Dominican Republic WT/TPR/S/207 
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I. ECONOMIC ENVIRONMENT 
(1) OVERVIEW  
1. As the largest economy in the Central American  and Caribbean region, real GDP growth in 
the Dominican Republic averaged 5.8 per cent per year in the period 2002-2007, albeit with wide 
fluctuations.  Following an acute crisis in 2003-2004, the economy staged a swift recovery driven by a 
vigorous expansion of private consumption and inv estment;  but this was followed by a slowdown in 
early 2008.  In the period under review, income per capita rose at an annual rate of 3.9 per cent, to 
reach a level of US$4,406 in 2007.  To sustain long-te rm growth requires a reduction in the country's 
persistently high poverty rates, and the implemen tation of policies to prevent economic incentives 
becoming distorted and avoid the pronounced stop-go cycles experienced during the period. 
2. Fiscal and monetary policy coordination has enhanced the overall credibility of 
macroeconomic policy since 2004.  In the fiscal dom ain an adjustment programme has been steadily 
consolidating the country's public finances, and this  is set to be extended through an austerity plan 
announced in July 2008.  Monetary policy has made  it possible to stabilize the nominal exchange rate 
against the US dollar and to maintain price stability , despite increasing infla tionary pressures.  The 
economic recovery has triggered a surge in imports , however, and the current account of the balance 
of payments has been in deficit since 2005, desp ite the growth of tourism income and family 
remittances, which have become a key element of the Dominican economy.  The current-account 
deficit has mainly been funded with increasing flow s of foreign investment, particularly from the 
United States. 
3. Merchandise trade represents about 50 per cent of Dominican GDP.  In 2002-2007, total 
exports grew at a modest pace, thanks mainly to  domestic exports, while foreign sales from free zones 
stalled, despite their continued importance, there by confirming the declining trend in the share of 
these zones in the country's economic growth over  the last few years.  The composition and 
geographic distribution of Dominican trade has re mained broadly stable, and manufactured products 
continue to dominate both imports and exports.  Although the relative importance of trade with 
Europe and Asia has increased, particularly in the case of imports from China, the United States 
remains the country's leading trade partner. 
(2) MACROECONOMIC TRENDS  
(i) Growth, structure and employment 
4. In 2002-2007, the GDP of the Dominican Rep ublic grew at an average real rate of 
5.8 per cent (Table I.1).  This is slower than th e rate recorded in 1996-2000 (7.6 per cent) and was 
subject to substantial fluctuations. 
5. In terms of their contribution to GDP, the key activities of the Dominican economy are, in 
order of importance:  services (52 per cent);  industr y (29 per cent) and agriculture (8 per cent).  In 
2002-2007, the services sector grew at an average real rate of 6.7 per cent, fuelled particularly by a 
vigorous expansion of the communications sector (essentially telecoms) supported by financial 
services, insurance and related activities.  Over th e same period, the industrial sector as a whole grew 
at an annual average rate of 3.0 per cent, despite  the GDP share of manufacturing industry slipping 
from 26.2 per cent to 23 per cent, mainly owing to a contraction in output from free zones.  
Agriculture expanded at an average real rate of 2.9 per cent during 2002-2007, which meant that its 
GDP share declined. WT/TPR/S/207 Trade Policy Review 
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Table I.1 
Main economic indicators, 2002-2008 
  2002 2003 2004a 2005a 2006a 2007a 2008b 
I.  Gross domestic product (GDP)              
GDP at current prices (RD$ billion)  463.6 617.9 909.0 1,020. 0 1,189.8 1, 364.2 370.2 
GDP at current prices (US$ milli on) 24,981 20,277 21,817 33,808 35,891 41,246 10,921 
GDP at constant prices – base year 1991 
(RD$ billion) 237.3 236.7 239.8 262.0 290.0 314.5 81.3 
GDP per capita (current US$) 2,917 2,326 2,459 3,743 3,903 4,406 n.a. 
Share of GDP (percentage)         
Breakdown by sector          
Agriculture 8.8 9.0 8.7 8.4 8.3 7.7 7.5 
Traditional export crops 1.0 1.0 1.0 0.9 0.8 0.8 1.1 
Other crops 2.7 3.1 2.6 2.4 2.5 2.2 2.6 
Livestock breeding, forestry and fi shing 4.5 4.3 4.6 4.7 4.4 4.3 3.8 
Industry 32.5 32.0 32.1 31.3 30.1 28.5 28.1 
Mining 0.8 0.8 0.9 0.8 0.8 0.7 0.7 
Local manufacturing industry 21.5 21.7 21.6 21.3 20.4 19.7 20.0 
Manufacturing in free zones 4.7 4.8 5.2 4.8 4.0 3.3 2.8 
Construction 5.6 4.6 4.5 4.5 5.0 4.8 4.5 
Services 49.6 51.5 51.7 51.5 51.5 51.9 53.3 
Energy and water 2.1 2.0 1.5 1.4 1.4 1.4 1.3 
Commerce 9.9 8.7 8.2 8.6 8.7 9.1 10.5 
Hotels, bars and restaurants 6.6 7.5 7.6 7.6 7.2 6.9 6.8 
Transport and storage 6.2 5.8 5.8 5.8 5.4 5.3 5.2 
Communications 8.0 9.3 10.0 11.5 12.9 13.7 14.6 
Financial, insurance and related se rvices 3.2 3.3 2.9 2.6 2.9 3.4 2.5 
Taxes on production, net of subsidies 9.0 7.5 7.5 8.8 10.1 12.0 11.1 
Real growth rates (per cent)        
Total GDP 5.8 -0.3 1.3 9.3 10.7 8.5 6.2c 
Breakdown by sector       
Agriculture 2.5 1.8 -2.5 5.9 8.6 1.2 -7.1c 
Industry 4.9 -2.0 1.8 6.6 6.5 2.4 3.0c 
Services 7.6 3.6 1.7 8.7 10.7 9.3 6.9c 
Taxes on production, net of subsidies 2.7 -17.1 1.2 28.6 27.3 28.3 23.7c 
II.  Employment        
Open unemployment rated (%) 5.8 6.5 5.6 5.8 4.7 4.3 4.2f 
Unemployment rate (broad definition)e (%) 16.1 17.0 18.4 17.9 16.2 15.6 14.0f 
Population (million) 8.5 8. 7 8.8 9.0 9. 2 9.3 n.a. 
n.a. Not available. 
a Figures subject to correction. 
b Preliminary figures for the first quarter of 2008. c Real growth rate with respect  to the first quarter of 2007. 
d The unemployed population as a percentage of the economically active population (EAP), who were available for work in 
October of the year in question, and had s ought work during the previous month.  Figur es at October of each year.  Information 
obtained from the results of the Encuesta Nacional de Fuerza de Trabajo  – ENFT (National Labour Force Survey) of April 2007. 
e The unemployed population as a percentage of the economically active population (EAP), who were available for work at the 
end of the year in question, whether or not they ha d sought work in the previous month (ENFT April 2007). 
f At April 2008. 
Source : Central Bank of the Dominican Republic. Dominican Republic WT/TPR/S/207 
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6. Between 2002 and 2004, the Dominican Re public experienced a period of major 
macroeconomic instability, caused among other factor s by sluggish external demand and a serious 
financial crisis triggered by banking frauds that resulted in the co llapse of three of the country's large 
banks (see Chapter IV(5)(iii)).  The crisis also cau sed a sharp depreciation of the national currency, a 
surge in inflation and large-scale losses of international reserves.  The scale of the subsequent bank 
bailout represented 20.3 per cent of GDP1, which itself shrank by 0.3 per cent in 2003-2004.  In 
January 2005, the Dominican Government signed a standby arrangement with the International 
Monetary Fund (IMF) for an amount of 438 million Special Drawing Rights (SDRs), equivalent to 
about US$665 million.2 
7. From 2005 onwards, the implementation of th e macroeconomic stabilization programme, 
agreed upon with the IMF, allowed for a rapid economic recovery.  In 2005-2007, the main macroeconomic indicators, including GDP, inflation, the fiscal balance and international reserves, all 
improved considerably.  Nonetheless, GDP, investment  and consumption growth slackened in the first 
quarter of 2008 (Table I.2), while inflationary  pressures strengthened (Section (2)(ii) below). 
Table I.2 
Structure of GDP by expenditure, 2002-2008 
 2002 2003 2004 2005 2006 2007 2008a 
As a percentage of real GDP          
Total consumption 86.2 82.1 83.5 88.3 89.3 92.1 87.9 
  Private 82.3 78.8 80.1 84.8 85.8 88.6 84.6 
  Public 3.8 3.3 3.4 3.5 3.5 3.5 3.3 
Gross capital formation  25.6 18.5 17.8 18.5 20.2 20.9 19.8 
  Private 22.7 18.1 17.6 18.2 20.0 20.7 19.7 
  Public 3.0 0.4 0.3 0.2 0.2 0.2 0.2 
Exports of goods and services 41.0 45.4 46.5 42.0 38.2 36.0 36.7 
Imports of goods and services 52.8 46.1 47.9 48.7 47.7 49.1 44.4 
Real percentage change         
Total GDP 5.8 -0.3 1.3 9.3 10.7 8.5 6.2b 
Total consumption 5.7 -4.9 3.1 15.4 12.0 11.9 9.0b 
  Private 5.6 -4.6 3.1 15.7 12.0 12.0 8.8b 
  Public 8.0 -12.6 3.8 10.2 11.0 10.0 16.2b 
Gross capital formation  3.5 -28.0 -2.3 13.1 20.8 12.4 4.3b 
  Private 5.0 -20.2 -1.8 13.3 21.3 12.5 4.3b 
  Public -7.2 -87.6 -26.2 -0.9 -22.6 7.0 6.2b 
Exports of goods and services 2.0 10.6 3.6 -1.2 0.7 2.4 -2.0b 
Imports of goods and services 1.5 -12.9 5.3 11.3 8.2 11.7 3.6b 
a Preliminary figures for the first quarter of 2008. 
b Variation with respect to the first quarter of 2007. 
Source : Central Bank of the Dominican Republic. 
8. During the years of economic crisis, gross capital formation and consumption both contracted 
sharply, reflecting the uncertainty caused by the crisis in the financial system in 2003.  From 2005 onwards, the rapid growth of the Dominican ec onomy was driven mainly by buoyant domestic 
demand, particularly private consumption and investme nt (Table I.2).  Private consumption growth is 
                                                     
