Dominican Republic and Haiti: Country Studies

since 1948, Dominican Republic peso (RD$) was officially
maintained on par with US$ until 1985, when it was floated
(and devalued) against the dollar until it stabilized at US$1 =
RD$6.35 in 1989. After experiments with multiple exchange
rates, all rates were unified in 1997 on free-market basis and at
initial rate of US$1 = RD$14. After Hurricane Georges, official
rate dropped to US$1 = RD$15.46. Commercial rate was US$1
= RD$16.25 in January 2000.
Imports: Total imports in 1998: US$3,403.1 million. Deep
plunge in oil prices reduced Dominican fuel bill by about 20
percent to US$336 million in first half 1998, but total value of
imports increased by 15 percent over 1997 as aftermath of
Hurricane Georges, which left 300 people dead and hundreds
of thousands homeless. Government officials estimated surge
in imports related to reconstruction effort at US$700 million
through 1999.
Exports: Total exports in 1998: US$2,457.6 million. Sharp decline
in world commodity prices caused by 1997 Asian currency
crisis created negative impact on trade deficit. Exports of
nickel, major Dominican earner of foreign exchange, suffered
27 percent price drop and fell 38.4 percent in 1998. Coffee
exports adversely affected by 10 percent decline in international
prices. Export of sugar and sugar products in 1998
decreased 29.6 percent, mainly as result of 24 percent cut in
Dominican international sugar quota.
Balance of Payments: Trade deficits continued into 1990s,
hitting record US$1,639 billion in 1993, 1.4 percent increase
over 1992, and exceeding US$1.5 billion in 1994. Deficits
registered continued deterioration: from US$832 million in
first half 1997 to US$945 million in first half 1998.
Fiscal Year: Calendar year.
Fiscal Policy: President Leonel Fernandez Reyna's campaign
against tax evasion (upon taking office in 1996) proved
successful: budgetary income in 1997 was 31 percent highei
than in 1996. Reforms in late 1990s included strengthening
Central Bank's autonomy and tightening credit and wage
systems. Inflation plunged from 80 percent in 1990 to 9
percent in 1995. External public debt as share of GDP more
than halved (to 33 percent) in same period. Unemployment
rate declined from about 20 percent in 1991-93 to about 16
percent in 1995.
4