Avoiding economic crisis amid political litmus tests
Amid an increasingly restrictive monetary policy and increases in widespread subsidies, economic growth (5.6%) and inflation (9.5%) in H1 2022 maintained momentum compared to H1 2021. This was also true when compared with January-May 2022. Economic growth has been mainly associated with the strong expansion of tourism.
For the sixth time since December 2022, the monetary policy rate rose on July 31st, now to 7.75% per year. In July the government also suspended the adjustment of the electricity rate scheduled to be applied for July – September, and called for a revision of the Electric Pact. It is estimated that this decision will imply an additional expense in the electricity subsidy of DOP 8,430 million ($154 million). Expenditure on temporary fuel and electricity subsidies was $126.5 million, in addition to the $546.3 million spent in January-June 2022.
On the political level, for the second time in less than a month, high-level political officials must leave the government. First it was Lizandro Macarrulla, a key player in the financing of President Luis Abinader's campaign, who had to request leave from his position as Minister of the Presidency due to the implications of his son's companies in the Medusa case. Then it was Roberto Fulcar, Abinader's campaign manager, who was replaced as Minister of Education due to public pressure questioning the quality of his administration and allegations of irregularities. Both situations have represented litmus tests for the discourse of transparency and adherence to the law sustained by the Abinader government.
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