Overview

The Dominican Republic (DR) has enjoyed one of the strongest growth rates in Latin America and the Caribbean over the past 25 years. Over the last two years, the share of Dominicans living in poverty (about 152 Dominican pesos a day) has also substantially declined from 36.4 percent in 2014 to 30.5 percent in 2016, according to official estimates. Yet, social spending in the DR remains low compared to the rest of the region; on average 1.6 percent of GDP in health compared to regional average of 4.5 percent. In addition, deficiencies in the reliability and quality of water and electricity services are affecting key drivers of growth including tourism, agriculture, and manufacturing.

According to the World Bank Group’s Doing Business 2017, the Dominican Republic made getting an electricity connection faster and paying taxes less costly. However, in spite of improvements to the business climate further reforms are needed to maintain the country’s competitiveness in the region and beyond.

Challenges for inclusive growth

President Danilo Medina and the Dominican Liberation Party won a second election victory in May 2016 after a constitutional reform in 2015 that allowed him to run for a second term in office.

Recent World Bank Policy Notes Building a Better Future Together” highlight three priorities to bring greater and sustained prosperity to all citizens:

  • Greater productive inclusion, through a labor market with better human capital and greater participation of women, links between foreign investment and the local economy, and increased competitiveness.
  • Public expenditure that is sufficient and effective in the context of limited fiscal space.
  • Increased resilience to climate change and natural disasters, and improved natural resource management to sustain high levels of growth. 

Last Updated: Apr 10, 2017

The World Bank Group’s Country Partnership Strategy for 2015-2018 seeks to support the Government’s efforts to make growth sustainable and more inclusive, by expanding economic and social opportunities to all Dominicans.

The strategy offers a US$550 million World Bank lending program and approximately US$200 million on the part of the International Finance Corporation (IFC), as well as guarantees from the Multilateral Investment Guarantee Agency (MIGA) in response to market demand. In addition, it offers advisory and other services on the part of the entire World Bank Group. With this comprehensive program, the World Bank Group hopes to achieve results in five key areas over the next four years:

  • Improve the investment climate and foster private sector development by reducing the time required to register new enterprises by half; promote access to financing for more than 60,000 small and medium-sized enterprises; and partner with the private sector through IFC and MIGA.
  • Increase access to electricity, telecommunications and other infrastructure services by reducing losses in the electricity sector and increasing investment in renewable energies.
  • Build resilience to external shocks by improving disaster risk management planning, developing a national integrated information system, installing a new telemetry network to manage water resource flows, and rehabilitating four dams.
  • Promote equitable, efficient, transparent and sustainable public resource management by strengthening fiscal management, better aligning actual expenditures with approved budgets and enhancing civil society capacity in budget analysis and oversight.
  • Improve access to social protection for 1.3 million Dominicans, including health, water and better housing by strengthening the targeting program, Progresando con Solidaridad; improving the quality of education; doubling the number of children immunized in three regions of the country; and ensuring access to improved sanitation for low-income households in Puerto Plata.

In the Dominican Republic, the World Bank’s portfolio has commitments of US$350 million  and IFC’s current commitments in DR are $222 million, including $61 million in mobilization from IFC partners.

This IFC support to the private sector is complemented by MIGA’s guarantees into the DR.  MIGA has current gross exposure of US$82.2 million supporting foreign investment in the country’s road infrastructure.

A review of progress and performance of the current Country Partnership Strategy for the DR is planned in FY18. 

Last Updated: Apr 10, 2017

Important results have been achieved in recent years in government projects financed by the World Bank Group.  These include:

1Competitiveness and Investment Climate

  • The Dominican Republic is among the 50 economies of the world where trading across borders is easiest and the cities of Santo Domingo and Santiago ranked third and fifth in the ease of starting a business out of 22 cities analyzed in 6 countries of Central America and the Dominican Republic.
  • Through the Caribbean Growth Forum, the country has launched several initiatives for public-private dialogue to improve competitiveness and the country’s business environment.
  • The DR has passed an insolvency law that will facilitate quicker and less costly commercial restructuring.

2. Broader Access to Improved Infrastructure

  • Rehabilitation of 520 Km of electric lines, reducing electricity losses and guaranteeing 24-hour service to 105,000 poor clients in rehabilitated circuits.
  • Extension of the runway at the Punta Cana airport with IFC support contributing to a substantial increase in tourist inflows.

3. Preparedness for Disaster and Climate Change

  • Rehabilitation of two major dams after storms Olga and Noel, and repair of 152 Km of transmission lines in four extremely poor provinces.
  • Rehabilitation of 11,500 hectares of irrigated lands, enabling an increase in agricultural production.
  • Enhanced telemetry systems to measure river water flows.

4. Public Expenditure Quality and the Creation of Alliances for Reform

  • Through the Municipal Development Project, 31 local governments received training on participatory budgeting, development planning, financial management, procurement and contracting, human resources and municipal services. They have also received computer equipment for the implementation of an Integrated Financial Management System.
  • The audit and oversight capacity of the DR Supreme Audit Institution (SAI), the Chamber of Accounts, was strengthened.
  • The Dominican Republic has been accepted as a candidate in the Extractive Industries Transparency Initiative.
  • Support to Government Quality of Education Initiative (IDEC) to strengthen the quality of education and to the broad based Electricity and Education Pact.
  • A  Citizen Observatory was established to oversee government budget spending.

5. Social services

  • More than 250,000 undocumented Dominicans have obtained identity documents.
  • 38,000 vulnerable youth have been trained to increase their employability, and more than 4,000 structurally unemployed Dominicans took part in temporary job programs combined with life skills training in extremely poor communities to support their reintegration into the labor force.
  • Support to transparency in the national public system for procurement and distribution of medicines in public hospitals, which helped cut costs of medicines, such as antibiotics and insulin.
  • Rollout of a competitive selection system for teachers to raise the academic standards of newly recruited teachers, and lead to better quality education for students. 

Last Updated: Apr 10, 2017


LENDING

Dominican Republic: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

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