 
1 Central Bank of the Dominican Republic (2003). 
2 In February 2007, the duration of the arrangement with the IMF was extended until 30 January 2008. WT/TPR/S/207 Trade Policy Review 
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explained, among other factors, by an increase in  family remittances and a vigorous expansion of 
bank lending.  The increase in gross capital form ation, which accounted for 21 per cent of GDP in 
2007, was essentially driven by private investment , which outpaced GDP growth in 2005-2007.  In 
contrast, exports have made only a modest contribu tion to GDP growth since 2005, largely due to the 
weak performance of free-zone activity (Section (iv) below) . 
9. As a consequence of the economic crisis, th e unemployment rate (broadly defined) rose 
between 2002 and 2004 (Table I.3), but the subseque nt upturn in economic activity was matched by a 
rise in the number of people employed (roughly 10.5 per cent between 2005 and 2007), while the broad-based unemployment rate retreated to 15.6 per cent in 2007 and 14 per cent in April 2008.  
According to the results of the National Labour  Force Survey (October 2007), a net total of 
345,777 new jobs were created in the period October 2004-April 2007.
3  As at April 2008, an 
estimated 58 per cent of the employed population was working in the informal sector.4 
10. Between 2002 and 2007, per capita GDP grew at an average real rate of 3.9 per cent per year, 
to reach a level of US$4,406 at th e end of that period (Table I.1 ).  A joint World Bank/IDB study 
shows that 42 per cent of the Dominican population was living in poverty in 2004, with 16 per cent in 
conditions of indigence.5  Official figures for October 2007 show the poverty index at 30.5 per cent 
and extreme poverty at 10 per cent.6 
11. Despite the robust economic recovery, a recent World Bank study notes that the 
Dominican Republic continues to face major ch allenges, including endemic poverty, insufficient 
progress on education and public h ealth (where public expenditure levels remain below regional 
averages), continuous fiscal and competi tive pressures, and institutional weaknesses.7 
(ii) Fiscal policy 
12. Implementation of the macroeconomic stab ilization programme has produced a gradual 
improvement in the public finances of the Domi nican Government (Table I.3).  Having posted 
negative results particularly in 2003, the Cent ral Government's overall fiscal position has been 
improving since 2004, and a surplus of 0.1 per cent of GDP was recorded in 2007.  Using a broader 
indicator of the fiscal position, the overall bala nce of the non-financial public sector improved 
from -4.9 per cent of GDP in 2003 to 0.04 per cent in 2007.  The quasi-fiscal deficit, for its part, 
which is heavily influenced by financial expenditu re arising from Central Bank certificates, narrowed 
from -3.4 per cent of GDP in 2004 to -1.8 per cent in 2007, thanks mainly to lower interest rates. 
                                                      
