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Daily News - Thursday, 04 January 2007

Leonel on budget concerns
President Leonel Fernandez says that he understands the concerns voiced by the Supreme Court (SCJ) and the Central Electoral Board (JCE), about the reduction of funds in their 2007 budgets, but explains that it is all part of the government's austerity plan. President Fernandez says that the Executive Branch will also be subject to a reduction in funds over the coming year. This year 5% of revenues will be directed towards the Executive Branch, less than in previous years, according to the President. Regardless, the President urged the institutions to understand that this budget is necessary to be in line with spending limits set by the agreement with the IMF. A Letter of Intent would be signed in January, supporting the fiscal reform and calling for a reduction in public spending. Fernandez denied that there is a problem with the 2007 budget's passage through Congress, saying that deputies are only taking their time to review it, assuring that it should be approved by Thursday.
On the positive side, as reported in El Caribe, he announced that the government would shortly implement plans prepared together with the World Bank and the Adam Smith Institute to resolve the electricity sector crisis. Furthermore, he announced the soon launch of the implementation of the National Competitiveness plan as a complement to the start of the DR-CAFTA agreement.

Still no consensus on 07 budget
The Senate decided to meet at 11am today in order to continue discussions of the 2007 Budget. Diario Libre writes that the fact that the PLD holds the majority in Congress doesn't mean that all bills handed to them will be passed with ease, and the delay in passing the budget plan, received on 27 December and due on 1 January, is an example of that. Chamber of Deputy president Julio Cesar Valentin says that all sides have agreed that no new NGOs should be created and that these types of entities cannot be assigned to government employees, legislators or politicians. Other than this, discussions on the new budget plan will continue. In order to facilitate the process, Senators decided to create two sub-commissions, one to discuss the budget assigned to the NGOs and one to discuss public works across the country. Radhames Pena said that RD$600 million would be reassigned in the budget with RD$250 million going to the Supreme Court, Central Electoral Board, Inapa, and public works in the country's provinces.

Debt increases because of Metro
The DR's foreign debt will increase by RD$7.1 billion in 2007, all because of construction of the Metro. Austerity doesn't apply in the case of the metro that is due to receive RD$10.7 billion in 2007 in order to speed up the pace of the project. Last year the metro had a budget of RD$1.84 billion, but actual costs ballooned to RD$3 billion and Hoy newspaper reminds readers that there was a RD$1.1 billion fund transfer from the Education and Health Departments to the project at the end of 2006. Metro director Diandino Pena says that Dominicans will be able to enjoy the metro by Spring 2008, before the 16 May Presidential elections. The budget for the Metro includes numerous loans from international organizations, most of which have not been approved by Congress. Last year alone the contract signed by Pena with the Franco-German company Siemens-Thales increased the foreign debt by US$119 million. Siemens has been contracted to build 17 of the train carriages for the Metro. Hoy reports that the viaducts from Villa Mella will cost US$200 million, while the one from the Cementera to La Feria will cost US$327 million, for a total of US$527 million. Initially Pena said that each kilometer of the Metro would cost US$32.6 million, but months later he informed the public that the actual cost would oscillate between US$40 and US$50 million, one of the lowest rates in the world.

Fernandez postpones trip
President Leonel Fernandez has postponed his trip to the Middle East, according to the Foreign Relations Ministry. Fernandez's trip was centered round the promotion of the expansion of a natural gas terminal in the DR. The President was to make his trip to Qatar next week, but no explanation was provided for the decision to cancel it. The trip, which included a stopover in India, is still scheduled for 2007. Hugo Giuliani Cury, the Dominican ambassador in the Qatari capital Doha, told a local newspaper that the DR could become a regional intermediary for natural gas if the United States decides not to build any more natural gas plants due to safety concerns.

Things are peachy for Medina
Commenting for the first time since Danilo Medina's departure from the government, President Leonel Fernandez said that his relationship with the former Minister of the Presidency is fine. When asked why Medina hadn't congratulated the President on his birthday or for the New Year, Fernandez said that Medina had never congratulated him in previous years, so there was no reason why he should he do it now. Fernandez said that he would find the right time to announce whether or not he will run for re-election, and argued that campaigning did not interfere with the running of the country. Medina, known as the PLD's leading political strategist, seeks to run for President on the PLD ticket in the 2008 presidential election. In 2000, when then President Leonel Fernandez was impeded by the Constitution to run for re-election, Medina ran on the PLD ticket and lost to the PRD's Hipolito Mejia. While he has not formally announced his intention to run, this time around President Leonel Fernandez has made it clear through his actions that he will seek reelection. The Constitution was changed in 2004 and consecutive presidential re-election was allowed.

