NEW YORK.- Standard & Poor's raised Dominican Republic's credit rating on Monday, citing improvements in the country's debt structure and prospects the economy will continue to grow at a healthy pace, Reuters reports.
It said the upgrade comes as the government of president Leonel Fernandez is moving to tap international capital markets for $500 million this year. “Fernandez is also pushing a tax reform bill in Congress to help the government meet fiscal targets under a $1.6 billion economic aid program it agreed to with the International Monetary Fund during the global economic slowdown.”
S&P said in a statement it upgraded the long-term foreign currency rating of the Dominican Republic, one of the largest economies in the Caribbean, to B-plus from B. S&P's rating is four notches below investment grade. "The Dominican Republic's economy remains resilient," S&P said. "The upgrade reflects the country's progress in gradually improving its debt structure and debt management, its stronger growth and export prospects."
Reuters said Moody's Investors Service rates the Dominican Republic at B1, the same level as S&P's new rating. Both have a stable outlook while Fitch Ratings has the country one notch lower at B with a positive outlook.
The International Monetary Fund forecasts the country's economy will expand by at least 5.0 percent this year, notching its third straight year of growth.
S&P said continued growth will be helped by the reopening of a key nickel mine this year and the planned 2012 production start at Barrick Gold's (ABX.TO: Quote) Pueblo Viejo gold project, the Dominican's largest foreign investment project.
S&P, however, warned the Caribbean nation still has many structural and institutional challenges.
"Despite buoyant economic growth, fiscal challenges persist as revenue collection lags behind the economic expansion," it said.
The IMF has urged Fernandez to implement his tax reform plan, which will slap a 1.0 percent tax on assets held by financial institutions and raise taxes on casinos and luxury properties to make up for government revenues falling short of budget projections.
A fifth and sixth review of the IMF agreement has been delayed after Dominican officials requested the fiscal targets be renegotiated after the rise in global oil prices forced the government to increase the amount it spends on subsidies for the electricity sector.
The news agency notes that the subsidies are expected to double to $700 million from $350 million projected in the government's 2011 budget, adding pressure on the country's fiscal accounts.
Economy minister Temistocles Montas said last month a planned $500 million bond issue would take place after IMF approval, enabling the country to tap international credit markets at the lowest possible interest rates.
Given the pending IMF approvals and congressional passage of the government-backed tax reform bill, some analysts said they were caught off-guard by the S&P upgrade.
"I was a bit surprised with the timing," said Franco Uccelli a Miami-based Caribbean and Latin America analyst with J.P. Morgan Chase.
Written by: Atabey, 14 Jun 2011 8:01 AM
From: United States, NYC
Let's see what Dready and the gang have in store for us today. They aren't going to like the news.
"I was a bit surprised with the timing," said Franco Uccelli a Miami-based Caribbean and Latin America analyst with J.P. Morgan Chase."
If DR plays ball with the USA, cookies are given. This will lower the cost of holding and servicing the debt in DR.
From: United States
It still is a junk bond rating.
And Leonel is a junk bond saleman.
Written by: derek, 14 Jun 2011 9:12 AM
From: Dominican Republic
Leonel, in just 7 years, has rescued the DR from the brink of complete collapse under Hippolito. This , in spite of the idiocy of GW (Baby) Bush, that brought the world to its knees. Well done Leonel!!
Just to be raised, when the US and many others, are on the verge of being lowered, is high praise indeed.
Written by: Atabey, 14 Jun 2011 9:51 AM
From: United States, NYC
Written by: JimHarrington, 14 Jun 2011 8:42 AM
From: United States
It still is a junk bond rating.
And Leonel is a junk bond saleman."
It may be junk, but if the USA says its not, the Markets will support the puny amounts. Remember, we're talking puny (DR) amounts of debt here relative to Greece and Portugal, two of the European piggies. The question remains, how to systematically attack and formulate a taxation policy that brings in the amounts needed to support a modernization process and lessen debt obligation moving forward. Many Latin nations have not been able to develop such a tax collection base and suffer because they collect way less than their develop nations. Puerto Rico, collects something like 50% of its taxable base and suffers from its inability to right itself. And this is with all the financial and support coming from Washington. Will DR continue the trend?