3 Central Bank of the Dominican Republic, viewed  at:  http://www.bancentral.gov.do/noticias/ 
avisos/bc2007-07-23.pdf. 
4 The informal sector includes wage earners working in establishments with fewer than five employees, 
plus self-employed workers and employers in the following occupational groups:  crop farmers and livestock 
breeders, operators and drivers, artis ans and operatives, traders and sale s persons, together with unskilled 
workers, domestic staff and unpaid workers. 
5 World Bank and IDB (2006). 
6 Data from the Ministry of the Economy, Planning and Development, obtained through the Central 
Bank's National Labour Force Survey. 
7 World Bank and International Finance Corporation (2007). Dominican Republic WT/TPR/S/207 
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Table I.3 
Central Government fiscal ba lance, 2002-2008 (accrual basis) 
(Percentages of GDP at constant 1991 prices) 
 2002 2003 2004 2005 2006 2007 2008a
A. Total income (I+II) 14.5 13.0 13.9 15.4 15.9 17.3 17.2 
I. Current income (1+2) 14.3 13.0 13.9 15.4 15.9 17.3 17.2 
 1. Tax revenue 13.8 12.1 12.9 14.6 14.9 16.0 16.4 
 Taxes on income and profits 3.5 3.3 2.7 2.9 3.3 4.0 4.5 
 Taxes on property 0.2 0.2 0.2 0.4 0.6 0.8 0.9 
 Taxes on goods and services 6.8 5.6 5.9 7.6 8.7 9.4 9.3 
 Taxes on foreign trade 3.2 2.8 4.1 3.7 2.3 1.7 1.6 
 Other taxes 0.0 0.1 0.0 0.0 0.0 0.0 0.0 
 Social security contributions 0.1 0.1 0.0 0.0 0.1 0.1 0.1 
 2. Non-tax income 0.5 0.9 1.0 0.9 0.9 1.3 0.8 
II. Capital income 0.2 0.0 0.0 0.0 0.0 0.0 0.0 
B. Total expenditure (III + IV) 16.0 16.0 16.7 16.7 17.2 17.7 19.0 
III. Current expenditure 10.4 10.1 12.5 12.6 13.0 13.0 13.7 
 Personal services 5.4 4.2 3.3 3.7 3.7 3.6 3.5 
 Non-personal services 0.0 0.7 0.7 0.9 1.0 1.1 1.0 
 Materials and supplies 0.0 0.9 1.0 1.1 1.3 1.3 1.0 
 Interest 1.1 1.6 1.8 1.3 1.4 1.2 1.3 
 Foreign 0.8 1.2 1.5 0.9 1.0 1.0 1.0 
 Domestic 0.3 0.4 0.3 0.4 0.4 0.3 0.3 
 Current transfers 2.2 2.8 5.7 5.6 5.6 5.7 7.0 
 Other current expenditure 0.0 0.0 0.0 0.0 0.0 0.0 0.0 
IV. Capital expenditure 5.6 5.8 4.2 4.1 4.2 4.7 5.2 
 Machinery and equipment n.a. 0.5 0.4 0.4 0.3 0.3 0.5 
 Civil works construction and agricultural plantations n.a. 4.2 1.9 1.6 2.2 2.7 3.8 
 Capital transfers  1.8 1.1 1.9 2.1 1.5 1.7 0.9 
 Other capital expenditure 0.1 0.1 0.1 0.1 0.1 0.1 0.0 
C. Grants (incl. transfers in 2002) 0.0 0.1 0.1 0.1 0.3 0.4 3.5 
D. Current balance (I-III) 3.3 2.8 1.4 2.9 2.8 4.3 1.6 
E. General balance excl uding residual (A-B+C+E) -1.6 -2.8 -2.7 -1.1 -1.1 0.0 0.1 
F. Residual -0.8 -1.4 -0.8 0.5 0.0 0.1 0.2 
General balance including grants (Deficit (-)/Surplus (+)) -2.3 -4.2 -3.4 -0.6 -1.1 0.1 1.5 
Memorandum item:        
Overall balance of the non-fina ncial public sector as a 
percentage of GDP (base 1991) n.a. -4.9 -3.2 -0.3 -0.8 -0.04 -0.25 
Quasi-fiscal balance of the Central Bank as a percentage of GDP (base 1991) -0.2 -2.2 -3.4 -2.6 -2.2 -1.8 n.a 
Total public debtb (US$ million)c 5,047 6,623 7,378 7,787 8,378 8,569 8,870d 
Total public debt/GDP (base 1991) 37.7 31.9 32.9 22.8 23.5 21.1 n.a. 
n.a. Not available. 
a Preliminary data for the first quarter of 2008. 
b At 31 December each year.  Includes the debt of the no n-financial public sector and the public financial sector. 
c Data from the Ministry of Finance. 
d At 31 March 2008. 
Source : Central Bank of the Dominican Republic,  Informe de la Economía Dominicana, January-December, 2002-2007, 
and data from the Ministry of Finance. WT/TPR/S/207 Trade Policy Review 
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13. The weakening of domestic dema nd resulted in income shrinking as a proportion of GDP in 
2003.  Taxes levied on foreign trade also decrea sed, despite a 10 per cent surcharge on imports, a 
2 per cent additional levy as from July 2003, an increase in the foreign exchange fee 
(Chapter III(2)(v)), and a 5 per cent tax on exports imposed in August 2003 (Chapter III(3)(ii)).  Tax 
revenue expanded in 2004 and has since grown steadily, reflecting a fiscal policy designed to stabilize 
the economy in the long term. 
14. Tax revenues have e xpanded thanks mainly to the implemen tation of a number of tax reforms 
since 2005 (see below), supported by improvements in tax administration and procedures (particularly 
through the introduction of the tax voucher for ope rations involving property transfer or service 
provision).  A substantial part of the increase in tax revenue in 2007 also reflected the high 
international price of nickel (a key export prod uct for the Dominican Republic), and income tax on 
capital gains.  Revenue growth in respect of domes tic taxes has been broadl y offset by tariff cuts, 
resulting from the implementation of the DR-CAFTA free trade agreement. 
15. Although current expenditure grew at a modest pace in relation to GDP as from 2004, the 
pace quickened in 2006-2007 and absorbed nearly 13 per cent of GDP in the latter year.  The growth 
of government consumption has been curbed as pa rt of the fiscal adjustment policy, but other 
categories have increased.  The fastest growing ex penses are transfers – mainly electricity and 
liquefied gas subsidies, which remain at a high level and represent a heavy fiscal burden 
(see Chapter IV(3)).  The increase in capital expenditu re is explained by public works, in particular 
the Santo Domingo metro. 
16. Official figures show that the total public debt  in relation to GDP, which had reached a level 
of 31.9 per cent in 2003, subsequently  dropped back to 21.1 per cent in 20078 (Table I.3).  This 
indicator fell from 2005 onwards in particular, driven  by the economic upturn, debt restructuring, 
lower international interest rates, and the revaluation of the Dominican peso.  Of the total public debt 
recorded in late 2007, 88.3 per cent was external a nd the rest was domestic debt consisting mainly of 
Central Bank certificates issued in the wake of the financial crisis. 
17. The entity responsible for formulating fiscal policy is the Secretaría de Estado de Hacienda  – 
SEH (Ministry of Finance).  The creation of this ministry in 2006 (Law No. 494-06) is one of the 
measures adopted since 2005 to reform the legal-in stitutional framework and make tax and financial 
administration more efficient and transparent.  Other measures include the promulgation of the Organic Public Sector Budget Law (No. 423-06), the Public Credit Law (No. 6-06), the National 
Treasury Law (No. 567-05), the Law on the Organization of the Ministry of the Economy, Planning 
and Development (No. 496-06), and the Law governin g the Office of the Comptroller General of the 
Republic and Internal Oversight (No. 10-07). 
18. Since 2005, fiscal policy has targeted reducing the public debt, solving liquidity problems, 
and keeping public finances on an even keel to fulf il the targets agreed upon with the IMF.  Efforts 
have been made to control public expenditure (layoffs in the pub lic sector and cuts in goods and 
services procurement, among other things), and to reduce tax evasion and simplify tax 
administration.
9  In late 2006, the Tax Rectification Law (No. 495-06) was passed, with the aim of 
completing the 2005 reform, correcting tax dist ortions and increasing revenue.  Among other 
measures, this legislation expanded the base of va lue added tax (ITBIS) in respect of alcoholic 
beverages and tobacco, and increased ad valorem excise duty (ISC) on these products and also on 
                                                      
