The Dominican Republic is a middle-income country, with the largest economy of Central America and the Caribbean. The country has weathered the global economic crisis well and in 2010 experienced one of the highest growth rates in the region. Read More »
For the last decade the Dominican Republic has been one of the fastest growing economies in Latin America, with the potential to reduce poverty and inequality.
In spite of a solid macroeconomic performance, the domestic financial and economic crisis of 2003 pushed almost two million people into poverty. Following the crisis, the Dominican Republic recovered and enjoyed strong economic growth. However, inequality persists and 40% of the population is poor.
This situation is explained by the following combination:
Inefficacy of the fiscal system to generate a more equal distribution of income
The growth pattern has created an “enclave” in free zones and tourism, with weak linkage to the economy in general, and
Labor markets that are not channels through which growth can translate into higher welfare at the household level.
On the other hand, the economic performance continues to be vulnerable to the high oil prices, to slower world recuperation, or to an eventual external crisis.
President Danilo Medina took office in August 2012 focusing on promoting transparency and governance, solidary economy, jobs formalization, and public services quality.
The Central Government deficit for 2012 is 6.6% of GDP. According to official estimations, the Government seeks to collect 1.8% of GDP via the new fiscal reform, put into effect since January 2013.
Social Development The Government proposes to invest 4% of GDP in education. This effort aims at:
Closing the quality-education gap in relation to other countries in the region,
Maintaining the existing schools infrastructure while investing in new constructions,
Strengthening of the teaching material,
Improving the quality of teachers,
Widening coverage, and
Better aligning the technical and professional training supply with the private sector jobs demand.
In terms of social protection, Government has provided identity documents to more than 120 thousand citizens for access to social assistance and other opportunities.
The continuation of these advancements is anticipated through the consolidation and the use of the national targeting database to identify poor homes and eligible households nationwide.
Challenges for Growth
Electricity sector reform: to widen the generation capacity and diversify the national energy mix, improve the distribution companies’ management, repair the power lines, raise the collection to secure the sector self-sustainability and target subsidies to reach the most vulnerable.
Long-lasting jobs: to secure greater investment in agriculture and tourism and promote policies for the development of SMEs.
Efficiency and better controls in public expenditure execution: to target public expenditure in an efficient manner, to protect the most vulnerable and strengthen civil society in order to monitor public institutions.
National Development Strategy 2030: to better align the budget information with the results indicators established in the National Strategy.
The Dominican Republic Country Partnership Strategy 2010-2013 emphasizes protecting the poor while enhancing competitiveness and strengthening public institutions for performance accountability. Its four strategic objectives are:
Strengthen social cohesion and improve access to and quality of social services,
Promote competitiveness in a sustainable and resilient economic environment,
Enhance quality of public expenditures and institutional development, and
Build capacity and constituencies for reform.
The strategy combines investment and policy-based lending with analytical work. In the first half of the current CPS, the Bank has provided record support to the Dominican Republic. Since 2009, US$600.5 million have been approved. The current Bank portfolio consists of seven investment operations with total commitments of US$266.9, and several Non-Lending Technical Assistance (NLTA) instruments.
The CPS contains a robust framework for supporting the government’s governance and public sector reform agenda with an array of interconnected instruments. Among these instruments, the programmatic development policy loan (DPL) on performance and accountability of social sectors includes a component to support a series of reforms to build a culture of results in public administration.
Also the Municipal Development Investment Loan includes institutional development activities to strengthen capacity of local governments; and the second Health Sector Reform Loan (PARSS II) includes a series of actions to support performance-based management within the health sector. Additionally, there are number of NLTA instruments that will focus on underlying political economy and governance issues that prevent the country from addressing fundamental development challenges in key sectors that include education, health, and energy.
The World Bank is now preparing the new strategy for the 2013 – 2017 period, which involves a consultation process with all sectors of Dominican society to know their opinions about the priorities areas where the Bank could support the Government.
During the existing strategy the following results have been achieved: