WASHINGTON, November 4, 2015 —The World Bank’s Board of Executive Directors today approved a US$60 million Development Policy Loan (DPL) to the Dominican Republic for its efforts to promote inclusive growth by strengthening management of public expenditures and enhancing the transparency and monitoring of government operations.
“This financing supports the Government’s efforts to improve public financial management and strengthen its results-based use of public funds,” said Magin Diaz, Vice Minister of Public Credit. “These efforts will lead to more efficient delivery of public services for the poorest by allocating and managing public resources more strategically”.
The Dominican Republic registered the highest growth rate in Latin America and the Caribbean in 2014 (7.3%), recovering from the slowdown in 2011 and 2012. This has helped boost employment and reduce poverty. A total of 169,000 jobs were created between October 2013 and 2014. The current account deficit is expected to shrink below 2 percent of GDP in 2015. However, macroeconomic and fiscal forecasts estimate the public sector debt stock to remain between 47.4 and 51.2 percent of GDP in 2018.
“We are encouraged by the Dominican authorities’ commitment to improve service delivery to the poorest and most vulnerable,” said Sophie Sirtaine, World Bank Country Director for the Caribbean. "The government's reforms to manage its public finances more effectively are a clear sign of this commitment, and the following measures will be important for consolidating the gains achieved in recent years."
The operation is aligned with the Dominican Republic’s National Development Strategy 2030. Specifically, the main reforms to be achieved by this DPL are:
- Improving the flexibility and transparency of public debt management: This means strengthening the sustainability of public finances and reducing overall public debt through improved coordination between institutions that issue public debt, and laws that enable renegotiation of existing debt under more favorable conditions.
- Strengthening planning, budgeting, implementation, monitoring and evaluation of public expenditures: This includes efforts to improve service delivery in the health sector through the implementation of results based financing to benefit the poorest and the uninsured. A national system for monitoring and evaluation of public programs, and the establishment of an e-Procurement portal for all public procurement processes, will also help improve efficiency in public financial management.
- Enhancing transparency and monitoring of government operations: Improved accuracy and regular publishing of validated poverty statistics and the establishment of participatory monitoring mechanisms will help better monitor the use of public funds, including those allocated to the National Education Pact and to non-profit organizations that play a key role in monitoring the delivery of quality goods and services to the poorest.
The loan is a flexible Development Policy Loan from the International Bank for Reconstruction and Development (IBRD), with fixed spread, customized repayment schedule and a total repayment of 23 years, including a grace period of 11 years.