Economist raises the need to improve management of the electric sector and reduce the accumulation of international reserves of the BC

SANTO DOMINGO. -For reduce the electricity sector deficit Dominican Republic is due rehabilitate the circuits, strengthen the management of these companies  y set technical rate by zone. Meanwhile, the Central Bank deficit (BC) will decrease as it reduce the accumulation of international reserves, the main cause of the quasi-fiscal deficit.  

The statement was made by economist Héctor Guiliani Cury, who explained that the electricity sector deficit It is mainly due to management problems of the Energy Distributor Companies (EDES), which results in high energy losses specifically in circuits C and D, where the lower income groups live mainly in the country.

“In those circuits, EDES only recover from 20 to 35% of the energy they supply and the cost of the average kilowatt hour is the lowest. A combination of investments in rehabilitation of networks and improvements in management, as well as intense social work by distributors in the intervened areas can increase the recovery of energy served to 85% levels in a few years. ”

The deficits of the electricity sector and the Central Bank, from their origins to their possible solutions, were addressed by the economist, during the fifth version of the Annual Congress of Economics and Business Students (CANE), which performs the Instituto Tecnológico de Santo Domingo (INTEC).

With regards to technical ratehe said you have to incorporate gradually, to the extent that the e circuits are rehabilitated installing electricity networks and meters that allow EDES to bill energy, collect it and reduce fraud.

In the case of the Punta Catalina thermoelectric plant, the economist considers that when he enters to work fully, he will not reduce the problem of the sector, unless the effective recovery coefficient in circuits C and D is reduced.

“From a political point of view, the technical rate does not have to be introduced in the entire population because it would cause problems, but rather to sectorize the problem by applying the rate as the circuits are rehabilitated,” said Guiliani Cury.  

As to BC deficitHe said that basically the big problem is not because of the bank rescue of the 2003, but the accumulation of net international reserves. The solution, according to the economist, is in gradually pass state deposits, which are in the Reserve Bank, to BC; In addition, as the titles of the BC expire and the Government assumes the part of the quasi-fiscal deficit corresponding to the bank rescue of the 2003, the Government invests the resources captured in infrastructure works.

He explained that otherwise the capitalization of the Central Bank will not be sustainable, because the Government would have to sacrifice tax resources that it can use to improve the living conditions of the population to pay interest to financial institutions and high-income groups.

“When the Central Bank buys dollars in the market to increase international reserves, it has to issue money, so the reserves it buys invested in the United States at half a percent, but when it issues the pesos to avoid that resulting in inflation, it has to issue certified at 12% and that means that large orders are incurred. ”

Guiliani Cury said that this accumulation of international reserves is being very expensive for the country and two things must happen: either the Government directly assumes the purchase of international reserves outside the balance sheet of the BC or reduce the accumulation process to levels that are sustainable.