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Dominican Republic
Index
Government expenditures, as a percentage of GDP, reached
21
percent by 1987, up from an earlier low of 15 percent;
both
figures were low by the standards of most developing
countries.
These data indicated that, with the exception of the
enterprises
inherited from Trujillo's holdings, the government's role
in the
economy was relatively limited. The ratio of total
spending had
also declined, beginning in the 1970s, because of the
decline in
revenues as a percentage of total output. Falling revenues
dictated a corresponding decrease in the percentage of
spending
on social services, which worsened the position of poorer
Dominicans. Ironically, a major drain of fiscal resources
in the
1980s was the result of the low prices of goods and
services
provided by government-subsidized enterprises, such as
utility
companies, many of which were created to cater to
lower-income
citizens. These subsidies began in the 1970s, at a time of
greater government resources; by the 1980s, however, they
had
created serious price distortions between government and
market
prices. Politicians were reluctant to cut price subsidies
to the
poor in the late 1980s, as the economy weakened and
popular
expectations for continued government support remained
high.
Government spending was divided between current and
capital
expenditures. Current expenditures averaged nearly 70
percent of
total expenditures during most years, and they were
divided among
the categories of social services, general services, and
financial services. Social services received 30 percent of
the
national budget in 1988, some 13 percent of which was
dedicated
to education and 8 percent, to public health. As recently
as
1984, social expenditures had accounted for 47 percent of
the
total. General services constituted 21 percent of
spending: about
7 percent of this was allocated to defense; 5 percent, to
judiciary and police; and 9 percent, to government
operations.
The 1988 budget also allocated 22 percent of expenditures
under
the designation of financial services to debt servicing;
this
percentage was lower than it had been in previous years,
as a
result of debt rescheduling. During most of the 1980s,
capital
expenditures (referred to as economic services in the
budget)
represented at least 30 percent of total government
expenditures,
a relatively high proportion. As the Balaguer
administration
initiated major public-works projects in the late 1980s,
the
budget share dedicated to capital expenditures increased
to more
than 40 percent.
Data as of December 1989
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