New president inherits empty coffers and filled hospital wards
An Eastern Caribbean state, the Dominican Republic has in recent years enjoyed an economic boom, with annual growth rates exceeding 6 percent. With this high economic performance, the country has set itself apart from the rest of Latin America, and not least neighbouring Haiti, with which The Dominican Republic shares the island of Hispaniola.
By Niels Dall-Hansen, Senior Analyst, EKF Denmark’s Export Credit Agency
Taking up the presidency might have been a dream job, but for newly elected Luis Abinader, the current reality is a raw deal. With the country's booming tourism industry decimated by the coronavirus crisis, the 53-year-old economist now has to deal with the fallout from dwindling government coffers and the rapidly growing numbers of citizens infected with COVID-19.
The presidential election held on 5 July had already been postponed for two months owing to the coronavirus crisis. After two terms in office, the former president, Danilo Median, was no longer eligible for re-election, but his party, the ruling Dominican Liberation Party, hoped to get its new candidate, Gonzalo Castillo, sworn in.
In an attempt to get the Republic's derailed economy back on track and reduce mounting unemployment, on 1 July, President Danilo Median reopened the country to tourists and eased restrictions on activities that had been suspended in order to contain the contagion.
This proved hasty. Over the past fortnight, the rate of new infections and hospital admissions has been increasing rapidly, with a dire new record set daily. The health authorities are now predicting that the number of confirmed infections will not peak until a month from now and the country is under lockdown again.
Corruption and scandals
This gave voters in the Dominican Republic yet another reason for ousting the ruling party. In recent years, mounting corruption and a series of public construction scandals have spurred growing public discontent with the country's rulers.
And with election pledges to fight corruption, reinstating transparency and trust in the political and legal system, while restoring the national economy, it did not take much to shift voter sympathy in favour of the opposition and the new president, Luis Abinader.
IMF aid package
Meanwhile, with the coffers virtually empty even before COVID-19 broke out, in May, the country had to request USD 650 million in emergency assistance from the International Monetary Fund (IMF) in order to honour even the most basic payments.
Since the coronavirus crisis is far from over, Abinader will presumably soon be obliged to fly to Washington to ask the IMF for a bigger bailout. This will entail requirements for reforms, making it even more difficult for the new president to fulfil his campaign promises any time soon.
However, in the longer term, the expectation is that the Dominican Republic will be able to regain its standing as the Latin American success story. Many years of political stability, trade-friendly legislation and economic progress have created a business climate that is far more diversified than counterparts in neighbouring countries. The Dominican Republic exports everything from T-shirts and medical devices to cigars, bananas and lots of gold from Pueblo Viejo, the second-largest gold mine in the world.
However, the key mission now is to bring American tourists back to the alluring sandy beaches and sunny weather that have made the country the number-one tourism hotspot in the Caribbean, but also caused its dependency on tourists splashing their dollar-bill cash.