Growing Anti-Corruption Movement Pressures the President
The anti-corruption movement known as the Green March is growing in size and strength, and the government is feeling the heat. Protestors are demanding that investigations accelerate, and have accused the Attorney General of negligence, bias and taking orders from President Danilo Medina and his PLD party. Movement leaders are also demanding that all contracts with the tainted Brazilian conglomerate Odebrecht be canceled, a step the government has so far refused to take. Besides calling for zero dealings with Odebrecht, protestors want those involved in the corruption scandal to be tried.
The government has now changed its tune, and is accusing at least some Green Marchers of aiming to tarnish Medina’s reputation, weaken the PLD or even destabilize the government.
But what’s most radicalizing Green Marchers is the perception that the government and the Attorney General are acting carefully to protect themselves. Public perception is that the AG and the courts, captured by the PLD, can’t administer justice, and that the political system is insensitive to public demands for more transparency and less corruption.
We don’t think Green March pressure will dissipate, or that government will meet its main demands, either. In fact, this movement is likely to push for deeper changes beyond the Odebrecht case, which could compromise the enormous control the PLD holds over every level of government.
Inflation was negative in March. The CPI fell by 0.20%, bringing Q1 accumulated inflation to 0.84%. Y/y inflation reached 3.14%. The Monetary Board at the end of March decided to increase the Monetary Policy Rate by 25 bp, from a 5.5% to a 5.75% annual rate, effective April 3rd. Under the Central Bank’s short-term liquidity management scheme, all other rates were adjusted by the same proportion. The decision aims to anticipate U.S. Fed hikes. Lending rates continue to rise, while borrowing rates have declined.
Central Bank net international reserves increased from $6.047 billion in December 2016 to $6.456 billion in March 2017, and were up 20.48% from March 2016. This is a record figure, equivalent to 4.1 months of imports.
Though budgetary spending is so far on target, international rating agencies are sounding warnings about excessive dependence on capital markets borrowing, and the negative effect that a U.S. rate hike may have on DR fiscal performance.
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