From: United States
the imbecile says
It may be junk, but if the USA says its not, the Markets will support the puny amounts
it is the USA that says it is. last i checked, Moody´s and Fitch are US ratings agencies
Written by: Atabey, 14 Jun 2011 9:57 AM
From: United States, NYC
At base there's a cultural issue perhaps and its very difficult to see the State collecting say 80% of its Taxable source streams. But DR and its modernizers have to attempt to structure the nation accordingly, ie., that is, set-up a national taxation system that provides enough revenue streams to support or carry its Public funding needs. And this must be accomplished within the next say 10 years. I believe by then the electrical subsidies will largely end, and user fees will extend widely throughout national life in DR. Yes, the days of enjoying the fruits without thinking about the States' take will be long gone, but Modernization has its pluses too. But the Citizenry MUST HOLD accountable its elected officials so that the Public treasury is used wisely. Tough days and years ahead, but this is the crux of the issue.
Written by: Atabey, 14 Jun 2011 9:59 AM
From: United States, NYC
Le dready appears. Hope you had your morning Joe. Well Le Dready, so your point is that the USA is not supporting LF?
From: United States
more idiocy from the loonie bin
If DR plays ball with the USA, cookies are given.
it´s an IMF loan, professor.
From: United States, FREEPORT, Long Island.... (Look, beyond the words)
We wouldn't need any hand-outs, if Leonel was for the people of the Dominican Rep.. The dominican republic is one of the few nations in the world that can back its own currency with its PRECIOUS METALS and RECOURSES. There is a lack of projective thinking in this government, the only forward thinking is to the end of Lee-Flee's career.
Leo is only a Con Artist and a good one... He took advantage of his educated and uneducated people to then create a plethora of fall guy/gals....
From: Dominican Republic, Puerto Plata
When Balaguer "entregó" the country in 1996, debt was at USD$700MM.
It is now at USD$26B.
Granted, a lot of work was done. But hardly did they build a modern Camelot.
But how much of it went to waste?
Written by: Atabey, 14 Jun 2011 10:28 AM
From: United States, NYC
That's my point Walter. If Modernization is the Goal, then some debt has to be used to fund the Enormous needs of the republic. Thousands of schools are still needed, huge sanitation and potable water services, and other infrastructural needs, too. So where to get all the funding needed? Some of it has to be obtained via foreign loans. Now the tough part is getting the Citizenry to HOLD THE DR OFFICIAL And the Government to the task at hand, and not just line their pockets. Difficult given our traditional attitudes toward Public life. Again, this happens all too frequently across much of Latin America.
I don't know how much monies have been stolen, but suspect an amount too high to give the Public any confidence in their government. That's why more transparency is needed in Government. But a more important issue is for the leaders of the republic to get the public out of its childish thinking that Government is the END ALL for advancing in life.
Written by: Atabey, 14 Jun 2011 10:35 AM
From: United States, NYC
That can only be accomplished by eliminating funding Political Parties and ending most of the State subsidies for electricity across the nation. People need to understand the true cost and benefit of programs and will never do so if the Government treats them like children. Exploiting their ignorance. A Good Informed Citizenry is the best hope for the Modernization process. Remember the housing shortage in DR is estimated at close to >70% of GDP! Now add education and all the rest and everyone should understand the Enormous needs still to be met by the leadership of the nation. A very tall task indeed and one made more difficult if the leadership doesn't get people politically and culturally sensitized to a new way of living. More work and less talk. More education and less political posturing. It will not be easy.
Written by: Atabey, 14 Jun 2011 10:40 AM
From: United States, NYC
Written by: dreadlocks, 14 Jun 2011 10:02 AM
From: United States
more idiocy from the loonie bin
If DR plays ball with the USA, cookies are given.
it´s an IMF loan, professor."
I guess the USA play a marginal role at the IMF, Le Dready? Ha HA hA!
Written by: juanb, 14 Jun 2011 12:08 PM
From: Dominican Republic
This rating is deserved recognition that our wasteful, corrupt government will show no mercy when it comes to taxing us.
LF and the criminals in his gov't have spent all our resources.
LFhas shown that he is shamless in his willingness to do anything to keep the lines of credit open.
