[REVISION HISTORY]

Dominican Republic economic stability and fiscal pressures

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2026-10-03 11:02 UTC → 2026-10-04 08:41 UTC · added ~~removed~~

The Dominican Republic continues to navigate a balance between macroeconomic stability and structural vulnerabilities. While growth projections remain around 4.5%, the economy faces mounting fiscal and inflationary pressures. To combat ~~inflation and anchor expectations amid supply shocks,~~ inflation, the Central Bank (BCRD) raised its monetary policy interest rate to 5.50% in September 2026. This ~~move~~ has ~~begun to impact specific sectors;~~ impacted the construction sector; Teodoro Tejada, former president of ~~the Dominican College of Engineers, Architects and Surveyors (CODIA),~~ CODIA, warned in October 2026 that rising ~~interest~~ rates and a 6.42% ~~year-on-year~~ increase in the Direct Construction Cost Index are hindering residential development and ~~limiting~~ affordable housing ~~access for middle- and low-income families.~~ access. Fiscal pressures are intensifying. The 2027 National Budget project reveals significant debt challenges, with interest payments projected to reach RD$351,327 million—an average of RD$962 million daily. This expenditure is nearly equal to total functional spending on education and almost double the spending on health. While the budget targets a primary surplus of RD$24,045 million, the total projected deficit stands at RD$327,281 million after interest. Non-financial public debt is expected to reach US$67,914 million by the end of 2026. Revenue collection remains a hurdle, as an IMF and DGII study identified a 36.5% compliance gap in ITBIS (Value Added Tax) as of ~~2023, particularly in the construction, commerce, and hospitality sectors.~~ 2023. These ~~fiscal~~ strains are compounded by rising fuel ~~costs, which Minister~~ costs and a widening gap between wages and the cost of ~~Finance Magín Díaz noted could necessitate up to RD$50,000 million in subsidies~~ living. A Remitly study highlights that the average annual salary of approximately $6,100 covers only 34% of the local threshold required for a dignified life. Economists suggest this ~~year.~~ disparity is exacerbated by an ‘implicit tax of failed public services,’ where workers must privately finance essential services like electricity, security, and healthcare.

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