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FY 1999: Dominican Republic |
I. EXECUTIVE SUMMARY The United States remains an important economic and cultural partner of the Dominican Republic. The Dominican Republic is the United States' seventh largest export market in the Western Hemisphere and a major destination for U.S. foreign direct investments. The Dominican Republic has a population of approximately 8 million people and a per capita income of about US$1,800. It occupies the eastern two-thirds of the island of Hispaniola, which it shares with Haiti. The Dominican Republic is about the size of New Hampshire and Vermont combined. The Dominican Republic has shown steady growth in GDP and per capita income over the last several years. The country's Central Bank reports 8.2 percent economic growth for 1997 and 5.9 percent during the first trimester of 1998, with a prediction of at least seven percent growth for 1998 as a whole. The financial sector problems of the early 1990s have faded. The Dominican peso was stable in 1997 but has been less so in early 1998 reflecting uncertainty surrounding the May 1998 congressional elections. On July 2, the official exchange rate was unified with the market rate at 15.35 pesos. The Central Bank has maintained a solid base for non-inflationary growth. Telecommunications, tourism, construction and free trade zones continue to be the leading growth sectors. Over 60 new free trade zone projects were approved in 1997 and this trend continues this year. The tourism sector is adding 3,000 rooms per year and further expansion is planned. Domestic manufacturing and traditional agriculture, however, are stagnating. In March 1996, the President of Haiti visited the Dominican Republic, the first such visit of a Haitian head of state in decades. President Fernandez returned the visit in June 1998. The two Presidents formed a joint commission to improve political and economic relations between the two countries. On August 16, 1996, the Dominican Republic inaugurated Leonel Fernandez of the Partido de la Liberacion Dominicana (PLD) as President. The transition from the administration of Joaquin Balaguer, President for 22 of the previous 30 years, took place smoothly. Congressional elections, for the first time separate from the presidential elections, were held in May 1998 with the opposition Partido Revolucionario Dominicano (PRD) obtaining 24 of 30 seats in the Senate and 83 of 149 seats in the Chamber of Deputies. The Dominican government is continuing to modernize its judicial system, fight corruption, and decentralize. Shortly after his inauguration, President Fernandez created a Commission for Judicial Reform to encourage transparency in judicial modernization; he also formed a commission to identify government debts. However, most foreign investors and international companies have not been able to make progress on outstanding disputes with the Dominican government concerning expropriated property or payment defaults. The Dominican government has not fully implemented the Uruguay Round Agreements. Food prices remain elevated due to the continued protection of the agricultural sector in violation of the Dominican Republic's Uruguay Round commitments. Electricity service from the state-owned utility, CDE, is inadequate to meet peak power demand. The government plans to begin the privatization of CDE in the fall of 1998. This Country Commercial Guide (CCG) presents a comprehensive look at the Dominican Republic's commercial environment using economic, political and market analyses. The CCG's were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. government agencies.[end of document]Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.