That includes screwing us with some of the highest taxes (telephones, fuel, and cable just to name a few) IN THE WORLD!!!
It's lkike lending money to a child because you know that he is willing to steal from his parent's pockets while they are sleeping.
Written by: lovingit, 14 Jun 2011 12:19 PM
From: United States, Delaware
The DR needs a system to collect income taxes. Income tax would alleviate taxation in many other sectors.
An initiative of this nature would serve multiple purposes:
1. Makes tons of money for the Dominican state. As some of you may know, in U.S., income tax is the single biggest earner for the country. This is because, a small % of the population have a house or a business, thus, tax income from that is not as lucrative, yet, most of the population does have a job. In the DR, the ratios would be similar.
2. Revenue Sharing. The richer gets taxed more, the poorer gets a larger return, this will minimize income inequality.
3. Extra money to be used to the further developement and well being of the Dominican people, better education, better hospitals, a short term wellfare program (no more than 5 years) where people would learn to be skilled workers and get them back on their feet.
...cont
Written by: lovingit, 14 Jun 2011 12:20 PM
From: United States, Delaware
...cont
4. Reduce other taxes, such as ITBIS, below double digits.
5. Crack down on illegal immigrants (require that every worker presents a cedula for payroll processing)
6. Crack down in illegal wages (The contracted company should investigate a full time employee is getting paid below minimum wage)
7. Data, Data, Data. The goverment would have real data on people's income, where do these people live so that programs helping those less fortunate barrios could be established.
If the DR was to contract a reputable company like ADP, require that all businesses use the payroll services, and make it free for the first 5 years or so and then based charges on the size of the company, revenue or number of employees, then it would be in the best interest of the Dominican goverment and "most" Dominicans that this is established.
Of course, the next thing is to ensure the revenue is used properly for the above mentioned reasons and beyond.
Written by: RoyStone, 14 Jun 2011 12:24 PM
From: Australia
From: Dominican Republic, NEVER FORGOTTEN, NEVER FORSAKEN!
The daily Bunch has spoken:
Guys don't eat your Bananas too green, it makes you even more irrelevant. Lol.
Written by: Atabey, 14 Jun 2011 12:47 PM
From: United States, NYC
RoyStone,
Unless you read up on the history of the DR all this might surprise you. Yes, the ratings are low, very low. But guess what? They were EVEN LOWER BEFORE! That's the sad part and the encouraging part as well. The movement IS IN THE RIGHT DIRECTION. And going forward, that's what needs to be encouraged. Negativity breeds negativity. Remember, constructive criticism is preferable to negative reinforcement. Especially for an outsider: Try it out.
Written by: RoyStone, 14 Jun 2011 12:51 PM
From: Australia
DONT_BE_SILENT,
And your contribution to the discussion is ........?
Written by: RoyStone, 14 Jun 2011 1:03 PM
From: Australia
Atabey,
I am all for credit where it is due, and yes it is an improvement in the rating However the article is misleading - suggesting everything is fine with the economy now, and the future looks wonderful. Well it isn't. The Cholera epidemic may be about to go into exponential mode, and if it does, tourism and the economy as a whole will be hit.
Stepping up mining is a positive step, but it seems most Dominicans are against it. Provided environmental safeguards are in place, this is the best news for DR, not Leo spruking in India for Kazakhstani tourism.
Written by: Atabey, 14 Jun 2011 1:17 PM
From: United States, NYC
"S&P upgraded the long-term foreign currency rating of the Dominican Republic, one of the largest economies in the Caribbean, to B-plus from B. S&P's rating is four notches below investment grade. "
The Holy Grail of for the DR is reaching "investment Grade Status" But that is still 4 difficult steps ahead. Still, it's a worthwhile Goal to shoot for.
As for the IMF taking a too rosy picture on DR. Well remember, they have an enormous amount of real time information on the current state of the DR economy. And many other economies in the world. As I stated to you before, DR is relatively speaking VERY Small fries in the Global context so while some problems will no doubt surface, an injection of liquidity from the US/EURO will easily sustain DR over such difficulties.
S&P, however, warned [DR] still has many structural & institutional challenges.
