New Dominican President Will Increase Fiscal Stimulus In Coming Quarters

• The Dominican government’s response to Covid-19 will push the fiscal deficit to a historic high of 6.5% of GDP in 2020. Fitch expects the Covid-19 shock will derail the country’s robust economic growth trajectory of the last decade, causing a 4.7% contraction in 2020 and significantly undermining short-term public revenues.
• Moreover, the Dominican government has implemented countercyclical fiscal stimulus measures to support recently unemployed and low-income workers, which will push expenditures higher.
• As Covid-19 cases in the Dominican Republic remain elevated, it is expected that the government will increase spending on health care operations and transfer payments into 2021.
• The budget shortfall is projected to narrow slightly, to 5.8% of GDP in 2021, but remain well above the five-year average deficit of 1.6% over the coming years.

(Source: Fitch Solutions)