Event

The candidate of the ruling party, the centre right Dominican Liberation Party’s (PLD), won the first round of the presidential election with more than 50% of the votes, paving the way for continuity on the Dominican political scene as the party controls both houses of Congress until at least 2014. Medina’s vice-president, Margarita Cedeno, is the wife of the popular incumbent President Fernandez, who was barred from seeking re-election under the constitution. Amid claims of electoral fraud, the main opposition candidate from the centre left Dominican Revolutionary Party (PRD), Hipolito Mejia who served as president from 2000 to 2004 and quit amid a deep economic crisis sparked by the collapse of three banks in 2003, conceded defeat only some days after the election. According to international observers, there were some isolated issues but without impact on the election outcome.

Impact on country risk

Medina promises political continuity in pro-business policy and popular policy such as infrastructure and welfare programs. Moreover, he proposed to increase education spending, create jobs and tackle poverty. As continuity is presumed, ONDD’s country risk classifications are likely to remain stable. The economy recovered strongly after the banking crisis and overcame the 2008-09 global economic crisis very well. Growth is expected to reach 4.5% in 2012. Despite strong performance, long term prospects are somewhat impeded by below- standard saving and investment. Moreover, structural problems such as in the electricity sector and the energy subsidy scheme, high dependence on fuel import and heavy reliance on tourism and remittances as a source of current account receipts still weigh on the country’s MLT political risk. In addition, as in other countries in the region, drug-related crime is rising.

Analyst: Pascaline della Faille, p.dellafaille@credendogroup.com