Dominican Republic’s Electricity Reforms Lower Government External Financing Needs

Press release by Fitch Ratings

Tue 25 Jan, 2022

Related Fitch Ratings Content: Dominican Republic’s Electricity Reforms Lower Government External Financing Needs

Fitch Ratings-New York-25 January 2022: Related Fitch Ratings content: Dominican Republic’s Electricity Reforms Lower Government External Financing Needs

Reforms to cut long-running financial losses by public electric utilities in the Dominican Republic (BB-/Stable) are bearing fruit, according to a new report by Fitch Ratings. The reforms were a driver of Fitch’s revision of the sovereign’s Rating Outlook to Stable from Negative in December 2021.

“The reduction of the public electric utility losses and the utilities’ US dollar-denominated domestic amortizations reduce a historically important source of the government’s external financing requirement and help stabilise government debt/GDP near 49% in 2022-2023,” says Kelli Bissett-Tom, Director in Fitch’s sovereign rating group.

The amortizations of the Dominican public electric utilities’ domestic US-dollar denominated domestic debt for 2007-2021 totalled USD9.785 billion, which was 10.3% of 2021 GDP or an average of 0.8% of GDP a year. The amortization total represents 29 percent of the external government debt.

In 2020-2021, the Dominican government reduced the operational deficits of the state-owned electricity distributors and cut the U.S. dollar-denominated domestic debt amortizations of the electric utilities.

Tighter cash management and the timely payment of public electric utilities’ power purchase liabilities to electricity generators have reduced the utilities’ interest expense in 2H20 and 1Q21. Interest outlays by the public electric utilities fell steadily to USD20 million in September 2021 from USD100 million in October 2020.

Our report, “Dominican Republic’s Electricity Reforms Lower Government External Financing Needs”, is available at www.fitchratings.com or by clicking the link above.

Contacts:

Kelli Bissett-Tom
Director
Primary Rating Analyst
+1 212 908 0564
kelli.bissett-tom@fitchratings.com
Fitch Ratings, Inc.
Hearst Tower 300 W. 57th Street New York, NY 10019

Richard Francis
Senior Director
Secondary Rating Analyst
+1 212 908 0858
richard.francis@fitchratings.com

Media Relations: Elizabeth Fogerty, New York, Tel: +1 212 908 0526, Email: elizabeth.fogerty@thefitchgroup.com

Additional information is available on www.fitchratings.com