Dominican Government Will Push For Fiscal Consolidation In Coming Years Amid Wider Deficits

  • Prior to the pandemic, Dom Rep’s fiscal deficit stood at 2.3% of GDP before rising to an estimate of 7.3% in 2020. Fitch forecast that with the help of rebounding revenues, the country’s fiscal deficit will narrow to 6.1% of GDP in 2021 and 5.4% in 2022, with public debt climbing to 54.9% of GDP in 2021 and 57.4% 2022, from an estimated 52.7% in 2020. 
  • Real GDP is forecasted to grow by 5.0% y-o-y in the Dominican Republic in 2021 and 4.7% in 2022, up from an estimated -6.8% in 2020, as private consumption and tourism recover from the economic shock of the COVID-19 pandemic.
  • Additionally, the ongoing government stimulus measures, combined with the planned roll-out of a COVID-19 vaccine in March 2021, will help economic activity return to normal over the coming quarters. This estimated recovery is significant when compared to the forecast 3.4% GDP growth for the Caribbean in 2021, and 3.6% in 2022.
  • The prospects for improvement in both fiscal and economic performance along with the push for fiscal consolidation continue to support our current HOLD recommendation on the sovereign.

(Source: Fitch solutions & NCBCM Research)