Thursday, March 30, 2023

In 2022 the budget execution of the Dominican government was 50.1% higher than in 2019

The budgetary execution of the Dominican Government during the past year implied expenses that exceeded by 50.1% what was provided in 2019, prior to the covid-19 pandemic. The foregoing indicates that in 2022 the Government executed expenses that exceeded RD$373,088.7 million what was executed four years ago, according to figures from the General Directorate of Budget (Digepres).

For 2019, the total expenditure executed by the Government was RD$744,276.1 million, while in 2022 the expenditure budget applied by the Executive Branch totaled RD$1 billion 117,355.8 million.

The statistics also indicate that with a greater availability of resources to spend, the Government has given more priority to current spending than to capital, which translates into a reduction in the rate of investment in state infrastructure works.

In 2022, the budget execution of capital spending was RD$130,527.5 million, which implies an increase of 26.7% compared to what was executed in the pre-pandemic year. But the current spending executed last year was RD$986,828.3 million, for an increase of 53.8% compared to 2019. That is, the relative increase in current spending is double the proportion in capital spending in the two years analyzed.

possible justification

The increase in current spending during the year 2022 could be justified by the fact that the Government was forced to subsidize various products to avoid a greater impact of inflation on the pockets of consumers.

However, according to the statistics of the Ministry of Finance, during 2022, the Government allocated around RD$92,000 million in extraordinary subsidies (outside the regular ones each year), which is practically a quarter of the proportion of increase in the expenditure with available resources (RD$373,088.7 million) in which the total expenditure of 2019 was exceeded.

This indicates that, apart from extraordinary subsidies, public spending in 2022 exceeds by no less than RD$280,000 million what was spent in 2019, the year before the covid-19 pandemic.

Analysts from different tendencies have questioned the fact that the current government has more resources and has spent much more than in previous administrations, when the intention should be greater rationalization, especially at a time when there was higher collection. , which could be an opportunity to reduce the fiscal deficit (difference between income and expenses) and thus contain the accelerated race of public indebtedness.

For this reason, upon coming to power, President Luis Abinader, faced with greater social demand from the population, especially those most affected by the effects of the pandemic, has seen the need to increase public spending instead of reduce it.

Now the official preaching is that it is not a question of spending less, but of spending better, that the levels of public spending are justified in the areas that the population really needs.

Low capital expenditure

Capital spending is the one dedicated especially to the construction of infrastructure works, while current spending goes to social areas such as payment of salaries, subsidies, expendable material, service areas (health, education, among others).

Regarding capital spending, the proportion in execution has been declining in recent years. An example is the fact that for the years 2015, 2016 and 2017 capital spending as a proportion of total spending averaged 17% per year, while between 2021 and 2022 the average is 12%, according to official figures.

Added to this is the fact that not all of what was originally budgeted to spend in a given year is always executed.

limited run

During the year 2022 the budget assigned for capital expenditure (construction of infrastructure works and other investments) was RD$159,229.8 million, but the execution reached RD$130,527.5 million, that is, only 81.5% of what was originally budgeted was disbursed, according to the Digepres figures.

A similar situation occurred in 2021, when the Government had difficulty fully executing the budget allocated to capital expenditures, contrary to disbursements for current expenditures, which tend to be more expedited and completed, even above budget.

That may change in 2023, since President Abinader has expressed that he will give priority to the completion of a series of infrastructure works that have begun or continued construction in the last two years and that are scheduled to be completed between now and next 2024, preferably before the elections.


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