Fiscal reform reformed
The Senate has approved, in one reading, the elimination of a selective tax on the importation of vehicles (Bill 495-06 for the Fiscal Reform) to comply with DR-CAFTA. All new legislation needs to be harmonized with DR-CAFTA.
PLD Senator Charlie Mariotti explained that the change eliminates the additional 10, 20 or 30% tax the government had incorporated on vehicle imports. The fiscal reform had originally called for buyers to pay 3% of the ISC on the cost of a vehicle. If a vehicle costs between US$10,000 and US$20,000 it is subject to a 10% tax, one costing between US$20,000 and US$30,000 a 20% tax, and one costing between US$30,000 and US$40,000 a 30% tax. El Caribe reports that government will collect RD$730 million less as a result of this move. One note says that the government strategy would be to adjust vehicle base values to compensate for removing this tax. Listin Diario reports that legislation prohibiting the importation of vehicles over five years old and cars weighing over five tons was also approved. In addition, used home appliances are also subject to an import ban, except in the case of personal effects belonging to Dominicans and foreigners moving to the DR.

Spain donates buses
Barcelona's Metropolitan Transport department has donated 25 buses to the Dominican Republic. The buses, which are worth RD$50 million, will operate alongside the Metropolitan Bus Services (OMSA) existing fleet. OMSA Director Ignacio Ditren presented the buses at the Presidential Palace where he and President Leonel Fernandez were driven along the streets around the Palace to test out the vehicles. Spanish Vice Consul Rocio Pichardo helped secure the donation of the vehicles and Ditren says that the buses will help strengthen bus services in the Santo Domingo and Santiago areas. Ditren says that OMSA will be receiving seven new buses in January.

Consuls have to go
Press reports say that the US government is pressuring the Dominican government to remove Dominicans with US residency who are serving as consuls in several US cities, as this is in violation of international law. This is a long standing practice of the Dominican government that appoints Dominicans living abroad to these revenue-producing posts. The US Embassy in the DR confirms that both governments are working to solve the issue so that both countries are in line with the Vienna Convention and State Department requirements. In a press release, the US Embassy says that it applies these requirements uniformly for all countries, and that accredited consuls or diplomatic envoys are not allowed to be citizens or legal residents in the US. The press release specifies that Article 22 of the Convention states that consuls in foreign countries may not have citizenship in the host country, unless the host country agrees to it, though this can be rescinded at any time. This move could lead President Leonel Fernandez to make many moves abroad, and it is a common practice for the DR to appoint people with US citizenship to a range of posts in the US, although the US has consistently refused to recognize their status. Press reports say this could affect persons appointed by former Minister of the Presidency, Danilo Medina.

Beer and other costs soar
Due to taxes to be imposed on beer producers as part of the fiscal reform, the consumer now has to deal with a RD$10-RD$20 price increase on Cerveceria Nacional Dominicana beer. Since Tuesday, the price of a 12oz Presidente beer has gone up from its recommended price of RD$35 to RD$45, while the Bohemia brand was increased from RD$30 to RD$40. Meanwhile, Presidente's "jumbo" beer bottle increased by RD$20, as it is now being sold for RD$90 and the 22oz Presidente beer went up from RD$50 to RD$65.
Ambev Dominicana (Brahma beer) says that their product prices haven't increased, but that they are studying the situation and could also raise their prices.
The latest fiscal reform taxes beverages on the percentage of alcohol, and not according to volume. A selective tax added on alcoholic beverages was also included, making a price increase almost inevitable.
Cigarette costs also increased. A pack of Marlboro now costs RD$40, an increase of RD$2. Fausto Perez, secretary general of the Leon Jimenes Industry Tobacco Workers Union, speaking in El Caribe newspaper, said that the tax increases could put 500,000 people who are directly or indirectly employed by the tobacco industry out of work. Perez has instructed legislators to review the fiscal reform that caused the price increases. But as Diario Libre reports, tobacco and alcohol aren't the only products that have gone up in price. Soy oil, evaporated milk, herring, American rice, and wheat all cost more this week. Prices are expected to continue to increase once a new tax on diesel, the principal fuel used for transporting goods locally, goes into effect.

