Aiming for an Image of Judicial Independence

DOMINICAN REPUBLIC - Forecast 05 Sep 2017 by Pavel Isa Contreras and Fabricio Gomez

The National Council of the Magistracy (CNM) last month appointed new judges to the Superior Electoral Court (TSE), the highest court for the resolution of electoral conflicts. Although the appointments, factually under control of President Danilo Medina, secured the PLD’s control over the court, some members, including its president, didn’t seem to correspond to party lines. This reflects Medina’s dual objective in reforming the high courts: to both increase his influence over the judicial system, and to seem to offer it greater independence.

The CNM must choose four new Supreme Court of Justice judges by yearend. We expect Medina to prioritize his own power, especially because of the threats that could link his administration to corruption, and because of changes in the political landscape that may not favor him.

Premature campaigning has revealed the outlines of the race for the 2020 presidential election. Given the constitutional impediment to Medina’s running for a third consecutive term, and poor prospects for proposed constitutional reform that would remove that law, other candidates have stepped forward. A new poll pegs Medina and ex-presidential candidate Luis Abinader as frontrunners, with just over a quarter of the voting intentions. Ex-presidents Leonel Fernández and Hipólito Mejía, and other pre-candidates, are running far behind.

The government has announced that the process of the Electricity Pact was in its final stretch, and that a deal would be brought to a plenary session of Congress for a vote. But there is well-founded skepticism that a deal can be approved. There are no signs of robust commitments for reducing the losses of the distribution companies, which should be the heart of a pact over the financially bankrupt system. Bidding for the construction of the Punta Catalina coal plants, which favored the scandal-ridden Brazilian company Odebrecht, has generated great suspicion.

Economic activity plunged in Q2, with GDP up just an estimated 2.7%, down from 5.3% in Q1. In H1, growth was estimated at 4%, below the average of the last decade. But we expect an H2 rebound, and growth of 5% for the year. The current account surplus reached $255.4 million in H1, up $188.3 million from 2016. Tourism and remittances were likely the driving forces. Fiscal accounts are largely in line with the budget law. Cumulative inflation at yearend is projected at 3.7%, within the (4% ± 1.0%) target range.

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