Vigorous recovery and resilience of Dominican economy despite challenges from global factors, according to IMF Mission

DOMINICAN REPUBLIC - In Brief 17 May 2022 by Magdalena Lizardo

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The IMF concluded the 2022 Article IV Consultation Mission and recognized that "the economy has shown a vigorous recovery after the pandemic, despite global factors that have generated challenges in terms of inflation." For the IMF, resilience and signs of policy sustainability are placing the Dominican economy in a good position to face emerging international challenges. The IMF understands that the recovery will continue with a projected growth of 5% for 2022 and a convergence of inflation to the target range in 2023. The policy priority in the short term, according to the IMF, is to return to the inflation target range, maintain a downward trajectory of public debt and protect the vulnerable population. The IMF advocates for an inclusive fiscal consolidation that can ensure the downward trend of the public debt and expressed its support for the reform of the electricity sector, the reforms to promote a more effective public administration and the authority´s commitment to implement a fiscal responsibility law. According to the organization, medium-term reforms should focus on: • Strengthening of monetary and financial policy and regulatory frameworks • Increased tax revenue by expanding the tax base and streamlining tax exemptions. • Reforms in support of economic growth and investment. • Progress in social areas, through better targeting of social programs, facilitation of participation in the formal labor market and reinforcement of the application of the social security law.