Political Stability in the Dominican Republic to Prevail in 2023

• With elections a year away, Fitch expects policy continuity will remain stable throughout the remainder of 2023 in the Dominican Republic.
• The approaching election season, coupled with elevated costs of living, are likely to pressure President Luis Abinader to maintain subsidy spending and work towards raising the minimum wage.
• Abinader has also kept in place popular policies, including the fuel subsidy as well as the strict policy of deporting any undocumented Haitian in the Dominican Republic. While there has been some pushback to the latter on humanitarian grounds, the policy remains popular, especially as Dominicans fear the influx of Haitians will put strains on public services.
• Of note, President Abinader has focused on capital projects for improving and modernising the country’s ecotourism, renewable energy sector, as well as transportation infrastructure. His Modern Revolution Party (PRM) will continue to enjoy a majority coalition in Congress, supporting policy continuity. 
• Given these factors, Fitch has maintained the Short-Term Political Risk Index (STPRI) score at 75.2 out of 100. While inflationary pressures continue to subside, the upcoming election cycle and cost of living crisis will pose some risks to social stability in the short term.
• Last week, Central Bank Governor, Valdez Albizu, delivered a speech to the local banking association hinting that inflation could converge to the target range as soon as this month. In April it had come out at 5.15% (down from 9.6% a year before), while the target band is set at 4% +/- 100bp.

(Source: Fitch Solutions)