8 Ministry of Finance (http://www.hacienda.gov.do/deuda_pública).  According to IMF data (2008), 
although the total public debt fell from 53 per cent of GDP in 2004 to an estimated 39 per cent in 2007, it is still 
above its pre-crisis level. 
9 Ministry of Finance (2006). Dominican Republic WT/TPR/S/207 
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fuels.  In June 2007, the Tax Amnesty Law once again reduced the ISC on tobacco and alcoholic 
beverages, and also lowered the rate of income tax ( impuesto sobre la renta  – ISR).  It has been noted 
that the reforms have not succeeded in rationa lizing tax exemptions or  expanding the tax base 
(particularly the ISR and the property tax).10 
19.  In July 2008, the President of the Republic  announced an austerity plan containing the 
following fiscal policy measures:  a cut in public expenditure approved for the second half of 2008, whereby it is hoped to end the year with a non-financ ial public sector deficit equivalent to 2 per cent 
of GDP;  the obtaining of external financing to unde rwrite the new expenditure level estimated by the 
Government, which is expected to be subm itted to Congress through a supplementary budget;  
measures in the electricity sector to reduce energy ge nerating costs, targeting of the electricity subsidy 
on the most needy families, plus energy-saving measu res;  and targeting of the subsidy on gas (LPG) 
to benefit public transport and low-income households.
11 
(iii) Monetary and exchange-rate policy 
20. Regulation of the monetary and financial system  is governed by the Constitution (Articles 111 
and 112) and by the Monetary and Financial Law (No. 183-02) of December 2002.  Work to draft 
amendment to this legislation was ongoing as of mid-2008. 
21. Pursuant to Law No. 183-02, monetary and financ ial administration consists of the Monetary 
Board12, which is the top-level body, the Central Bank and the Banking Supervisory Authority;  and it 
enjoys functional, organizational, and budgetary au tonomy.  The Monetary Board is responsible for 
setting the Dominican Republic's monetary, exchange rate and financial policies, while the Central 
Bank implements those policies in accordance with the monetary programme approved each year by 
the Monetary Board.  The main function of th e Banking Supervisory Authority is to supervise 
financial intermediaries and ensure th at they comply with Law No. 183-02. 
22. Law No. 183-02 makes price stability the overarching monetary policy objective.  Since 
2004, the strategy has been based on a monetary-t argets approach, aimed at controlling monetary 
aggregates through indirect instruments such as Cent ral Bank open market operations, so as to fulfil 
the inflation targets set in the monetary programme and in the standby arrangement (Table I.4).  The 
IMF considers this strategy to be successful, sin ce inflation has been reduced to single digits.13  The 
authorities have reported that although the rise in oil and food prices prevented them from achieving 
the established inflation target in 2007, underlying inflation (excluding energy prices) was nonetheless 
within the target range of 4-6 per cent.14  Preliminary figures for the first quarter of 2008 show a 
national consumer price index of 9.7 per cent, comp ared to the 6 per cent set as the inflation target 
for 2008. 
                                                      
10 World Bank and International Finance Corporation (2007). 
11 The speech made by the President of the Republic on 17 July 2008 can be viewed at:  
http://www.presidencia.gob.do/app/pre_discursos.aspx. 
12 The Monetary Board is chaired by the Governor of the Central Bank, and consists of the Minister of 
Finance, the Banking Supervisor, and another six members appointed for a two-year term by the President of the Republic. 
13 IMF (2008). 
14 Central Bank of the Dominican Republic, Ministry of the Economy, Planning and Development, and 
Ministry of Finance (2008). WT/TPR/S/207 Trade Policy Review 
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Table I.4 
Main monetary indicators, 2002-2008 
 2002 2003 2004 2005 2006 2007 2008h 
Monetary aggregates         
Base moneya (end-of-period nominal variation 
in %)b -0.2 101.8 1.3 17.6 16.1 13.7 -3.2 
M1 (end-of-period nominal variation in %)b 5.6 77.4 5.8 26.9 13.3 22.9 -0.1 
M2 (end-of-period nominal variation in %)b 11.6 64.8 9.3 15.4 11.8 18.5 3.3 
Interest rate  (annual average %)        
Lending ratec 26.1 31.4 32.7 23.2 19.3 15.7 16.7 
Deposit rated 16.8 20.5 21.2 13.6 10.1 7.0 6.4 
        
