Dominican Republic: Sectoral Financial Positions and Macroeconomic Vulnerabilities

Svetlana Cerovic and Jose Saboin

No 2016/208, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the financial position of the key sectors of the Dominican Republic. It contributes to macroeconomic surveillance by identifying financial interlinkages and vulnerabilities through the balance sheet approach. The balance sheet of the economy has been weakening, particularly in foreign currency, due to persistent fiscal deficits. Risks arising from weaker foreign currency position, however, seem to be mitigated by long-term maturities on government debt and increasing accumulation of foreign currency assets. Given the strong links of the rest of the economy with the public sector, network analysis suggests that while the financial position of the other sectors of the economy is stronger, they could be adversely affected in an external stress scenario. Exposures to public sector are particularly pronounced in the domestic financial system (directly) and households (indirectly, through pension funds).

Keywords: WP; central bank; financial crisis; capital structure; creditor position vis-à-vis bank CDs; liquidity risk; balance sheet approach; net financial position; Dominican Republic; financial interlinkages; position vis-à-vis; FX position; balance sheet risk; BCRD certificate; Financial statements; Currencies; Public sector; Pension spending; Global (search for similar items in EconPapers)
Pages: 37
Date: 2016-10-17
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