Moderate fiscal misalignment in 2018

DOMINICAN REPUBLIC - In Brief 01 Feb 2019 by Pavel Isa

Recently, the Ministry of Finance announced that in 2018 the Central Government's deficit reached DOP 97.7 bn or 2.4% of GDP. That is DOP 22.2 bn more than the target set in the budget law. The deficit of the NFPS reached DOP 104.6 bn or 2.6% of GDP, DOP 25.7 bn more than the target. Both cases were a moderate misalignment with respect to the targets and are explained by the increases in oil prices observed up to October which pushed the energy subsidy up to DOP 61 bn (close to US $ 1.2bn) or 1.5% of GDP. However, it has transpired that the Central Government transferred to the Central Bank only slightly more than the DOP 10 bn out of a total of DOP 27 bn contemplated in the budget law as part of the recapitalization program. This indicates that had it complied with the law, the fiscal misalignment in 2018 would have been greater. The central government deficit would have reached 2.8% of GDP and that of the NFPS 3% of GDP.

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