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USAID Information:
External Links:
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Dominican Republic
The Development Challenge: The Dominican Republic currently faces enormous challenges - hardship
not seen in this country since the early 1990s. Serious economic and political crises - including three
failed banks, a government fiscal crisis; a currency that has lost half of its value; high inflation rates; a
serious shortage of electricity generation leading to sporadic, localized blackouts throughout the country;
a divisive 2004 presidential campaign; and government corruption and cronyism - are collectively
resonating through Dominican society and directly affecting vital government services, especially health,
education and justice. These dilemmas make USAID's work more difficult and important than ever in this
country, a close U.S. ally for geographic, political, and economic reasons. The biggest challenges in the
year ahead will be to help the Dominican Republic regain macroeconomic balance, maintain social
services, and strengthen key government and democratic institutions.
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The collapse of the country’s third-largest bank, Banco Intercontinental (Baninter), was followed by
problems with two smaller banks, Banco Mercantil and Bancredito. The Central Bank intervened to
secure depositors’ money, which led in turn to a huge increase in the quasi-fiscal debt, sustained
depreciation of the Dominican peso, sharp increases in the cost of living, and stagnation of salaries while
jobs were being lost. After years of vigorous growth, the Dominican government is currently forecasting a
negative 1.3% gross domestic product (GDP) growth rate for 2003 with inflation forecast at close to 40%.
In 2004, the economy is forecast to contract by 1%, and inflation is forecast to be 14%. Although the
government secured a two-year, $600 million standby agreement with the International Monetary Fund
(IMF) in August 2003, its unannounced purchase of two previously privatized but failing electricity
distribution companies increased the debt burden beyond IMF agreed-upon limits and the IMF stopped
the program after the first disbursement. The IMF is reassessing its agreement with the Government of
the Dominican Republic, and a new agreement is expected to gain approval in early 2004. Although
tourism, free trade zones, export sectors, and remittances are experiencing healthy growth in response to
the upsurge in the U.S. economy, the internal economy, imports, and investments have fallen dramatically
and capital flight is evident.
The USAID-funded 2002 Demographic and Health Survey shows an HIV/AIDS seroprevalence rate of
1.0% in the adult population, with certain age groups and regions higher than the national average; for
example, the rate for residents of former sugar cane worker villages is 5.0%. Government expenditures
for HIV/AIDS prevention have been limited and largely dependent on external support from international
agencies. More than 96% of mothers deliver their newborns with a trained attendant but, paradoxically,
maternal mortality continues to be high (estimated at 178 deaths per 100,000 live births) due to poor
quality care. Infant mortality is 31 per 1000 births, and vaccination rates continue to be low (the fully
vaccinated coverage rate in 2002 was 34.9%). Inequities in access to quality health services remain an
important issue, and the government is undertaking a fundamental health sector reform intended to
guarantee a basic package of primary care services through health insurance plans. The quality of basic
education is poor, particularly for children in rural areas, and public investment in education remains
relatively low. Additionally, the sustained influx of illegal and transient Haitians adds to the country’s
poverty burden and further strains the already inadequate health and education services.
Overall lack of transparency and confidence in public sector institutions, high levels of corruption, lack of
respect for the rule of law, and high transaction costs limit the economy's competitiveness. The
Dominican Republic is being carefully monitored for human rights violations and trafficking in persons.
The May 2004 presidential campaign has begun, and the country will be closely scrutinized for the
fairness and transparency with which it is able to conduct the election and transfer power to the winning
candidate.
Sustained economic growth and continued social and political progress in the country depend on
increasing the country's competitiveness in world markets, resolving the electricity sector crisis, protecting
the fragile island environment, addressing the health and education needs of the country's poor, bringing
widespread corruption under control, strengthening rule of law, and reinforcing key government and
democratic institutions. The Dominican Republic serves as a source of employment and public services
for large numbers of Haitians, while the porous border creates a challenge in controlling illegal activities
like drug, arms, and alien smuggling.
U.S. national interests include ensuring economic prosperity and security in this strategic partner with
strong economic, trade, diplomatic and cultural ties to the United States, as well as important links to
other Caribbean and Latin American countries. The United States is interested in seeing the Dominican
Republic become an active partner in a Free Trade Area of the Americas (FTAA), attain robust
democratic institutions where rule of law and respect for human rights dominate, develop efficient and
reliable systems for transparent governance, collaborate fully in the war against international terrorism
and U.S. efforts to safeguard homeland security, maintain regional stability, deter illegal immigration, curb
international crime, fight the spread of HIV/AIDS and other diseases, and safeguard U.S. citizens.
The USAID Program: USAID’s objectives are designed to: 1) increase and sustain economic
opportunities for all Dominicans, especially the poor; 2) strengthen participatory democracy; and 3)
improve the health of vulnerable populations. The economic opportunities portfolio concentrates on
institutional changes, policy reforms, and public-private partnerships that will help expand job creation,
foster private-sector led growth, increase trade and investment, achieve a sustainable energy sector,
expand electrical service in rural areas, improve environmental protection, and enhance the quality of
basic education. Through technical assistance to key government institutions coupled with support to
sustain dynamic participation of civic action groups, USAID’s democracy program fosters continued
progress through development and enforcement of the rule of law and advancement of political and
electoral reforms and anticorruption systems. In addition to working with the Government of the
Dominican Republic to carry out an ambitious health sector reform program, health activities are
concentrated on HIV/AIDS prevention and care services, tuberculosis detection and treatment,
vaccination coverage for children under age five, community managed clean water systems, and
reproductive health services. All USAID programs work with partners from the public and private sectors,
nongovernmental organizations, and citizen coalitions.
Other Program Elements: In addition to the bilateral program, the Central America Regional Program
(G-CAP) and the Bureau for Latin America and the Caribbean's Office of Regional Sustainable
Development (LAC/RSD) each manage two programs in the Dominican Republic. G-CAP’s regional
trade and investment program trains officials in trade, labor, and energy policies to prepare for the
Dominican Republic's integration into free trade agreements. G-CAP’s rural diversification program will
improve coffee quality and marketing. LAC/RSD manages a program to strengthen regional mechanisms
to promote human rights, fortify government accountability, promote decentralization and local
governance, and provide outreach to civil society on trade and economic issues. LAC/RSD also
manages the Cooperative Association of States for Scholarships (CASS) program, which funds
scholarships for socioeconomically disadvantaged students who demonstrate leadership potential. These
students study in the United States in programs tailored specifically to meet the development needs of the
students’ respective countries. The Center of Excellence for Teacher Training (CETT) Presidential
Initiative, a program designed to improve teacher training and address high rates of school
underachievement and illiteracy in disadvantaged areas, is managed by the USAID mission in Jamaica.
The USAID mission in the Dominican Republic also manages initiatives to reduce trafficking in persons as
well as a Haiti/Dominican Republic bi-national program to reduce tensions and foster joint development
efforts along the Haiti/Dominican Republic border.
Other Donors: Donor coordination in the Dominican Republic is good and roundtables take place
regularly to exchange information on issues, funding, and activities. Development assistance to the
Dominican Republic in calendar year 2002 totaled $318 million. After the United States, the largest
bilateral donors and their principal areas of focus are Venezuela (petroleum), Japan (agriculture,
education, water, urban infrastructure, and health), and Spain (governance, education, environment,
health, infrastructure, tourism, and private sector development). Other top bilateral donors include
Taiwan, Brazil, Germany, and France. Multilateral donors include the Inter-American Development Bank
(the largest donor overall at $112 million), the World Bank, the European Union, and multiple United
Nations agencies.
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