Inauguration speech and Cabinet reshuffling signaling continuity rather than innovation

DOMINICAN REPUBLIC - In Brief 17 Aug 2016 by Pavel Isa

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Yesterday, Danilo Medina was proclaimed President for a new term. In short, his inauguration speech points towards policy continuity and very few innovations or ruptures. Most of the speech was devoted to outline social achievements of the past term and new goals for the next four years. For that, the President promised to continue efforts to reduce poverty and unemployment, and improve the quality of public education and health services. He promised to continue efforts to support SMEs and small rural production, reduce housing deficit with support from the private sector, reform the National Police and contribute to modernize the justice system. The innovations were limited to promote a renewal of urban transport, expanding access and use of Internet and improve access to water. On fiscal issues, President Medina was rather vague. He referred to the Fiscal Pact calling for dialogue to agree on ways to strengthen the financing of public services but provided no indication that the government will invest much effort and political capital on this issue. He also talked about efforts to improve tax collection efficiency. In our view, in the short and medium term the government will emphasize that rather than making significant changes in the tax system or in public expenditure. We don’t foresee a fiscal reform coming soon. President Medina also made changes in the Cabinet but was mostly a reshuffling rather than a renewal. In the area of economic policies, designations points towards continuity of current macroeconomic management model characterized by very slow process of fiscal adjustment and strong emphasis on exchange rate and price stability. More to come in our upcom...