"Despite buoyant economic growth, fiscal challenges persist as revenue collection lags behind the economic expansion,"
From: United States
another lame attempt at stand up comedy from the professor of copy and paste
I guess the USA play a marginal role at the IMF, Le Dready? Ha HA hA!
and that means what? that this is not going to be a loan? or that there will be no onerous structural adjustment stipulates? oh, i forgot. it will be ¨cookies¨for playing ball with Uncle Sam.
Written by: Atabey, 14 Jun 2011 3:01 PM
From: United States, NYC
Anyway, the role of the US in the IMF is very well documented, so don't take my words for it Le Dready.
And yes, it does matter that the USA is backing the DR. "Onerous structural adjustment stipulations" say you. Well, you believe in a "free lunch" too El Dready? Perhaps that Entitlement Mentality is part of your beliefs too. DR as I've stated numerous times suffers from the same malady many other Latin States do: poor central government tax collection compliance. In many of the First World states, tax collection is closer to meeting the budgetary requirements of the State. Sure, in recent times the hardship of the Great Global Recession has dealt a blow to tax revenue streams, but in the main, what separates the poorly run nations from their better managed cousins is the formers lack of collecting the taxation needed to sustain the spending streams in their modernization or just cost of operating their government responsibility.
Written by: Atabey, 14 Jun 2011 3:09 PM
From: United States, NYC
At some point the people of the DR have to sit up and take their medicine. First, insist on Good Governance. Non-violent resistance if need be and lots of it. The World Press will not sweep it under the rug, but expose it to the max. Second, "hit the books" Insist on educational increases and follow it up by encouraging student and overall populace acceptance of a knowledge based society. Third, End the Entitlement Mentality that goes something like: "I just want a job with the government or a Political Party so I can make a killing." The Central Government encourages the Entitlement Mentality by sustaining costly and inefficient subsidy programs that use up valuable streams of revenues better suited to other more important sectors of the largely underdeveloped country. Think infrastructure needs, potable water, sanitation, Education, etc.
From: Dominican Republic, Puerto Plata
Anyway guys, all things must pass.
When the Hippo hits the Palace, it'll be D---
Get ready.
From: Dominican Republic, Puerto Plata
Anyway guys, all things must pass.
When the Hippo hits the Palace, it'll be D---
Get ready.
Written by: Atabey, 14 Jun 2011 3:51 PM
From: United States, NYC
Let's hope the Hippo, IF HE GETS IN, does the incredible: manages the affairs of State with wisdom. Now, that may earn DR two or more of the 4 steps up the Quality Bond Ratings game!
I would not bet on it, unfortunately.
From: United States
says the half wit Atabey
And yes, it does matter that the USA is backing the DR. "Onerous structural adjustment stipulations" say you. Well, you believe in a "free lunch" too El Dready
you are the one who sees the loans as cookies for playing ball.
Written by: RoyStone, 16 Jun 2011 11:18 AM
From: Australia
As previously stated, the IMF is a bank. The borrower's credit rating determines the interest rate they are charged. If a borrower defaults, they try to help, then send in the bailiffs. If the government borrows too much and the rating is still low, then too much tax revenue goes to servicing the loan and not enough is available for projects, especially if much is being creamed off by the administration.
From: United States
Atabey thinks it is a cookie jar, owned by your affable Uncle Sam, who lets you have a few if you eat your broccoli.
From: Dominican Republic
As usual, media fluff, disinformation and manipulation bombard the neurons of the unenlightened masses, to the point that functional illiteracy of current events is cultivated as a virtue. Nobody bothers about the Dodd hearings last summer in which the rating agencies where called on the carpet, regarding their role in the Wall Street meltdown. For those too lazy or just playing dumb, at least I'm posting a link to shed some light on the permanent and structural crisis of planetary capitalism, which most people I'm afraid, don't even remotely believe it even exists. Happy reading to the lazy talkin' heads. :-)
http://www.stumbleupon.com/su/Ach....on-in-realism-from-a-member-of-thWritten by: Atabey, 16 Jul 2011 4:15 PM
From: United States, NYC
ArielFornari, 16 Jul
long time no read. Too much festivities on Bastille Day? How's our man Chavez? Heard he's headed back to Cuba, didn't accept the Brasilian offer.
