidays approach.
Dollars are being purchased by commercial banks for RD$15.30-RD$15.70, while exchange banks and street vendors are offering RD$15.50-RD$15.85.

PRD elects not to return to political dialogue
In a meeting held yesterday, the ruling body of the Dominican Revolutionary Party (PRD), "the Presidium," decided against returning to the political dialogue with the Fernández Government sponsored by the Catholic Church. The Presidium declared that the PRD will join no type of conversation whatsoever with the Government until "current conditions" change. Presidium member Tony Raful told the press that this means that the Fernández Government must (1) drop its opposition to renaming the national airport after ex-PRD leader and presidential candidate Dr. José Francisco Peña Gómez; (2) drop its opposition to the current members of the Central Election Board (JCE); (3) stop dragging its feet on paying the JCE its operating funds.
Presidential pre-candidates Hipólito Mejía and Rafael Suberví said yesterday that they would favor the PRD returning to talks.

Business groups insist on tariff reforms; opposition resists new taxes
The President of the National Council of Private Enterprise (CONEP), Celso Marranzini Pérez, together with directors of the Federation of Industrial Associations (FAI), called on Congress to approve the tariff reform proposal sent to the legislative body last week by President Leonel Fernández. The tariff reforms, necessary if the Dominican Republic is to meet its free trade treaty obligations with Central America and the Caribbean Common Market (CARICOM), were characterized by Marranzini Pérez as necessary in order for DR industry to be competitive. The revenue loss for the government caused by the tariff cuts must be counterbalanced by increasing the Transfer Tax on Industrial Goods and Services (ITBIS). [President Fernández proposed raising ITBIS from its current 8% to 12% in 1999 and to 14% in the year 2000.] Such a tax rise would not be inflationary, argued Marranzini Pérez, because the tariff cuts foreseen would mean much lower prices for imported goods and goods made using imported inputs.
The business groups pointedly did not endorse, however, the President's proposal to significantly raise the Selective Consumption Tax on alcoholic beverages and tobacco products. They feel that such a targeted tax hike would seriously stunt sales in those sectors and harm important national industry. José Miguel Barceló, of the Barceló rum, says that everytime there has been a tax increase, there has been a decline in rum consumption.
Meanwhile opposition figures continue to voice opposition to the tax proposals. Jacinto Peynado, a former Vice President, the Reformista (PRSC) presidential in 1996 and possibly the PRSC presidential candidate for the year 2000, said that he opposes the tax plan. Senate Vice President Jesús Vásquez Martínez (PRD-Maria Teresa Sánchez Province) said that raising the ITBIS to even 10% would create a "dangerous social explosion" in the DR. The President of the Chamber of Deputies, Peguero Méndez (PRD), reiterated that he thinks the debate should focus not on whether to increase ITBIS, but rather by how much. Last week he floated the idea that ITBIS be raised to 10% instead of the 12% sought by the Executive Branch. Any revenue shortfall remaining from the tariff cuts could be counterbalanced by an increase in taxes on luxury houses and capital gains, he further suggested yesterday. The existing tax level on both is too low, he said, and raising them instead of extra hikes in ITBIS would reduce the new tax burden on the poor.
Local economist Jaime Aristy has pointed out that the increase in the ITBIS will not affect the nation's poor, as most products consumed by this segment of the population are exempt of the tax.

Poll: Dominicans not certain economy is improving
Results of a poll of a 1,000 Dominicans conducted November 7-12 finds many uncertain whether the economy is improving their lot or not. The poll, conducted by the news daily Hoy and the firm Hamilton & Staff, found that when asked "Would you say that your economic situation in the last 2-3 years is better, worse or more or less the same?", 56% opined that there has been no real change in their economic situation. 29% claimed that their lot is worse than before, while 14% said it has improved and 1% offered no opinion. Asked "Where do you believe you and your family will be in one year?", 25% said better off, 22% said worse off, 20% said the same, and 33% said they were not sure what their state will be.
The same poll offered no comfort for President Leonel Fernández. Asked about the performance of his government, over half expressed dissatisfaction: 37% characterized the Fernández government as "not very good," 17% as "bad," 36% as "good," and 9% as "excellent."

Government will crack down on nonpayment of taxes by businesses
The head of the Directorate-General of Internal Revenue (DGII), Juan Hernández, warned businesses that his agency will not be flexible with companies that have not paid their taxes. Last week DGII closed one of the Santo Domingo outlets of the supermarket chain Super Dominicano for the company's failure to pay taxes. Hernández said that currently 20 companies face similar closure for failure to hand over the income taxes (ISR) they withhold from their employees. Another 5-6 were also on the closure list for failure to pay ITBIS, but recently worked out payment agreements with DGII. Hernández stresses that DGII only seeks to close a business when they have failed to respond to all other calls to comply issued by DGII. These businesses should not have a problem paying, since they withhold ISR from their employees' paychecks and collect ITBIS from customers every time they make a sale.

