Dominican Republic Restructures $787 Million Foreign Debt
Jun. 27, 1985
SANTO DOMINGO, Dominican Republic (AP) _ The government has reached agreement with the International Monetary Fund to restructure $787 million of its foreign bank debt, the president said Thursday.
President Salvador Jorge Blanco said the terms call for a 13-year repayment schedule, with a five-year grace period before money is paid back.
''The renegotiation will give us breathing space,'' he said in an address to the nation. ''This doesn't mean the reorganization is completed.''
The debt restructuring is guaranteed by the IMF, which also signed a one- year agreement with the government in April that freed some $90 million in credit.
The agreements were reached after Jorge Blanco imposed a series of austerity measures including the elimination of a government subsidy on imports and devaluation of the Dominican peso. The currency, for years held at par with the U.S. dollar, now trades at a third of the dollar's value.
The moves drove up consumer prices sparking a series of strikes and street disturbances, including three days of rioting in April 1984 that left 54 dead by government count and as many as 100 by other calculations.
The nation's unemployment rate is 30 percent of a labor force estimated at 2 million. The minimum wage is currently $58 a month.
The Dominican Republic is still involved in negotiations for the restructuring of another loan from the United States and Spain.
Jorge Blanco said the nation's total foreign debt is $3.4 billion when accumulated interest and penalties are figured in.
He said the nation's economy would remain precarious as ''ruinous prices'' dominated the world market for sugar, the major export commodity.
''Never before has Latin America lived through a crisis more serious, more profound and more all-pervasive,'' Jorge Blanco said.