**Table I.3: Dominican Republic: Value and Shares of Primary Exports 1995-2000**

|||InU|S$milli|ons|||% Sh|are of T|otal Expo|rts|||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
||1995|1996|1997|1998|1999|2000|1995|1996|1997|1998|1999|2000|
|1.PrimaryExports|324|361|403|370|231|276|37%|38%|40%|42%|29%|29%|
|Ofwhich:|||||||||||||
|Crude Sugar|103.4|145.9|175.6|66.3|65.6|70.9|12%|15%|17%|8%|8%|7%|
|GreenCoffee|81.6|63.0|66.4|64.6|14.8|20.8|9%|7%|6%|7%|2%|2%|
|CocoaBeans|54.4|58.2|54.1|79.3|20.2|21.7|6%|6%|5%|9%|2%|2%|
|Tobacco|16.8|27.5|38.7|39.8|33.2|24.2|2%|3%|4%|5%|4%|2%|
|Banana|12.0|10.0|7.6|13.0|16.6|19.3|1%|1%|1%|1%|2%|2%|
|Coconuts|6.6|6.5|4.6|6.3|6.0|6.2|1%|0.5%|0.5%|0.5%|1%|1%|
|Melons|3.5|4.9|3.9|4.3|7.5|10.8|0.5%|0.5%|0.5%|0.5%|1%|1%|
|Avocado|3.8|4.2|2.3|5.4|7.6|6.6|0.5%|0.5%|0.5%|0.5%|1%|1%|
|Oranges|2.9|2.9|2.4|2.2|1.7|1.4|0.5%|0.5%|0.5%|0.5%|0.5%|0.5%|
|Others|38.8|38.2|46.8|89.1|67.4|94.1|4%|4%|5%|10%|8%|10%|
|2. Intermediate<br>Products|328|331|312|211|202|286|38%|35%|31%|24%|25%|30%|
|3. Consumption<br>Products|220|253|303|299|372|404|25%|27%|30%|34%|50%|42%|
|4.Total(1+2+3)|872|946|1017|880|805|966|100%|100%|100%|100%|100%|100%|

Notes: Data for 2000 is preliminary. Sugar, Coffee, Cocoa, Tobacco include raw products only. Source: Central Bank of Dominican Republic (2001).

# **A.2 Exchange Rates and Inflation**<sup>**2**</sup>

Economic reforms, including changes in monetary and fiscal policy along with market and trade liberalization, began in 1991. This followed a period of inappropriate fiscal and monetary policies. The previous policies caused inflation rates to rise to about 40-50% from 1988-1991, and led to distorted exchange rates. In contrast, since 1992, annual inflation rates declined to 4- 12%, and there were appropriate adjustments in exchange rates. To stabilize prices and the exchange rate, the Government of Dominican Republic (GoDR) still controls some domestic prices and foreign exchange (forex) flows through import pricing and quota policies for agricultural products and energy products. Since 1999, GoDR raised the foreign exchange commission charged by the Central Bank on forex transactions from 1.75% to 5%. GoDR has announced plans to eliminate the 5% forex commission, but has delayed doing so, while seeking alternative revenue generating sources. The 5% forex commission was, however, waived for traditional agricultural exports - coffee, cocoa sugar, tobacco - in August 2001. In September 2001 the forex commission was lowered from 5% to 4.75%, and in April 2002, commissions on insurance transactions were waived.

Misaligned exchange rates and high export taxes on traditional Dominican agricultural commodity exports, such as sugar, coffee and cocoa, which prevailed in the 1980s, have been blamed for placing these commodities at a relative comparative disadvantage in international markets (e.g., Varangis, 1989; World Bank, 1991; Schiff, 2001). They also placed these traditional agricultural exports at a comparative disadvantage relative to non-traditional (untaxed) agricultural export enterprises and crops destined for domestic markets. Direct export taxes for coffee and cocoa existed from 1975 to 1992. This taxation represented a significant transfer of

> 2 This sub-section draws upon Central Bank publications from its website and The Economist’s 2001 Country Profile for DR (The Economist, 2001).

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