From: Dominican Republic
Atabey-The fifth column blocked me over here for a while, plus I'm busy somewhere else. My man Chavez is doin' fine and dandy as I see on twitter, and looks better every day and Ollanta Humala and him hit it off right. Brazil looks to the Pacific via Peru, and Uncle Sam is in dire straits as usual, that's about it for news and sports for now.... :-)
Written by: Atabey, 16 Jul 2011 5:49 PM
From: United States, NYC
I hear that Chavez got cold feet on Brazil's offer and preferred the Cuban offer. No other country wants to save him as much as Cuba right now. Too many potatoes in the basket for them. Brazil has too many holes for Uncle Sam to reach him up close and personal. I think Chavez is very ill as his cancer has metastasize. It will not be an easy going for him. His party needs to develop another leader and fast, just in case.
Stay in touch.
From: Dominican Republic
Atabey-I'm not a Chavez insider, but I do stay on top of things. The virtually same optical view has been held about the Cuban Revolution since 1959, from the media oligopolies and the CIA, and from what I see Cuba hasn't crumbled yet. One BIG mistake that the "armchair experts" in Washington keep making, is to equate the Revolution with one man, and believe me, that's one BIG mistake but I'm not about to persuade them otherwise. As to his illness, he does look better each day, but only God knows. Again, as to leadership, both Cuba and Venezuela have top leadership out the kazoo believe me, so I ain't losing any sleep over it. :-)
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"I was a bit surprised with the timing," said Franco Uccelli a Miami-based Caribbean and Latin America analyst with J.P. Morgan Chase."
If DR plays ball with the USA, cookies are given. This will lower the cost of holding and servicing the debt in DR.
And Leonel is a junk bond saleman.
Just to be raised, when the US and many others, are on the verge of being lowered, is high praise indeed.
From: United States
It still is a junk bond rating.
And Leonel is a junk bond saleman."
It may be junk, but if the USA says its not, the Markets will support the puny amounts. Remember, we're talking puny (DR) amounts of debt here relative to Greece and Portugal, two of the European piggies. The question remains, how to systematically attack and formulate a taxation policy that brings in the amounts needed to support a modernization process and lessen debt obligation moving forward. Many Latin nations have not been able to develop such a tax collection base and suffer because they collect way less than their develop nations. Puerto Rico, collects something like 50% of its taxable base and suffers from its inability to right itself. And this is with all the financial and support coming from Washington. Will DR continue the trend?
It may be junk, but if the USA says its not, the Markets will support the puny amounts
it is the USA that says it is. last i checked, Moody´s and Fitch are US ratings agencies
If DR plays ball with the USA, cookies are given.
it´s an IMF loan, professor.
Leo is only a Con Artist and a good one... He took advantage of his educated and uneducated people to then create a plethora of fall guy/gals....
It is now at USD$26B.
Granted, a lot of work was done. But hardly did they build a modern Camelot.
But how much of it went to waste?
I don't know how much monies have been stolen, but suspect an amount too high to give the Public any confidence in their government. That's why more transparency is needed in Government. But a more important issue is for the leaders of the republic to get the public out of its childish thinking that Government is the END ALL for advancing in life.
From: United States
more idiocy from the loonie bin
If DR plays ball with the USA, cookies are given.
it´s an IMF loan, professor."
I guess the USA play a marginal role at the IMF, Le Dready? Ha HA hA!
LF and the criminals in his gov't have spent all our resources.
LFhas shown that he is shamless in his willingness to do anything to keep the lines of credit open.
That includes screwing us with some of the highest taxes (telephones, fuel, and cable just to name a few) IN THE WORLD!!!
It's lkike lending money to a child because you know that he is willing to steal from his parent's pockets while they are sleeping.
An initiative of this nature would serve multiple purposes:
1. Makes tons of money for the Dominican state. As some of you may know, in U.S., income tax is the single biggest earner for the country. This is because, a small % of the population have a house or a business, thus, tax income from that is not as lucrative, yet, most of the population does have a job. In the DR, the ratios would be similar.
2. Revenue Sharing. The richer gets taxed more, the poorer gets a larger return, this will minimize income inequality.
3. Extra money to be used to the further developement and well being of the Dominican people, better education, better hospitals, a short term wellfare program (no more than 5 years) where people would learn to be skilled workers and get them back on their feet.
