Santo Domingo.- Bloomberg reported the removal of the tax reform bill. It caused a dip in Dominican bonds. President Luis Abinader said the fall would be temporary.
Bloomberg noted, “dollar bills have hastened emerging market depreciations. Those maturing in 2060 lost nearly 2.6 cents on the dollar, traded under 90 cents.” This reform planned to amplify revenue by raising income, business, and property taxes. However, it planned to lower film and tourism industry incentives.
Furthermore, credit rating agencies responded. Fitch Ratings and Moody’s ranked the Dominican Republic three notches below investment grade. Meanwhile, S&P Global gave a higher rating of BB. Seaport Global pointed out to its clients that the retractment is a huge letdown in achieving an investment grade status. Yet, it is unclear how fiscal consolidation will be met, despite there being a cap on primary spending.