The Dominican Republic’s consolidated government debt stood at $ 53,000 million at the end of 2020, representing 69.2% of its gross domestic product (GDP) in that year, representing an increase of 18.7 percentage points of GDP compared to 2019 .
This information is highlighted in a report by the Central Bank of the Dominican Republic, in which it assesses the economic measures taken during the pandemic health crisis and their impact on liquidity, interest rates, tax bills and government debt.
An open page of the financial institution indicates that if nominal GDP in dollars had just maintained its 2019 level, about US $ 89,000 million, instead of falling to about US $ 79,000 million as estimated in 2020, the consolidated government debt , would have been about 59.5% of GDP, about 10 percentage points less than the 69.2% of GDP recorded in 2020.
The document entitled “Economic Policy, Government Debt and Financial Markets in Pandemic Times”, which was advised by the government and the international department of the Central Bank, explains that the preliminary results show that the factors that contributed the most The increase in Dominican debt was the increase in the primary deficit due to lower collections due to the incarceration and paralysis of multiple economic activities as a result of the pandemic.
In addition, other aspects are mentioned, such as higher social expenditure to protect the population from the health crisis, which led to an increase in financing and thus in debt; in addition to the contraction of GDP, a product of social isolation measures to moderate the spread of the coronavirus.
Government debt is also attributed to the variation in the exchange rate caused by the effects of COVID-19 in the sectors that generate foreign exchange, such as tourism and exports.
“ As the economy recovers to pre-crisis levels, the foreign exchange-generating sectors are reactivated, which contributes to exchange rate stability and the government starts to generate primary surpluses, the debt-to-GDP ratio will gradually decline, increasing sustainability. improves, ” the government informs. Central Bank document.
The financial entity adds that the decrease in real gross domestic product, apart from the impact of tax behavior and the accounting effects of exchange rate fluctuations, had a significant impact on the increase in government debt.
RATE
Loans
The Central Bank made approximately RD $ 215,000 million (more than 4% of GDP) available to the private sector.
Bookings
The entity has $ 12,000 million in reserves, 15.2% of GDP, to cover 7.4 months of imports.