Medina’s re-election push loses steam
President Danilo Medina’s re-election prospects took a dramatic turn for the worse in April, dimming so significantly that his candidacy now looks unlikely to regain momentum. Unless he does the improbable (by seeking a constitutional reform against all odds, thereby risking his PLD party’s unity) Medina will be left with no other option but to negotiate with his rival Leonel Fernández, who -- if not facing Medina in a primary -- would surely easily win the nomination.
There are now many strikes again Medina. First, his Attorney General’s effort to discredit a well-regarded judge generated a wave of protests that left his government in a troubled spot. The AG’s behavior was perceived as an abuse of power, clumsiness and a clear intention to oust a very independent judge who might have been threat in adjudicating potential corruption cases.
Second, Senate President Reynaldo Pared threatened three Superior Electoral Tribunal judges with a political trial, after a 3-2 ruling declaring that the PRD 2017 National Assembly was not in accordance with the law.
Third, the Catholic Church rejected the Medina re-election attempts, and accused the government of manipulating the judicial system, and trampling the Constitution. It also said that the country could be heading toward a “dictatorship.” The political opposition, civic organizations and other figures echoed and supported these statements.
Fourth, a new phone tapping scandal has broken out, hurting the government, because the General Prosecutor’s office is now widely perceived as being actively involved in illegal espionage.
Inflation in March continued February’s upward trend, reflecting fuel price rises. CPI increased by 0.65% from February, bringing accumulated inflation between February and March to 1.02%. With this result, y/y inflation reached 1.47%, below the lower limit of the Central Bank’s 2019 target range (4.0% ± 1.0%) and well below the rate of the same months in 2018 (3.91%) and 2017 (3.14%).
Although in the medium-term liquidity levels are stable, in March monetary policy grew more relaxed. Liquidity expanded, pushing the banking sector to cut rates, to stimulate demand for credit. The average lending rate fell 65 points.
Net international reserves December to March fell by $273.6 million, and by $435 million from March 2018, the result of Bank interventions to alleviate seasonal pressures on the currency. Yet reserves are relatively strong, at $7.35 billion in March, equal to more than three months of imports. The trade balance is stable. Imports totaled $4.88 billion, exports $2.37 billion and the deficit in Q1 2019 was $2.4 billion, just $50 million higher than in Q1 2018.
The central government closed with a narrow cash position in March. This should force the government to go to the international market as soon as May.
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