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Daily News - Thursday, 15 February 2007

Fernandez in Puerto Rico
President Leonel Fernandez is scheduled to speak about trade relations between the DR and Puerto Rico in San Juan on 9 March. The President will be speaking at the Caribe Hilton in San Juan, in an event organized by the Association of Industries of Puerto Rico (AIPR). No further details have been released about the trip.

IMF agrees on letter of intent
The IMF has agreed on the letter of intent regarding the fifth and sixth reviews of the Stand-by Arrangement with the DR. The agreement received the full support of the IMF board of directors, including the United States representative. The approval extends the agreement until 2008 and will guarantee a disbursal of US$57 million to the country this month, out of the US$290 million worth of credits still remaining under the agreement.
Franco Uccelli of Bear Stearns reports that the disbursements would be used to further strengthen the country's international reserve position. He indicates that the Letter of Intent's key macroeconomic forecasts for 2007 include real GDP growth of 6%, inflation of between 4%-6%, a quasi-fiscal deficit of 2.3% of GDP, a non-financial public sector surplus of 0.5% of GDP, a current account deficit of between 1.8%-2.3% of GDP and a reduction in subsidies to the electricity sector from 2006's US$530 million to no more than US$400 million this year.
"Given the country's strong economic momentum, we view the government's projections as reasonable and attainable," writes Uccelli. "Encouraged by the Dominican Republic's positive results for 2006, which included economic growth of 10.4% and inflation of only 5%, and by its sound prospects for this year, we recently upgraded our recommendation on its bonds to outperform", he reports.

More taxes for tourism areas
President Leonel Fernandez will send a bill to Congress to create the National Institute for the Development of Tourism Infrastructure, Tourism Minister Felix Jimenez announced yesterday at a press conference. The new government body will be funded by a US$8 duty levied on air travelers to the DR, and will replace the Executive Committee for Tourism Zone Infrastructures (CEIZTUR) that is currently funded by a US$5 tax on travelers created last year (US$2.50 on entry and US$2.50 on departure). The Minister of Tourism will manage the new organization, and the board will be made up of the director of the National Institute of Potable Water and Sewage, an engineer representing the National Hotel & Restaurant Association, and banker Alejandro Grullon Espaillat.
Tourism Minister Felix Jimenez made the announcement during a press conference at the Presidential Palace yesterday. He said that the National Hotel & Restaurant Association has already approved the increase in the duty to be collected, which will be used to improve infrastructure in tourist areas.
The CEIZTUR entry tax has already generated a RD$2.1 billion fund handled by the Ministry. The additional funds would enable the department to carry out beach regeneration projects in Samana (Carenero and Los Cacaos), La Romana (La Caleta), San Pedro de Macoris (Guayacanes), Najayo and Palenque (San Cristobal) and beaches in Barahona. The funds would also be used for sewage treatment plants in the expanding areas of Puerto Plata, Cabarete and Las Terrenas (Samana). He also announced sewage construction plants for Rio San Juan, Jarabacoa, Samana (through to Las Galeras) Juan Dolio and Guayacanes, Najayo and Palenque.
For the southwest of the country, he says the government envisions the construction of 1,500 rooms over the next three years. He said his department is working with the Environment Ministry on plans for tourism development in areas such as Bahia de las Aguilas in Pedernales, as reported in Hoy.

Air Dominicana in 2008?
The government has announced the creation of Aerolineas Dominicanas (Air Dominicana) that will be run by Air Europa, the Spanish airline. Tourism Minister Felix Jimenez explained that although the Dominican government is acting as a shareholder in the project, all investments are private. He made the announcement during a press conference at the Presidential Palace.
The airline's first flights are scheduled for 2008. The feasibility report calls for an initial investment of US$10 million. The company will begin with a fleet of four jets - two Boeing 767s, a Boeing 737 and a Boeing 800.
Air Europa main shareholders recently purchased Coral Hotels in the DR.

Indian investors interested in DR
Indian Foreign Relations Minister Anand Sharma has said that Indian investors are interested in the areas of technology, cinematography, production of audiovisual equipment and tourism in the DR, as both countries strengthen their relations. Sharma is in the DR on an official 72-hour visit. Upon his arrival at the airport yesterday, Sharma was met by Dominican Ambassador to India Hans Dannenberg Castello and by the director of the Las Americas Institute of Technology (ITLA), Jose Armando Tavarez. Sharma's first stop was at the ITLA where he said he was quite impressed with the installations. Sharma also highlighted the DR's strategic position in terms of access to other markets, which Sharma says India is very interested in.

