Two possible levels of Central Government deficit for 2022: -4.4% and -2.7% of GDP

DOMINICAN REPUBLIC - In Brief 19 Jul 2021 by Magdalena Lizardo

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The Ministry of Finance sent the 2022 Macroeconomic and Fiscal Projections Progress Report to the National Congress. A vague document on the projections of income, spending and budgetary results projected for 2022, in which three possible scenarios of budgetary results are presented. Scenario 1 Inertial: The tax structure does not undergo change and the tax pressure is reduced compared to 2021. Spending increases, because the impact of the pandemic still remains and priority investment projects are planned. As a result, the Central Government deficit would amount to 4.4% of GDP, higher than the 4.1% projected for 2021 in the Budget Amendment Bill. Scenario 2: Although it is said that there would be a greater tax collection effort under the current tax legislation, revenues remain the same as in the inertial scenario. Primary spending contracts by 1.6% of GDP compared to the level projected for 2021. The projected deficit would amount to -2.7% of GDP. Scenario 3: Although it is the scenario associated with the Fiscal Pact, it is only indicated that the goal of the primary balance and the budgetary result is similar to that in force in Scenario 2. That is, 0.8% and -2.7% of GDP, respectively. No information is offered on how these results would be reached, if by increasing tax pressure, or reducing primary spending, or both. In conclusion, the only thing that this document seems to "reveal" dropwise is that the Government would be aiming for an adjustment of 1.4% of GDP with respect to the situation projected for 2021 or 1.7% of GDP if the Government develops new prioritized investment projects in 2022. In multi-year terms, the deficit projections, as % of GDP, which wou...