A changing political landscape
The political landscape is changing: the opposition seems to be strengthening, internal struggles have paralyzed the PLD, President Medina’s approval ratings, while still high, have been declining, and the odds of his third nomination (banned by the Constitution) have weakened in recent months. However, there is still a long way to go until the next presidential election, in May 2020.
The results of the Gallup-Hoy poll, the country's best-known survey, recently came to public attention. The poll covers a wide range of topics, and these are its main results:
- Two years before the national elections, most of the population is undecided about whom they prefer as the next president; the percentages of preferences for the four politicians with the highest profile remain low.
- Two thirds of the adult population reject a new constitutional amendment that would allow President Medina to opt for a third presidential term.
- President Danilo Medina's approval rating, while still high at 50%, continues to fall.
- A solid majority of the population believes that the country is on the wrong track, and that crime continues to be the main problem.
The PRM, the main opposition party, has just passed an important test. It organized with relative success, and without trauma, its first national convention to choose both national and local authorities. Although some results are still unknown, and in several important places the convention was postponed due to organizational problems, the PRM renewed almost all its leadership by electing young people for main positions, thus giving the party a new face.
With this result the PRM presents itself strengthened and rejuvenated. Although there is still a long way to go, and the party will have to overcome other tough tests, it is beginning to emerge as an alternative for the 2020 elections. With this convention, the image projected was one of maturity and order.
In part, the outcome of the convention was certainly the result of an agreement between the two main party leaders, Luis Abinader and Hipolito Mejia. Although a vote took place, they agreed to support José Paliza for President and Mejía´s daughter Carolina for the General Secretariat. In a way, the agreement somewhat restricted democratic space and gave Paliza and C. Mejía a wide margin of victory at the convention for their nominated positions.
As we recently published in an “In Brief”, preliminary fiscal figures for 2017 are already out and were close to what we expected:
- The deficit for the Central Government reached almost DOP 109 bn (3% of GDP), 0.7% of GDP above the target.
- The deficit for decentralized and autonomous institutions reached DOP 6.2 bn. The target was a surplus of DOP 1.7 bn.
- Thus, the budget result for the Non-Financial Public Sector (NFPS) totaled DOP 115 bn (3.2% of GDP).
- The Central Bank´s deficit reached DOP 44.4 bn (1.2% of GDP).
- The deficit of the consolidated public sector was DOP 159.5 bn (4.4% of GDP).
In other economic news, in February, the average price level declined by 0.11%, bringing cumulative inflation to 0.18% and annualized inflation to 3.32%, remaining within the target range of the Monetary Program (4.0% ± 1.0%).
From January to mid-March 2018, monetary policy has become more restrictive. It is not clear to what extent this is a turning point or just a seasonal performance. Nonetheless, the result was that as of March 22, 2018, the average lending rate increased by 143 points over the previous month. The borrowing rate increased by 79 points. The margin of intermediation for the banking system swelled from 7.46% to 8.10%.
Despite a comfortable international reserve position, the monetary authority has been forced to meet with financial intermediaries and exchange agents because it transpired in the media that many buyers have experienced difficulties obtaining foreign currency. These restrictions emerge from time to time due to the moral pressure exerted by the Central Bank on the prices at which the banks sell US dollars. In addition, at this time of the year the restriction is greater due to the strong seasonal increase in demand associated with the replacement of inventories and the repatriation of profits of foreign investment companies.
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