Indotel opens new center
The Dominican Telecommunications Institute and the Loyola Polytechnic Institute in San Cristobal have inaugurated a RD$3.6 million technology center with 20 new computers and activities area.

Constitutional reform in trouble?
Diario Libre writes that although the PLD has the votes to open Congressional discussions for constitutional reform, it may not have enough to pass the changes that the presidential commission is proposing. Opposition to the revisions is expected from both the PRD and the PRSC. Diario Libre writes that the PLD must then bring a unified position to the Congressional Revision Assembly. Reports of internal conflicts within the PLD party could also spell trouble. Diario Libre explains that the once-amicable relations between the government and Congress are now strained due in part to some senators' loyalty towards presidential pre-candidate Danilo Medina, who is challenging President Fernandez for the 2008 PLD presidential candidacy. Medina, nevertheless, has said that all senators will follow what the PLD political committee decides. The PLD has enough votes to convene the Constitutional Revision Assembly, but the party would need two thirds of the vote to pass changes. The PLD currently has 118 of 140 needed votes.

PRD not convinced
Despite the President's efforts to convince them to the contrary, at a press conference after a meeting between the PRD and President Leonel Fernandez, the opposition party spokesmen announced that they would be sticking to their position that a constitutional reform should be conducted through a constituent assembly, a special non-Congressional body. Yesterday's meeting at the Presidential Palace was attended by PRD head Ramon Alburquerque and secretary general Orlando Jorge Mera. The meeting began at 5pm and ended at 6:40pm. Interestingly, the PRD rejected the option of a constituent assembly when it was in government and had majority in Congress and instead pushed through modifications proposed by then President Hipolito Mejia that enabled the latter to run for re-election.

JCE to decide on incentive
After the Chamber of Accounts declared itself incompetent to rule on the JCE incentives case, Central Electoral Board head, Julio Cesar Castanos Guzman announced the JCE's own board would decide on the issue next Wednesday. A majority vote would be called. The Chamber cited article 10 of Law 10-04 and article 8 of Law 821-27, and its 1941 modification that would relieve the judges from an opinion in the dispute. Judge Aura Celeste Fernandez disputes the RD$66,000 a month incentive payments, which are equal to the income tax deductions that judges would be required to pay, and has refused to accept them herself. Of her colleagues on the JCE, only judge Mariano Rodriguez followed suit.
News reports also carry comments from three previous JCE judges on the incentives case. The judges and the widow of a former JCE president have asked the current JCE to look into the records to see if at any time they received funds or benefits outside of their monthly checks. Juan Sully Bonelly, Luis Mora Guzman, Rafael Armando Vallejo and Ivelisse Saldana de Estrella (widow of Cesar Estrella Sadhala) made their comments in light of the announcement by the Chamber of Accounts who said they are not in a position to decide on the legality of receiving these incentives. In a statement, the former judges said that if those judges received or did not receive extra benefits, this should be made public in either case.
Also commenting on the issue, Diario Libre's Adriano Miguel Tejada writes today that "independently of their legality, the matter irritates the public that each day feels crushed by a leviathan-state, while politicians and high-ranking officers seem to live in a Nirvana full of privileges."

Parties receive money
The country's 21 recognized political parties received RD$24.7 million from the JCE yesterday. This disbursal is the first of a total of RD$296.8 million that the parties will receive. The funds will be used to finance their activities. The PLD, PRSC and PRD received the largest sums of RD$6,596,432 while the smaller parties received funds depending on their size. The Alianza por la Democracia received RD$511,018 while the Partido Popular Reformista received RD$164,910.

