CAC Daily -
Dominican Republic: Fiscal performance off track in Jan-Sep
The government deficit widened 24.8% to US$934 million
(1.7% of projected 2011 GDP) in January-September from US$748 million (1.4% of
GDP) a year earlier, underperforming the US$729 million (1.3% of GDP) shortfall
targeted for the 9-month period in the Stand-By Arrangement (SBA) with the IMF.
The relatively weak outcome was the result of a 5.2%oya rise to US$5.4 billion
in revenues and a 5.5%oya climb to US$6.4 billion in expenditures. While
revenue growth was largely driven by an 8.3%oya surge in tax collections, which
managed to swell despite a slowdown in economic activity, the increase in
expenditures was limited by a 14.5%oya contraction in capital outlays, as
current expenditures shot up 13.4%oya. Even though the IMF SBA calls for the
government deficit to moderate from 2.5% of GDP in 2010 to 1.6% in 2011 and to
a five-year low of 0.6% in 2012, recent government estimates already put the
budget deficit at 1.9% of GDP in 2011 and 0.9% in 2012. Given the year-to-date
results, however, we believe meeting the revised targets will be no easy feat.
Franco A Uccelli (AC)
(1-305) 579-9415
franco.a.uccelli@jpmorgan.com
J.P.
Morgan Securities LLC
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