The World Bank In Dominican Republic

Over the last two decades, the Dominican Republic has been one of the fastest-growing economies in the region. This was due to a combination of market-oriented structural reforms in the early 1990s and favorable external conditions that supported economic growth. In addition, prudent monetary and fiscal policy contributed to macroeconomic stability.

However, the drivers of this exceptional growth are reaching their limit due to low productivity growth in recent years, insufficient human capital to meet the needs of the business sector, the occurrence of climate change-related disasters, and distortions in key markets, including the inefficient allocation of tax exemptions.

The economy grew by 2.5 percent in 2003, and growth of 5.1 percent is expected for 2024, driven by the delayed effects of monetary policy easing and an increase in public investment. The upper-middle-income poverty rate (US$6.85 PPP per day in 2017 currency) is estimated at 19 percent, down from 20 percent observed in 2019, before the pandemic.

Despite growth, several sectors have failed to generate quality jobs, and the high inflation rates observed in 2022 and 2023 (8.8 and 4.8 percent, respectively) affected the livelihoods of the population, mainly the most vulnerable. Consequently, it is necessary to improve access to quality basic goods and services—in education, health, water, and electricity—that help expand economic opportunities, increase economic mobility, and protect vulnerable sectors.

The Government has shown a strong commitment to addressing the long-standing challenges posed by the electricity sector through a comprehensive package of reforms, but challenges remain such as increasing transparency, accountability, and efficiency in the sector; continuing with the diversification of  the energy matrix, including less polluting energy sources; and increasing access to reliable and affordable energy. Improving the environment to support the competitive development of private sector-led renewable energy investments will also be key.

More than 40 percent of Dominicans live in vulnerable conditions and are at risk of falling into poverty due to climate-related impacts and economic crises. Likewise, gender gaps in jobs and wages, shorter working lives, and higher unemployment and unpaid roles contribute to a higher incidence of poverty among women.

Climate change has intensified exposure to natural disasters, which could increase contingent fiscal liabilities, given the country's low degree of financial protection against these risks. The occurrence of adverse events increasingly highlights the critical need for accelerated action to strengthen the country's resilience and adaptation in an inclusive manner.

Looking ahead and to achieve inclusive growth, the Dominican Republic will require a greater increase in productivity, through the implementation of reforms to strengthen fiscal reserves, human capital, competitiveness, innovation, green technology, public spending efficiency, and resilience to climate events. These changes should go hand in hand with improvements in labor market regulations and social protection systems.

Last Updated: Apr 17, 2024

The new Country Partnership Framework (CPF) FY22-FY26 with the Dominican Republic defines the World Bank Group's commitment to the country. The CPF has three main objectives:

• improve the quality of basic public services such as energy, social protection, and health
• increase the number of high-quality jobs
• increase climate resilience

As of January 2024, the portfolio for the country from the International Bank for Reconstruction and Development (IBRD) amounts to $1.8 billion and includes eight (8) investment operations ($978.5 million); one (1) budget support ($400 million); one (1) Program-for-Results ($250 million); a contingent financing line to address shocks ($230 million) and one (1) Emissions Reduction Payment Agreement ($25 million).

Financing for projects in planning for fiscal years 24-25 includes $400 million for budget support related to policies to address climate change, and $780 million in support of three (3) investment operations in energy efficiency, green and resilient industrial transformation, and blue economy. The IBRD loan portfolio is complemented by a wide range of analytical and advisory services on the country in key areas such as climate and development, economic performance, the private sector, poverty, gender, and territorial development.

The International Finance Corporation (IFC) currently maintains its strongest portfolio among all Caribbean countries in the Dominican Republic ($205.1 million committed including mobilizations) and is strategically focused on promoting the development of key sectors of the economy such as agribusiness, manufacturing, and medical technology; supporting access to financing for MSMEs and women; promoting competitiveness through improvements in technical education and health; and prioritizing sustainable development through investments in renewable energies and green financing.

The Multilateral Investment Guarantee Agency (MIGA) will focus on investment opportunities that increase job creation and support a green, inclusive, and resilient recovery, and will work closely with IFC and the WB to improve the enabling environment for the development of public-private partnerships and foreign private investment.

The World Bank Group has a strong commitment to the Dominican Republic to improve the lives of people by improving access to good quality public services, increasing the number of high-quality jobs through better labor skills and the quality of education, and increasing the capacity to respond and recover from the adverse effects of climate change.

Last Updated: Apr 17, 2024

World Bank Group-funded projects have achieved significant results in recent years, including:

Infrastructure

• Over the last five years, more than 600 km of electrical lines have been rehabilitated, which has reduced electricity losses and guaranteed 24-hour service to 105,000 customers in poverty.
• The commissioning in 2017 of a wastewater treatment plant and a submarine outfall has improved water quality and sanitation for nearly 140,000 people in Puerto Plata, one of the main tourist destinations.

Technical Assistance

• The country recently began the process of developing the Low Emission and Resilient Long-Term Development Strategy (ELP), the roadmap to achieve its net-zero emissions goal by 2050, integrating the public sector, private sector, academia, NGOs, civil society, and international organizations.
• In recent months, advice and capacity-building support have been provided for the preparation of a general water law that will reform the institutional framework of the sector, and there is ongoing dialogue with the government to support the design of a National Water Sector Modernization Program to achieve the vision of the Water Pact 2021-2036.
• The National Diagnostic Assessment System (sample-based) for third and sixth grades of primary and ninth grade of secondary education has recently been improved to help measure students' learning levels after the Covid-19 pandemic. In addition, a small project has been designed to measure learning loss in 9th-grade high school students using an adaptive platform.
• Key government technicians have been trained in the use of a free and open-access classroom observation tool (Teach ECE) to improve the assessment of the quality of services in early childhood centers; 30 centers have been evaluated with this tool. ECE aims to measure the quality of teacher-child interactions in early education.
• A "Comprehensive Adaptive Social Protection Strategy" has been disseminated and considered for inclusion in the disaster risk management law reform. The Strategy aims to increase the resilience of poor and vulnerable households through social policies and programs aimed at reducing vulnerabilities and supporting and strengthening their capacity to prepare for, cope with, and recover from a disaster.

Innovation

• "Supérate," the main line of action for Social Protection of the Dominican government, has been created and institutionalized. Additionally, the availability of an "Emergency Voucher" since March 2022 has provided temporary support for the poor and vulnerable population most affected by shocks and helped about 36,000 poor and vulnerable families recover from the ravages of Hurricane Fiona. This is an innovative process in the region.
• As of February 2022, the Dominican Republic is the first Caribbean country to launch a green taxonomy strategy. The International Finance Corporation (IFC) of the World Bank Group, the Superintendency of Securities Market, and the Ministry of Environment launched the "Green Taxonomy" project, which seeks to implement strategies that promote the sustainable growth of the capital market and contribute to climate change mitigation.

Direct Benefits to the Poorest Population

• Since 2017, 1.3 million households in extreme poverty have received the "Aliméntate" monetary transfer, conditioned on primary health care responsibilities, with special emphasis on child and reproductive health.
• Since 2017, about 9,000 dirt floors have been replaced with cement in the 14 poorest provinces of the country.
• Also, more than 27,000 young people have received training for their insertion into the labor market or to start an entrepreneurship, of which 69% are women.

Last Updated: Apr 17, 2024