Inflation  (percentage change over 12 months at the end of the period)  
Inflation target n.a. 35.0 14.0 12.0–15.0 6.0-8.0 4.0-6.0 6.0 
National consumer price index (INP C) 10.5 42.7 28.8 7.4 5.0 8.9 9.7 
Exchange rates        
End-of-period exchange rate (RD$/US$)e 20.2 37.4 29.3 33.3 33.2 33.6 34.3 
Estimated real effective exchange rate(2000=100)f 91.8 70.6 104.3 98.9 99.6 99.7g n.a. 
n.a. Not available. 
a Includes banknotes in circulation a nd demand deposits in local currency. 
b Calculated on the final balance as of December in the previous year. 
c Annual weighted average of nomina l lending rates at full service banks (bancos múltiples) . 
d Annual weighted average of nominal deposit rates at full service banks (bancos múltiples) . 
e Simple average of rates prevailing on the official market, the private market and the non-bank market. 
f IMF data. 
g Estimate at November 2007. h Preliminary figures for the first quarter of 2008. 
Source : Central Bank of the Dominican Republic and IMF. 
23. Monetary policy was tightened in 2002 in respon se to signs of macroeconomic instability.  In 
2003, as a consequence of the liquidity assistance measures adopted by the Central Bank to support 
the bank bailout, base money issuance increased by 102 per cent compared to the previous year.  The 
high levels of monetary aggregates recorded in 2003 take into account the assets and liabilities of 
fraudulent banks.  In the years since then, the polic y of controlling monetary aggregates has made it 
possible to curb the expansion of the monetary b ase:  in 2007, base money grew by 13.7 per cent, 
slightly less than nominal GDP growth (14.7 per cent).  Nonetheless, there was a expansion in  monetary aggregates, which, according to the authori ties, was largely the result of deposit growth in 
the financial system, reflecting the upturn in economic activity in 2007. 
24. Prudent monetary policy and an improvement in  inflationary expectations allowed for a 
substantial reduction in interest rates between 2005 and 2007, although the spread between lending 
and deposit rates narrowed only slightly.  Lower inter est rates also fuelled a rapid expansion of credit 
to the private sector, which grew by 16 per cent per year in 2006 and 31 per cent in 2007.
15  The 
Central Bank recognizes the need to monitor credit gr owth and is adjusting interest rates to absorb 
inflationary pressures and potential external shocks.  It is also maintaini ng its policy of lengthening 
the average term to maturity of its stock of  certificates, and reducing its quasi-fiscal deficit.16 
25. Given the continuous rise in the internationa l prices of oil, food products and other raw 
materials during the first half of 2008, the Cent ral Bank adopted a number of monetary policy 
                                                      
15 Information provided by the Central Bank of the Dominican Republic. 
16 Central Bank of the Dominican Republic, Ministry of the Economy, Planning and Development, and 
Ministry of Finance (2008). Dominican Republic WT/TPR/S/207 
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measures, such as raising interest rates and changing the composition of the legal reserve requirement, 
to prevent aggregate demand growth putting furt her pressure on domestic prices.  These measures 
have helped slow the rate of growth of private cr edit and monetary aggregates, which is expected to 
contribute to fulfilment of the targets of the monetary programme for 2008.  The fiscal policy 
measures announced in July 2008 (see Section (2)(ii) above) were expected to curb public expenditure 
growth in the second half of 2008 and thus restrain  the expansion of domestic demand and help ease 
domestic inflationary pressures.17 
26. The recapitalization of the Central Bank for the purpose of ensuring its financial 
independence is a government priority.  For that purpose, Law No. 167-07 (July 2007) aims to 
recapitalize the institution over a ten-year period, by issuing state bonds, supported by direct fund 
transfers and other financial contributions from the State to the Central Bank. 
27. Until late 2002, there were several foreign ex change markets in the Dominican Republic.  
Pursuant to the Monetary and Financial Law wh ich institutes a regime of free convertibility and 
exchange rate flotation18, the official exchange rate was abandoned in 2002, and from 2004 onwards 
the foreign exchange market was unified. 
28. The IMF classifies the Dominican regime as one  of managed floating without pre-announced 
targets.  Pursuant to the November 2006 Regul ation Governing the Monetary Programme and 
Monetary Policy Instruments, the Central Bank buys  and sells foreign currency under the free-market 
quotation system, through the foreign-exchange-desk ( mesa de cambio ) facility, working with duly 
authorized foreign-exchange and financial intermediaries. 
29. The Dominican peso depreciated sharply against the US dollar in 2003, mainly as a result of 
the financial crisis and the pressures exerted by capit al flight on the foreign exchange market.  Since 
2004, implementation of the macroeconomic stabili zation programme has made it possible to lower 
and broadly stabilize the nominal exchange rate agai nst the dollar, although by 2007 the real effective 
exchange rate had appreciated slightly from its pre- crisis levels.  On this point, the Central Bank has 
stressed that its interventions within a managed fl oating system continue to be aimed basically at 
avoiding undue exchange rate appreciation caused by the inflow of foreign capital, which could 
undermine price stability.19  The IMF has stated that the Domi nican exchange-rate regime has been 
adequate, and that the pace of exchange-ra te seems to be broadly in equilibrium.20 
(iv) Balance of payments 
30. The balance of payments on current account pos ted a surplus of about 6 per cent of GDP in 
2003 and 2004, thanks largely to the economic slowdown.  Nonetheless, it moved back into deficit in 
2005 and this has since widened to the equivalent of  5.6 per cent of GDP in 2007 (Table I.5).  This 
trend is the result of an increase in the trade defic it, which in turn reflects the strong growth of the 
Dominican economy, together with an increase in th e oil import bill (estimated at 10 per cent of 
GDP in 2007) and that of food imports. 
                                                      
17 Central Bank, Nota Económica  (bc2008-08-08), viewed at:  http://www.banventral.gov.do/notas. 
18 Law No. 183-02, Articles 28 and 32. 
19 Central Bank of the Dominican Republic (2008a). 
20 IMF (2008). WT/TPR/S/207 Trade Policy Review 
Page 10 
 