Sewage system vs. metro
Geologist Osiris de Leon, speaking at the UASD Library auditorium yesterday, recommended that the government abandon the construction of the north-south 14.2 km line of Santo Domingo's first underground transport system and use the ditches for the construction of a sewage system for Santo Domingo instead. De Leon feels that if the government continues with the metro construction as so far, there is a strong risk that the structure will collapse.
He says that the government violated Environmental Law 64-00 and did not carry out the required preliminary studies, and as a result has had to increase spending and in some cases duplicate the metro structures when it finds inadequate soils on the chosen route. De Leon says that the government was aware that studies were necessary but did not carry these out and instead used of the RD$750 million that were allotted for the first year to begin to open ditches. De Leon warned that throughout the ground of Santo Domingo, underground caverns and clay soils on the planned metro route could cause the structures to collapse in the event of heavy rainfall, as has already occurred at several points during construction. De Leon also warned such a collapse would also happen in case of an earthquake measuring 7.5 on the Richter scale.
De Leon was also very critical of the government's solution for the dumping of earth dug up to build the metro - alongside the La Isabela River. He says this is in violation of the protected area. He mentioned the government had announced that an extension of the Avenida del Puerto would be built, but then found it would have to dynamite the ground in order to pass the La Zurza area and apparently has abandoned the avenue extension.
De Leon mentioned that the government has spent over RD$6.6 billion on the construction so far, almost the entire proposed cost for the metro, which was US$325 million, and that this amount is only enough for 12% of the construction.
De Leon is an advocate of a bus system for the city, and mentions that the cost of buses is US$5 million per kilometer compared to US$100 million per kilometer for the metro, with the advantage that buses allow flexibility for changing their routes. He mentioned that to feed passengers for the metro, the metro office has already planned 140 kms of east-west bus feeder routes.
The Fernandez administration allotted RD$10.7 billion for the metro construction in this year's budget, funded by a tax increase, up from RD$1.8 billion in 2006.
De Leon estimates that the government would have to subsidize the metro to the tune of RD$3.2 billion a year in order for it to operate. He forecast that Dominican taxpayers would have to pay RD$55 billion for the metro to be completed.
He urged the government to spend the funds in the Santo Domingo sewage system instead, which is estimated to cost US$1 billion, and for which governments over the years have said there is not enough money. "The construction of the sewage system would guarantee public health, because currently 75% of sewage is disposed of using wells that pollute the underground waters.
De Leon said that the country should invite Greenpeace, and the US and French geological societies for their opinions on the geological aspects and violations of environmental laws. Furthermore, the president of the Academy of Science, Nelson Moreno Ceballos mentioned that it is up to the Ministry of Environment to act in response to any breaches of Environmental Law 64-00 caused by the metro construction.

Drug tests for judges and prosecutors
Supreme Court president Jorge Subero Isa and Attorney General Radhames Segura signed an agreement yesterday giving the go-ahead for the National Forensic Sciences Institute to perform drug tests on judges, prosecutors, employees of the Judicial Branch and prosecutors. The drug tests, which are obligatory, are aimed at detecting cocaine, marijuana, opiate and amphetamine use.

Drinking less beer
Beer consumption decreased by 30% in the month of January. The Cerveceria Nacional Dominicana, makers of the Presidente and Bohemia beer brands, say that the decline in sales came as a result of the higher cost of beer due to the tax increase as part of the January fiscal reform. The beer company said that the drop in sales has offset the hike in the selective tax on consumption, which means that the government will not be collecting the extra taxes it had budgeted.

German nationals arrested
Two Germans and a Dominican woman accused of forging checks and debit cards have been apprehended by police. Detlef Galeck, Udo Neumann and Cristina Antonia Martinez were arrested in Santiago and are believed to be part of an international ring. During a search of the house where the trio resided, computer disks, stamps and other equipment were found. A rifle and three copies of a passport were also found.

Storms in NY affect flights in DR
Heavy snowfall in New York has forced the cancellation of all flights to that city and left many travelers headed for JFK International stranded at Las Americas International Airport (AILA). Seven American Airlines and Delta flights to NY were cancelled yesterday.

Big Papi big on charity
Boston Red Sox slugger David "Big Papi" Ortiz has donated an ambulance and 40 heart valves to the Robert Reid Children's Hospital. Sports Minister Felipe Payano and First Lady Margarita Cedeno de Fernandez were both present at the ceremony, which took place yesterday. Ortiz says that the funds for the heart valves were raised during last year's Softball Classic. Ortiz said that he visited the hospital as a child and that it had changed a lot since then, adding that he thought it looked like a hospital in the United States.
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