Various governments forgive, defer Dominican debt repayment
The Central Bank announced yesterday that the Venezuelan Investment Fund (FIV) has agreed to a delay in Dominican repayment of loans due the Fund. The DR originally was scheduled to repay US$20.6 million to the Fund in October. The Fund has agreed to give the DR another five years to repay the debt, with the first payment of principal not due until October 30, 2000. Interest payments will resume in April 1999. The Bank also said that the Government of Canada has forgiven US$1 million in bilateral debt, and the Government of Spain has forgiven unpaid interest due on bilateral debt since September. Spain has also offered a new interest-free line of credit of US$25-30 million, with a thirteen-year grace period.

Government will investigate alleged worker abuses in free zones
Reacting to a report on the Bonao free zone carried last week by the daily El Siglo, Minister of Labor Dr. Rafael Alburquerque announced yesterday that his department will initiate an investigation into alleged worker abuses in the zones. The paper's reporters claim to have personally witnessed blows against pregnant workers. Women workers told the reporters that they receive slaps, kicks and threats with scissors if they refuse the sexual advances of floor supervisors. The paper also reported worker claims that they are summarily fired without dismissal pay if they ask for overtime pay or join a trade union, while the provincial representative of the Ministry of Labor does nothing out such abuses. Dr. Alburquerque said that he takes the charges seriously and will have all the facts checked out. Zone businesses found to be practicing such abuses would be banned from the Dominican labor market. If Ministry of Labor workplace inspectors are found to have ignored such abuses, "they will pay for their errors." Alburquerque said that a formal complaint of physical abuse against a worker has not been filed with the ministry since 1991, and a tripartite (government, labor, business) commission has been created precisely to avoid such situations by dealing jointly with any worker complaints.

DR officials surprised by FBI announcement
Numerous top Dominican officials, quizzed by the press, insisted that they had not been informed about U.S. Federal Bureau of Investigation (FBI) plans to open an office in Santo Domingo. FBI Director Louis Freeh announced the new office along with those in seven other countries. Major-General José Anibal Sanz Jiminián, head of the National Police, and Eduardo Latorre, Minister of Foreign Relations, both professed to have not heard of the plans. Minister of the Interior and Police Ramón Andrés Blanco Fernández also said he had not been informed of such plans, and that he would consider an FBI office here to be a violation of nation sovereignty.
Contacted by the news daily El Siglo, U.S. Embassy spokesman Michael Stanton confirmed that there indeed will be an FBI representative or representatives in Santo Domingo, but stressed that they would operate under the coordination of the Embassy and work primarily as liaisons with their counterparts in the Dominican government, nothing more. He characterized them as no different from representatives from other U.S. agencies already here under the Embassy umbrella, such as customs, agriculture, immigration, commerce or the Internal Revenue Service (IRS).

Peña Gómez Province?
A well-known jurist and former president of the Lawyers' Association of the Dominican Republic, Dr. Domingo Porfirio Rojas Nina, has drafted a bill for Senate President Ramón Alburquerque (PRD-Monte Plata) that would rename San Cristóbal Province as José Francisco Peña Gómez Province. Dr. Peña Gómez, who died May 10, 1998 in San Cristóbal, was the leader of the Dominican Revolutionary Party (PRD), its perennial presidential candidate and a former mayor of Santo Domingo. The draft bill would change the province's name in January 1999, but the provincial capital would retain the name San Cristóbal.

New trade union organization launched
The country's four main trade union groups - the Central General de Trabajadores (CGT), Confederación Nacional de Trabajadores Dominicanos (CNTD), Autónoma Sindical Clasista (CASC) and the Trabajadores Unitaria (CTU) - have formed a new umbrella body, the Consejo Nacional de Unidad Sindical (CNUS, National Council of Union Unity). The presidency of the new organization will rotate among the Secretaries-General of the member groups every six months. The aim of the CNUS will be to foster unity among Dominican unions and to present a united front on worker issues whenever possible.

UN to provide US$5 million in food aid for hurricane victims
The World Food Programme (WFP), part of the United Nations (UN) system, signed an agreement yesterday with the Dominican government to distribute food to victims of Hurricane Georges. Under the US$5 million emergency aid plan, the WFP will provide the DR with 8,550 tons of cereals, vegetables and cooking oil to Dominicans left homeless by the hurricane. Actual distribution of the food will done by nongovernmental organizations (NGOs), who will also be responsible for transporting the food to the areas most affected by the hurricane.

Lions-Giants game rained out; Giants appoint new manager
The sole game of the Winter Professional Baseball Tournament scheduled for yesterday - a match between the Escogido Lions and the Northeast Giants, was rained out. The same two teams are scheduled to play tonight at Julian Javier Stadium in San Pedro de Macoris tonight at 8:00 pm. Also slated for tonight at 8:00 pm in Santo Domingoís Quisqueya Stadium is a game pitting the tournament's leading team, the Cibao Eagles, against the number two, the Licey Tigers.
Yesterday the Giants named Alejandro "Alex" Taveras as their new team manager to replace Miguel Diloné, who resigned over the weekend because of time conflicts with his work for the New York Mets. Taveras played shortstop in the Major Leagues and has worked in the past for the Cleveland Indians organization. He directed the Philadelphia Fillies in the DR's summer league in the past, and is slated to do so again in 1999.

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