 
Table I.5 
Balance of payments, 2002-2008 
(US$ million) 
Items 2002a 2003a 2004a 2005a 2006b 2007b 2008c
I. Current account (I+II) -797.9 1,036. 2 1,041.5 -473.0 -1, 261.8 -2,230. 8 -804.0 
I.1 Trade balance -3,672.7 -2,156.0 -1,952.1 -3,724.7 -5,563.7 -6,579.9 -2,186.4 
 Exports 5,165.0 5,470.8 5,935.9 6,144.7 6,610.2 7,237.2 1,684.3 
 Domestic 847.7 1,064.0 1,250.7 1,395.1 1,931.4 2,674.3 641.4 
 Free zones 4,317.3 4,406.8 4,685.2 4,749.6 4,678.8 4,562.9 1,042.9 
 Imports -8,837.7 -7,626.8 -7,888.0 -9,869.4 -12,173.9 -13,817.1 -3,870.7 
 Domestic -6,237.3 -5,095.9 -5,368.1 -7,366.3 -9,558.8 -11,288.9 -3,249.3 
 Free zones -2,600.4 -2,530.9 -2,519.9 -2,503.1 -2,615.1 -2,528.2 -621.4 
I.2  Balance of trade in services  1,757.3 2,249.4 2,290.7 2,456.8 2,985.0 2,967.6 1,119.9 
  Income 3,070.7 3,468.8 3,503.9 3,913.2 4,542.5 4,690.0 1,565.9 
  Travel 2,730.4 3,127.8 3,151.6 3,518.3 3,916.8 4,025.5 1,381.5 
 Other 340.3 341.0 352.3 394.9 625.7 664.5 184.4 
 Expenditure -1,313.4 -1,219.4 -1,213.2 -1,456.4 -1,557.5 -1,722.4 -446.0 
 Freight -627.6 -550.2 -509.8 -706.7 -776.9 -889.6 -247.3 
 Other -685.8 -669.2 -703.4 -749.7 -780.6 -832.8 -198.7 
I.3 Investment income -1,151.8 -1,393.1 -1,824.4 -1,902.2 -1,827.2 -2,028.1 -604.0 
 Income 300.4 340.7 321.8 418.1 699.7 798.4 183.1 
 Central Bank 25.5 17.2 20.0 59.5 116.6 161.8 37.7 
 Other 274.9 323.5 301.8 358.6 583.1 636.6 145.4 
 Expenditure -1,452.2 -1,733.8 -2,146.4 -2,320.4 -2,526.9 -2,826.5 -787.1 
 Interest -202.4 -235.2 -333.6 -376.1 -338.3 -360.7 -74.5 
 Profits and other items -1,249.8 -1,498.6 -1,812.8 -1,944.3 -2,188.6 -2,465.8 -712.6 
I.4 Net current transfers 2,269.3 2, 335.9 2,527.5 2, 697.1 3,144.1 3,409.6 866.5 
 Family remittances 1,959.6 2,060.5 2,230.2 2,429.8 2,737.8 3,032.7 794.1 
 Other 309.7 275.4 297.3 267.3 406.3 376.9 72.4 
II. Capital and financial account 383.1 -16.3 117.6 1,635.9 1,790.5 2,554.5 562.0 
II.1 Capital accountd     254.2 201.9 12.7 
II.2 Financial account 383.1 -16.3 117.6 1,635.9 1,536.3 2,352.6 549.3 
 Direct investment 916.8 613.0 909.0 1,122.7 1,459.4 1,698.0 1,057.8 
 Portfolio investment -25.7 543.8 -24.3 244.2 775.7 991.3 -239.7 
 Medium- and long-term public and 
private debt (net) 413.2 509.2 -142.7 84.4 329.5 112.1 69.9 
 Short-term public and private debt 
(net) 147.2 -286.6 -227.5 -38.8 266.7 -126.0 65.3 
 Money and deposits 63.2 -109.3 -7.0 -9.7 23.1 -9.2 -5.0 
 Othere -1,131.7 -1,286.5 -389.9 233.2 -1,318.0 -313.6 -399.0 
III. Errors and omissions -139.9 -1 ,566.3 -979.9 -458.0 -338. 6 333.3 107.1 
IV. Global balance (I+II+III) - 554.7 -546.5 179.2 704. 9 190.1 657.0 -134.9 
V. Financing 554.7 546.5 -179.2 -704.9 -190.1 -657.0 134.9 
 Variation in reserves (increase -) 526.5 358.0 -541.8 -1,108.7 -314.3 -691.5 55.8 
 Use of IMF credit and loans (net) -25.6 92.8 65.7 219.1 37.5 62.8 84.1 
 Other 53.8 95.7 296.8 184.7 86.7 -28.3 -5.0 
Table I.5 (cont'd)Dominican Republic WT/TPR/S/207 
 Page 11 
 
 
Items 2002a 2003a 2004a 2005a 2006b 2007b 2008c
Memorandum item        
International reserves (months of 
merchandise imports)f 1.1 0.5 1.3 2.3 2.2 2.6 n.a. 
Current account as a percentage of GDPf -3.7 6.0 6.1 -1.4 -3.5 -5.6g  n.a. 
External public debt as a percentage of 
GDPh 18.2 29.7 29.2 20.2 20.2 18.3 n.a. 
n.a. Not available. 
a Revised figures. 
b Preliminary figures. 
c Preliminary figures for the first quarter of 2008. d Excludes components classified as financing in Group V.  Acco rding to the fifth version of the Balance of Payments Manual, 
only current payments are included in the capital account component , while the forgiveness of arrears on debts with official 
creditors (bilateral, multilateral) are recorded as exceptional financing. 
e Includes commercial credits and other capital. f IMF data. 
g Estimate. 
h Based on figures from the Ministry of Finance. 
Source : WTO Secretariat, on the basis of data from the Internati onal Department of the Balance of Payments Division of 
the Central Bank of the Dominican Republic, the Mi nistry of Finance and the IMF (2005) and (2008). 
31. Between 2002 and 2007 total imports grew at an average nominal rate of 9.3 per cent per 
year;  but during the 2003-2004 crisis, both imports and the trade deficit decreased.  Since 2005, however, the economic recovery has attracted larg er imports, and the trade deficit has widened 
substantially to the equivalent of 15 per cent of GDP in 2007.  Total exports grew by an average 
nominal rate of 7 per cent per year in the pe riod 2002-2007, basically reflecting an increase in 
domestic exports.  Exports from the free zones conti nue to play a very important role, but performed 
weakly in the period under review, confirming their declining contribution to the growth of the Dominican economy.  The export growth recorded in 2007 was largely due to a higher value of nickel exports, which accounted for 16 per cent of the country 's total foreign sales in that year.  Preliminary 
figures suggest that value of exports stabilized in the first quarter of 2008. 
32. The balance of trade in serv ices was in surplus throughout the period under review, mainly 
thanks to an increase in tourism revenue which ha s offset growing outgoings in respect of freight, 
insurance and other items.  Inv estment income was negative thr oughout the period, reflecting an 
increase in the repatriation of profits from ente rprises financed through foreign investment. 
33. Family remittances from Dominican nationals living abroad grew at an annual average rate of 
9 per cent between 2002 and 2007, to represent 7.9 per cent of GDP.  During the review period, 
remittances continued to underpin the country's ex ternal accounts, in contrast to the periodic 
weaknesses suffered by exports, partic ularly those from the free zones. 
34.  Since 2005 the current account deficit has been funded mainly through foreign investment 
flows.  Having contracted in 2003, foreign direct in vestment (FDI) grew at an  average annual rate of 
23 per cent between 2004 and 2007, in response to th e economic recovery.  Portfolio investment has 
also grown vigorously, reflecting increasing confidence in the Dominican economy and a steady 
revival of the local financial market.  The sharp increase in the errors and omissions category of the 
balance of payments for 2003 largely reflects ca pital flight triggered by the macroeconomic 
uncertainty prevailing in that period. 
35. After falling to a low in 2003, gross internati onal reserves rebounded strongly in the ensuing 
years, although there was a dip in the first half of  2008.  Reserves represented 2.6 months of imports WT/TPR/S/207 Trade Policy Review 
Page 12 
 
