Washington, USA
Restoring the sustainability of the debt, Simplifying the tax system, strengthening and unifying social protection systems, improving efficiency in water supply and sanitation, are some of the key post-pandemic priorities for a sustained recovery of growth in the Dominican Republic, according to a new report from the World Bank.
The report released today focuses on how to improve quality in the allocation of expenditure, an essential issue given the current limited fiscal space after the fiscal efforts required to address the pandemic in 2020, the agency said in a statement.
The study highlights the following key areas to drive sectoral reforms:
Sustainability of public debt. He noted that a strategy to stabilize the ratio of debt to gross domestic product could include the following elements:
- 1) The adoption of a law of fiscal responsibility that allows to realize investments against cyclical, from achieving a wider fiscal space product of reductions of expenses or increases in the collection of taxes;
- 2) the reconstruction of fiscal “mattresses” or increased reserves, appropriate to face macroeconomic shocks, which allow to mitigate the impact that natural disasters have on the population;
- 3) increase the participation of the private sector in disaster risk management, including insurance of public assets (schools, hospitals, roads, water treatment plants, etc.) and insurance against significant disasters in through the issuance of disaster bonds.
These actions would initiate a virtuous circle that would lower funding costs as market confidence in government securities improved.
The report cites as another key aspect to improve the focus and efficiency of social protection system and key public services such as water and sanitation.
In this sense it indicates that cconsolidating social protection programs will generate tax savings which allow to expand the coverage of conditional transfers. In turn, he recommends strengthening leadership in the sector, regulation and accountability of state-owned water and sanitation companies, could improve the efficiency and quality of these services. It also proposes efficiency improvements and appropriate tariffs (including mechanisms to protect the most vulnerable) would allow tax transfers to support the expansion of systems (coverage, continuity and consumption) to the poorest households.
Another clace area is aincrease public investment. In this area he argues that limplementation of the reforms proposed in the report could encourage greater participation of the private sector in infrastructure through public-private partnerships (PPPs) to help finance investment needs, while guaranteeing financing for consumption by the poorest households.
In this regard, the report states that while PPPs can improve the provision of services, they must be structured based on an optimal distribution of risks between the public and private sectors to avoid incurring excessive contingent liabilities..
goal
The communiqué explains that the central goal of government public policy is to improve the quality of life of the people. In this sense, the report reinforces and helps to refine this goal with specific policy recommendations for the sustainability of public debt and the resilience of public finances that will allow it greater capacity to face adverse shocks such as the VOCID -19, the strengthening and sustainability of the social protection system and key public services, such as drinking water and sanitation for the benefit especially of the poorest population, and the increase and improvement of public investment, including joint projects with the private sector, the statement said.
adds that eThe study suggests that quality improvements in the allocation of public spending and fiscal policy indirectly support the creation of jobs in the private sector..
He points out that, first, improvements in the efficiency of tax insurance directly reduce compliance costs and therefore improve the profitability of companies. And, secondly, a simplification of the tax system (focused on the expansion of bases and the harmonization of rates) would level the ground for all companies, which would encourage competition and, therefore, the productivity of country.
The report further suggests that lthe complexity of the Dominican Republic’s tax system could affect companies’ investment and employment decisions.
He concludes by stating that “Review of Public Expenditure of the Dominican Republic 2021” supports the Government’s efforts to mitigate the effect of the Covid 19 crisis on employment and poverty, allows the private sector to position itself for a solid recovery and maintaining a sustainable debt dynamic.
I need it the report it was carried out at the request of the Government and with financial support from the French Development Agency (AFD) and the World Alliance for Water Security and Sanitation (GWSP). The document can be downloaded from the web via this link http://wrld.bg/kMm450G0Nwp.
valuations
The statement stressed that the Ministry of Economy, Planning and Development (@MinEconomiaRD) has positively assessed the contributions made by the World Bank to the country with the publication of the report.
“Its results support the government’s efforts to improve the quality of public spending and drive public finances on a path of greater sustainability in the context of the process of recovery of economic activity and employment,” he said. express Miguel Ceara Hatton, Minister of Economy, Planning and Development.
“The MEPyD appreciates this new contribution from the World Bank and reiterates its commitment to helping to give more quality to politics and public spending to drive economic growth, people’s well-being and the exercise of rights. fundamental, “he added.
The representative of the World Bank in the Dominican Republic, Alexandria Valerio, said the country is well positioned to grow again and move forward on an inclusive growth agenda, May it bring greater prosperity to all citizens.
“As in most countries, the post-pandemic in the Dominican Republic urges action and decision-making so that all Dominicans can achieve a more prosperous future and a better quality of life after the pandemic,” he added.