In Political Parties Law, Media Likely to Prevail
Although the eye of Hurricane Maria did not touch the country, it came close enough to flood entire towns and plantations, displacing thousands of families, and damaging infrastructure and crops in the East and Northeast.
In politics, attention has focused on the debate over the political parties’ law. Approving a good parties law that regulates their internal life and funding, and reforming electoral law, are essential for the health of democracy. Though in recent months the path to agreements seemed clear, the debate has stalled over rules for the election of party authorities, and candidates for public positions. Since the PLD controls Congress, the issue will be settled by the PLD´s Political Committee, which Medina dominates. Hence, the president is likely to prevail.
Not a single defendant in the Odebrecht corruption case has been locked up. All have either been released on bail or remain under house arrest. The last two released were Angel Rondón (accused of being the middleman who distributed bribe money) and Víctor Díaz Rúa, former minister of public works. Since they are widely perceived as guilty and as active participants and beneficiaries of corruption schemes, the release was distasteful in public eyes.
Inflation jumped in August. CPI was up by 0.57% from July, the highest recorded since December. But due to the low levels of inflation between March and July, accumulated inflation during the first eight months of the year was only 1.77%, and y/y inflation was 3.18%, within the target range of the Monetary Program.
In response to figures showing a major growth slowdown, the Central Bank's stance has changed dramatically, from hawkish to dovish. Reserve requirements and the policy rate were cut at the end of July. As a result, in August, private lending grew by 10.4 billion, almost three times the average monthly growth of the first seven months of the year. The central government’s financial results remain well below the target for the year, and are significantly misaligned. The deficit reached DOP 20.4 billion, or 24% of the target for the entire year. Spending containment explains this performance. But we expect spending to accelerate in H2, and that the budget will line up with the fiscal target.
The executive branch submitted its proposed 2018 budget to Congress. We expect it to be approved without significant modification. It generally lacked innovation, or surprise. Revenues are projected to rise by 12%, and total spending by 10%.
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