Could Margarita break the PLD deadlock?
Robust growth and low inflation marked the beginning of 2019, with economic activity expanding 5.9% between January and February, and February inflation at 0.37%. Accumulated inflation through February was 0.2%, and annualized inflation was 1.19% -- well below the lower limit of the Monetary Program’s target range.
Liquidity contracted, as the Central Bank moved into a seasonal tightening mode. There is also typically a seasonal increase in foreign currency demand in winter, as importers seek to replenish inventories. Oil prices pushed the oil bill up, putting further pressure on the FX market. Yet this wasn’t reflected in the exchange rate. Devaluation in January and February reflect the trend seen over the past year, of a 2.5% to 3% decline. There was a dent in international reserves, which fell $493 million from December 2018, and by $927.2 million from February 2018. Yet reserves remain comfortable.
The IMF mission has just concluded its regular visit, as it prepares its so-called Article IV review. The report forecasts a 5.5% expansion in real GDP for 2019. It also acknowledges a fall in unemployment and poverty rates. However, the team indicated that, to maintain its robust economic performance, the country must tackle structural reforms, mainly in taxation, and by adopting a fiscal responsibility framework aimed at reducing policy uncertainty and fiscal risks.
The selection process for the new Supreme Court judges has turned into a major disaster for Attorney General Jean Alain Rodríguez, for President Danilo Medina and for the National Council of the Judiciary. Rodríguez went on the attack against Judge Miriam Germán, the respected current president of the Criminal Chamber of the Supreme Court of Justice, a tactic much of the public saw as illegal and unjust. A political and personal fiasco for Rodríguez, the episode also hurt Medina, as many believe Rodríguez could not have acted without the president’s direction, or at least consent. The political backfire comes as Medina is torn between seeking a Constitutional amendment that would allow him to run again, or letting his rival, ex-president Leonel Fernández, become the PLD nominee.
An unlikely breaker of this deadlock could be Vice President Margarita Cedeño, who is also Fernández’s wife. Cedeño stated during a recent visit to the United Nations that the time was ripe for women to govern, and for new leadership in the PLD.Cedeño is very popular, and would have a better chance of winning than either Medina or Fernández. But she has so far has not explicitly expressed her intention to run and, in our opinion, wouldn’t launch a candidacy without the guaranteed support of either Medina or Fernández.
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