Tasty chickens
Dominicans ate more chicken than ever before in December. According to Diario Libre, Dominicans ate more than 18 million chickens in the month of December, and this is due to an increase in chicken production that reduced the cost of chicken to the consumer. Between January and November 2006, 145 million were eaten, a monthly average of 13.1 million.

New Year's baby
Wesli Steven Perez Adon has been certified as the first baby of 2007. Wesli was born 10 seconds into the New Year, 12:00:10, at the San Lorenzo Maternity Hospital in Los Minas. The bouncing baby boy weighs in at six and a half pounds and was pronounced to be in good health.

Drive through venues still open
Despite the enforcement of the law forbidding consumption of alcoholic beverages in vehicles, drive-through alcohol venues will remain open. Owners say that the enforcement of the law, which also affects passengers, will reduce revenues by 90%, but that they would find ways to stay open. One place, El Trompo, will now open earlier and will begin to sell breakfast, while a gas station, Isla del Malecon, continues to sell beer to drivers, but with the bottle cap still on. The enforcement of the new law calls for the transit authority to stop anyone consuming alcohol while driving, forbids any alcohol bottle to be open in the vehicle, and for bottles to be carried in the trunk. Any person caught will have their vehicle towed away and will be fined.

Customs makes bust
The Customs Department (DGA) has discovered a shipment of household appliances and other merchandise that was being imported into the country without paying the proper taxes. The shipment had a total taxable value of RD$106 million. The shipments were found in the ports at Haina Oriental and Boca Chica. Luis Sanchez, sub director of operations at the DGA, says that seven companies, three customs agencies, five auxiliary customs agencies and 15 DGA employees are being investigated for their roles in the tax evasion scheme.

Accused to be extradited
The Santo Domingo Attorney General's office has dropped money laundering charges against Antonio Flete Lima and Lourdes Ivelisse Machuca Castillo so that the pair may be extradited to the United States. The US government had asked for their extradition on 31 October 2003 so that they could be tried for money laundering and cocaine distribution. The couple is accused of laundering RD$100 million in the country.

Martinez Pozo proof
Gobierno de la Manana morning radio talk show's Julio Martinez Pozo called in on the Attorney General's office yesterday and presented evidence that a government official had hired a man to murder him. Martinez was promptly led to Attorney General Radhames Pena's office to discuss the issue. Martinez says that he provided detailed names of those allegedly involved in the plot and continued by saying that if the AG's office doesn't take action against these individuals he would personally go to the police and do it himself. Martinez is claiming that people associated with Public Works Minister Freddy Perez are behind the attempt on his life. Martinez is a strong supporter of former Minister of the Presidency Danilo Medina, who has announced he seeks to be the PLD candidate in the 2008 presidential election.

Panamanian sailors abandoned
Listin Diario reports that six Panamanian sailors have been left ashore in Puerto Plata by their ship, the Charlot. The lawyer for the six, Erick Urena, says that the men were contracted in Panama to deliver wood and sand to islands in the Bahamas on 23 December 2006. They claim that they entered port in Puerto Plata and were then left behind without money and are starving, since they have no resources. The men are suing Jose Antonio Contreras of the Charlot for time worked without pay. Urena pointed out that Dominican labor laws state that when a sailor is left at a port other than the one he embarked at, the ship must pay for his air ticket back to his port of origins. No word on what the DR Immigration authorities plan to do.

Visas to be easier?
Major League Baseball wants to make it as easy as possible for foreign talent to make it to the Big Show, and that's why MLB, according to Diario Libre, is launching a campaign for the State Department to allow baseball players to apply for a different visa to play in the United States. Currently, baseball players entering the US apply for an H2B temporary work visa, but the proposed plan would have athletes enter on P-1 visas. This move would greatly affect Dominican ball players as the DR is the largest exporter of foreign born players to the Major Leagues. Diario Libre reports that 400 new players are signed to contracts every year, and 130 of these are taken to the US to play baseball.

Baseball round robin
Looks like the round robin is shaping up to be a two team race. Last night the Aguilas rallied to beat Licey 8-6. Aguilas are 2-1 against Licey in the round robin series and were 8-2 in the regular season series. The Aguilas stay in second place with a 5-2 record, while Licey now have a losing record at 3-4. In last night's other game the Gigantes continued their winning ways as they pounded the Toros 6-2. The Gigantes look to be an unstoppable force this year, as they improved their round robin record to 6-1. Unfortunately for the Toros, who are now 0-7 in this postseason, a birth into the post-season was only a tease for their fans.
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