 
in 2007.  The IMF considers that this level is s till low compared to that of similar economies, and 
concurs with the Dominican authorities in recommending a greater accumulation of international reserves to mitigate the effects of possible external shocks.
21 
36. The external public debt of the Dominican  Republic averaged around US$6.4 billion in 
2002-2007, but from 2004 onwards, its level declined in relation to GDP, dropping to 18.3 per cent of 
GDP in 2007 (slightly higher than before the crisis).   In terms of composition, in late 2007 multilateral 
agencies accounted for 32.5 per cent, bilateral agen cies 38.8 per cent, commercial banks 5.5 per cent, 
debt held in bonds 23.0 per cent, and amounts owed to suppliers 0.2 per cent.22  Decree No. 1093-04 
of September 2004 transferred responsibility for reco rding and servicing the external debt of the 
non-financial public sector from the Central Bank to the Ministry of Finance. 
37. Preliminary Central Bank figures show that private-sector external debt averaged around 
US$3.1 billion in the period 2002-2006, dominated by loans (59 per cent), followed by liabilities with 
direct investors (16 per cent) and commercia l credits (12.5 per cent), among other items. 
(3) DEVELOPMENTS IN TRADE AND INVESTMENT FLOWS  
(i) Trade in goods23 
(a) Composition of trade in goods 
38. Domestic exports (i.e. excluding exports from free zones) performed strongly in 2002-2006, 
growing at an average nominal rate of 19.5 per cen t per year to reach a value of US$1.982 billion in 
2006 (Table AI.1).  This is explained by the rise in the world prices of Dominican export products, 
and by an increase in domestically produced goods acquired in ports. 
39. With regard to the composition of domestic exports, the share of primary products dropped 
from 56 per cent in 2002 to 47 per cent in 2006.  This category includes food products (sugar, 
bananas, cocoa and brandies, among other items),  which accounted for 27 per cent of domestic 
exports in 2006, together with extractive indust ry products (20 per cent in 2006).  In the case of 
manufactured goods, although their share in total dom estic exports grew from 35 per cent in 2002 to 
50 per cent in 2006, they are heavily concentrated  in iron and steel goods (essentially ferronickel 
products), the external sales of which accounted for 40 per cent of domestic exports in 2006. 
40. Domestic imports grew at a nominal average rate of 12 per cent per year in 2002-2006, 
recording a value of US$9.401 billion in 2006 (Table AI.2).  Manufactured products were the leading 
category, accounting for roughly 56 per cent of domes tic imports in 2006.  These included transport 
machinery and equipment (24.5 per cent), along w ith chemical products (9.6 per cent) certain 
semi-manufactured goods (8.7 per cent) and other consumer goods (6 per cent).  The primary product 
share in domestic imports grew from 38 per cent to 44 per cent between 2002 and 2006.  Imports in 
this category include fuel (petroleum products), which represented 30 per cent of domestic imports in 
2006, followed by food products (cereals and milk), which accounted for 11.6 per cent in that year. 
                                                      
21 IMF (2008). 
22 Ministry of Finance (2008a). 
23 This subsection is based on calculations made by the WTO secretariat on the basis of imports (f.o.b.) 
and exports (f.o.b.) of goods in the period 2002-2006 provided by the Dominican authorities. Dominican Republic WT/TPR/S/207 
 Page 13 
 