...cont
4. Reduce other taxes, such as ITBIS, below double digits.
5. Crack down on illegal immigrants (require that every worker presents a cedula for payroll processing)
6. Crack down in illegal wages (The contracted company should investigate a full time employee is getting paid below minimum wage)
7. Data, Data, Data. The goverment would have real data on people's income, where do these people live so that programs helping those less fortunate barrios could be established.
If the DR was to contract a reputable company like ADP, require that all businesses use the payroll services, and make it free for the first 5 years or so and then based charges on the size of the company, revenue or number of employees, then it would be in the best interest of the Dominican goverment and "most" Dominicans that this is established.
Of course, the next thing is to ensure the revenue is used properly for the above mentioned reasons and beyond.
"B" still stands for basket-case banana-republic. Certainly nothing to brag or rejoice about! B- is the lowest S&P rating of any country.
http://www.standardandpoors.com/r....rCode=39&start=0&range=50
Guys don't eat your Bananas too green, it makes you even more irrelevant. Lol.
Unless you read up on the history of the DR all this might surprise you. Yes, the ratings are low, very low. But guess what? They were EVEN LOWER BEFORE! That's the sad part and the encouraging part as well. The movement IS IN THE RIGHT DIRECTION. And going forward, that's what needs to be encouraged. Negativity breeds negativity. Remember, constructive criticism is preferable to negative reinforcement. Especially for an outsider: Try it out.
And your contribution to the discussion is ........?
I am all for credit where it is due, and yes it is an improvement in the rating However the article is misleading - suggesting everything is fine with the economy now, and the future looks wonderful. Well it isn't. The Cholera epidemic may be about to go into exponential mode, and if it does, tourism and the economy as a whole will be hit.
Stepping up mining is a positive step, but it seems most Dominicans are against it. Provided environmental safeguards are in place, this is the best news for DR, not Leo spruking in India for Kazakhstani tourism.
The Holy Grail of for the DR is reaching "investment Grade Status" But that is still 4 difficult steps ahead. Still, it's a worthwhile Goal to shoot for.
As for the IMF taking a too rosy picture on DR. Well remember, they have an enormous amount of real time information on the current state of the DR economy. And many other economies in the world. As I stated to you before, DR is relatively speaking VERY Small fries in the Global context so while some problems will no doubt surface, an injection of liquidity from the US/EURO will easily sustain DR over such difficulties.
S&P, however, warned [DR] still has many structural & institutional challenges.
"Despite buoyant economic growth, fiscal challenges persist as revenue collection lags behind the economic expansion,"
I guess the USA play a marginal role at the IMF, Le Dready? Ha HA hA!
and that means what? that this is not going to be a loan? or that there will be no onerous structural adjustment stipulates? oh, i forgot. it will be ¨cookies¨for playing ball with Uncle Sam.
Anyway, the role of the US in the IMF is very well documented, so don't take my words for it Le Dready.
And yes, it does matter that the USA is backing the DR. "Onerous structural adjustment stipulations" say you. Well, you believe in a "free lunch" too El Dready? Perhaps that Entitlement Mentality is part of your beliefs too. DR as I've stated numerous times suffers from the same malady many other Latin States do: poor central government tax collection compliance. In many of the First World states, tax collection is closer to meeting the budgetary requirements of the State. Sure, in recent times the hardship of the Great Global Recession has dealt a blow to tax revenue streams, but in the main, what separates the poorly run nations from their better managed cousins is the formers lack of collecting the taxation needed to sustain the spending streams in their modernization or just cost of operating their government responsibility.
When the Hippo hits the Palace, it'll be D---
Get ready.
When the Hippo hits the Palace, it'll be D---
Get ready.
I would not bet on it, unfortunately.
And yes, it does matter that the USA is backing the DR. "Onerous structural adjustment stipulations" say you. Well, you believe in a "free lunch" too El Dready
you are the one who sees the loans as cookies for playing ball.
http://www.stumbleupon.com/su/Ach....on-in-realism-from-a-member-of-th
long time no read. Too much festivities on Bastille Day? How's our man Chavez? Heard he's headed back to Cuba, didn't accept the Brasilian offer.
Stay in touch.