Overview

For the past two decades, the Dominican Republic has been one of the fastest growing economies, with GDP growth averaging around 5.5 percent annually between 1991 and 2013. Despite this exceptional performance, poverty is higher today than in 2000. Poverty soared from 32 percent in 2000 to almost 50 percent in 2004 following the 2003 financial and economic crisis, before gradually declining to 41 percent in 2011.

According to the World Bank Group’s Doing Business 2015 [http://www.doingbusiness.org/data/exploreeconomies/dominican-republic/], the Dominican Republic along with Jamaica and Trinidad and Tobago featured among the countries that implemented the most reforms in Latin America making it easier for local entrepreneurs to do business.

In recent decades, the country has also transformed its economic base and has diversified its exports. Improvements to the business climate have facilitated international trade and boosted export growth. However, the country still ranks below other Caribbean countries and needs to carry out further reforms to maintain its competitiveness in the region.

Challenges for inclusive growth

Improve the business climate to boost investment and jobs creation while strengthening access of the poor to labor markets: Traditional job-intensive sectors such as manufacturing are growing at a slower pace than telecommunications and mining, which tend to generate fewer jobs.  Since 2000, a large share of the jobs created has been in low-skilled industries in the informal sector. As a result of the 2003 crisis and the slower growth of the textile industry, real wages have declined by 27 percent since 2000, even as labor productivity rose. Improving competitiveness policy and the investment climate, in addition to implementing job training policies, could help create more and better jobs.

Promote equitable, efficient and sustainable fiscal policy: The current tax system is hampered by low revenue collection and relies heavily on indirect taxes. Making the tax system more progressive would allow for more redistribution, as well as more investments in basic public services such as water and sanitation, quality education and health, especially for the most vulnerable.

Improve public service delivery to reach people living in poverty:  Despite significant improvements in service delivery coverage, access to basic public services remains unequal and of low quality, particularly for people living in poverty. Better program targeting, monitoring and evaluation, along with incentives such as results-based budgeting, could help improve service delivery.

 

Last Updated: Mar 30, 2015

The World Bank Group’s new Country Partnership Strategy for 2015-2018 seeks to support government efforts to expand economic and social opportunities to all Dominicans.

The strategy offers a new US$550 million World Bank lending program and approximately US$200 million on the part of the International Finance Corporation, as well as guarantees from the Multilateral Investment Guarantee Agency (MIGA) in response to market demand. Additionally, 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 business climate by reducing the time required to register new enterprises by half; promoting access to financing for more than 60,000 small and medium-sized enterprises; and facilitating public-private partnerships.
  • Increase access to electricity, telecommunications and other services by reducing losses in the electric power sector, increasing investment in renewable energies and improving access to more efficient, reliable information and communication technologies through a national broadband network that will connect 15 provinces.
  • Strengthen the capacity of recovery from external shocks through the installation of a new telemetry network to manage water resource flows; construction and rehabilitation of four dams; and development of a national integrated information system.
  • Promote efficient public resource management through the strengthening of fiscal management, budgetary processes and the capacity of civil society for budget analysis and oversight.
  • Improve social protection access  for 1.3 million Dominicans, including health, water and better housing by strengthening of the targeting program, Progresando con Solidaridad; improving quality of education by increasing the number of teachers recruited through a competitive selection system; doubling the number of children immunized in three regions of the country; and increasing access to improved sanitation for 128,000 people living in poverty in Puerto Plata.

In the Dominican Republic, the World Bank’s portfolio has commitments of US$237.4 million whereas the IFC’s portfolio totals US$208 million, with additional mobilization of IFC partners for US$97 million. This IFC support to the private sector is complemented by a MIGA guarantee of US$107.6 million to support foreign investment in the country’s road infrastructure.

 

Last Updated: Mar 30, 2015

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

1. Social services

  • More than 235,000 previously undocumented Dominicans have obtained identity documents.
  • 38,000 vulnerable youth have been trained to increase their employability.
  • More than 4,000 structurally unemployed Dominicans participated in temporary job programs in extremely poor communities in the north of the country to support their reintegration into the labor force.
  • Construction of 258 new classrooms and 18 schools in the regions.
  • Support to the national public system for procurement and distribution of medicines in public hospitals to ensure greater transparency in the process, with significant price reductions on a wide range of medicines.

2. Competitiveness

  • Rehabilitation of 520 Km of electric lines, guaranteeing 24-hour service to 105,000 poor clients with contracts in the vulnerable circuits identified.
  • 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.
  • Extension of the runway at the Punta Cana airport with IFC support contributed to a substantial increase in tourist inflows.
  • The issuance of the IFC’s “Taino Bond” and on-lending of proceeds to local banks led to the availability, for the first time, of five-year, fixed rate mortgages for low-income households.

3. Public expenditure quality and the creation of alliances for reform\

  • Five municipalities drafted municipal development plans and institutional action plans, and received training in participatory budget planning, financial administration, municipal services and procurements.
  • The audit and oversight capacity of the DR Supreme Audit Institution (SAI), the Chamber of Accounts was strengthened.
  • The exemplary Participatory Anti-Corruption Initiative (IPAC), launched with World Bank support to prioritize anti-corruption reforms, and strengthen accountability, achieved major gains such as more than US$20 million in annual savings in procurement of medicines.
  • The Bank has supported Government initiatives to strengthen the quality of education (Quality of Education Initiative –IDEC), in support to a broad-based Pact for Education.
  • The Bank supported the Government and national stakeholders, including the Social and Economic Council (CES) in the Electricity Pact process.
  • The Bank also engaged with Parliamentarians to deliberate on budget transparency and options to improve the Open Budget Index.
  • A Citizen Observatory was established to oversee government budget spending.

Last Updated: Mar 30, 2015


LENDING

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

*Amounts include IBRD and IDA commitments