 
(b) Direction of trade in goods 
41. The United States remains the leading market for the Dominican Republic, although its share 
of domestic exports declined from 47 per cent in 2002 to 31 per cent in 2006 (Table AI.3).  On the American continent, the second larg est export market is Haiti, which absorbed just over 7 per cent of 
domestic exports in 2006, followed by Ca nada, which received 4.3 per cent.  The 
European Communities jointly absorbed about 11 per cent of domestic exports in  2006, slightly below 
the 12 per cent recorded in 2002.  In contrast, th ere has been a significant increase in sales to Asia 
(mainly China and the Democratic People's Republic of Korea),
24 whose share of the total rose from 
5 per cent in 2002 to 14 per cent in 2006. 
42. Although its share has decreased considerably si nce 2002 (Table AI.4), the United States is 
still the Dominican Republic's leading supplier, cont ributing 27 per cent of its domestic imports in 
2006.  Other countries of the American continent jointly provided 12 per cent of the country's domestic imports in 2006, led by Panama (2.6 per cent), Colombia (1.8 per cent) and Mexico 
(1.7 per cent).  In the period 2002-2006, the European Communities share in domestic imports 
increased from 5.4 per cent to about 8 per cent, led by imports from Spain (2.4 per cent).  There has 
been an even more pronounced increase in pur chases from Asia (rising from 3 per cent to 
10 per cent), and particularly in China's share, whic h rose from 0.1 to 2.7 per cent of domestic imports 
between 2002 and 2006. 
43. The Dominican authorities have provided sta tistics on the country's total goods exports, 
i.e. including those from the free zones, for the peri od 2002-2006 (see Tables AI.5 and AI.6).  In that 
time span, total merchandise exports grew at a nominal  average rate of 6.0 per cent per year, to post a 
value of US$6.79 billion in 2006.  Although exports from the free z ones remain the most important 
source, they grew by an average of just 2.2 per cent between 2002 and 2006, and their share in total 
exports dropped from 82 per cent to 71 per cent. 
44. Manufactured goods accounted for 76 per cent of tota l exports in 2006 (Table AI.5).  In this 
category, garments accounted for 25 per cent;  consumer goods such as medical instruments, 
jewellery and footwear represented 22 per cent;  a nd iron and steel products (essentially ferronickel 
items) accounted for 11.8 per cent.  Commodities a ccounted for 20 per cent of total exports in the 
same year, mainly consisting of traditional food product s (14 per cent of the total).  The United States 
absorbed roughly 63 per cent of total Dominican expor ts in 2006 (Table AI.6).  Although the relative 
share of the country's exports to Europe (partic ularly the European Communities) and Asia has 
increased, these two regions jointly represented just  10 per cent of the Dominican Republic's total 
goods exports in 2006. 
(ii) Trade in services 
45. The balance of trade in services was in surp lus throughout the period 2002-2007 (Table I.5), 
thanks mainly to the expansion of tourism re venue, which, following a brief downturn in 2001-2002 
(in the wake of the terrorist attacks of 11 September 2001 in the United States), grew at an annual 
average rate of 8.1 per cent between 2002 and 2007.  With earnings of US$4 billion in 2007, tourism 
remains the Dominican economy's leading source of  foreign exchange.  Meanwhile, outgoings in 
relation to transport and freight gr ew at an annual average rate of 7 per cent during the same period, 
reflecting the strength of demand for forei gn international transport services in the 
Dominican Republic, and the expansion of its external trade. 
                                                     
 
24 The vast majority of Dominican exports to Chin a and the Democratic People's Republic of Korea 
consist of ferronickel products. WT/TPR/S/207 Trade Policy Review 
Page 14 
 
 
(iii) Foreign direct investment 
46. FDI flows to the Dominican Republic tota lled US$6.719 billion in the period 2002-2007 
(equivalent to an annual average of US$1.120 billi on).  Of this, 22 per cent was channelled to the 
telecommunications industry, which has been one of the most dynamic sectors of the Dominican 
economy in the period under review (see Chapter IV (5)(ii)).  Other sectors receiving substantial FDI 
flows are tourism (21 per cent), real estate (19 per cent), and trade and industry (18.3 per cent).  FDI 
flows to the free zones have slackened since 2005, acc ounting for just 8.4 per cent of total flows in the 
period under review (Table I.6). 
47. The leading FDI sources in the period 2002-2007 were the United States, which accounted for 
44 per cent of total flows, followed by Spain (12. 6 per cent) and Canada ( 10.1 per cent).  Several 
other EC countries (Netherlands, France, United Kingdom and Italy) between them accounted for 
10.9 per cent of total FDI flows received by the Dominican Republic in this period (Table I.7). 
Table I.6 
Foreign direct investment (FDI) by sector, 2002-2008 
(US$ million) 
Sectors 2002 2003 2004 2005 2006a 2007a 2008b
Total 916.8 613.0 909.0 1,122.8 1,459.3 1,698.0 1,057.8 
Tourism 211.8 78.5 137.6 312.1 281.5 445.0 53.9 
Trade/industry 223.2 102.9 320.5 199.4 206.3 180.7 675.0 
Telecommunications 223.1 146.5 224.6 111.8 341.2 417.0 107.3 
Electricity 140.1 1.2 -57.7 117.1 -29.4 -19.0 23.7 
Financial 24.9 99.4 61.4 44.0 91.8 53.0 41.1 
Free zones 45.0 44.9 100.1 174.7 130.5 73.5 16.5 
Mining 22.6 77.9 60.2 30.5 95.8 -170.4 39.2 
Real estate 0.0 0.0 81.8 133.1 328.5 723.3 112.3 
Otherc 26.2 61.7 -19.5 0.1 13.1 -5.1 -11.2 
a Preliminary figures subject to revision. 
b Preliminary figures for the first quarter of 2008. 
c Includes net loans from direct investors, and other sectors. 
Source : Central Bank of the Dominican Republic. 
Table I.7  
Foreign direct investment (FDI) by country of origin, 2002-2008  
(US$ million)  
Country 2002 2003 2004 2005 2006a 2007a 2008 
Total 916.8 613.0 909.0 1,122.7 1,459.3 1,698.0 n.a. 
United States 382.1 461.6 176.6 457.1 685.0 796.1 n.a. 
Spain 35.0 -13.3 126.6 214.5 228.5 258.3 n.a. 
Canada 18.4 -22.7 274.2 110.7 136.6 163.3 n.a. 
Netherlands 119.4 25.1 0.2 41.3 -26.2 21.9 n.a. 
France 109.6 33.0 85.3 22.4 -0.1 0.1 n.a. 
United Kingdom -0.2 -25.2 21.4 94.8 69.5 77.8 n.a. 
Italy 5.0 5.1 39.1 15.2 1.1 1.2 n.a. 
Switzerland 4.0 5.8 18.2 48.1 7.2 80.1 n.a. 
Chile 0.0 -0.7 12.4 17.5 15.6 -8.5 n.a. 
Grand Cayman -13.7 -9.1 -62.8 -58.7 -29.1 -39.4 n.a. 
Other 257.1 153.4 217.8 159.8 371.2 347.1 n.a. 
n.a. Not available. 
a Preliminary figures subject to revision. 
Source : Central Bank of the Dominican Republic. Dominican Republic WT/TPR/S/207 
 Page 15 
 
 
(4) PROSPECTS  
48. In early 2008, the Central Bank was forecasting r eal GDP growth of about 5.5 per cent by the 
end of the year, and inflation of around 6 per cent.  On the fiscal front, it was projecting a central government primary balance of 1.3 per cent of GDP, and an overall non-financial public sector deficit 
of 0.7 per cent of GDP.  In addition, the Centra l Bank predicted a current-account deficit of between 
3.8 and 4.3 per cent of GDP for 2008, reflecting the larger oil bill, but it was not anticipating major 
financing problems, thanks to burgeoning FDI flows.   Among the risk factors that could alter this 
scenario, the Central Bank pointed to the scale of the impact of the mortgage crisis in the 
United States, and an even more pronounced increase in oil prices.
25 
                                                      
25 Central Bank of the Dominican Republic (2008b).