Economist and former diplomat, Luis Manuel Piantini, along with other economic experts, has proposed a definitive solution to the Central Bank’s debt issues. Piantini suggests that the government should adopt a political stance and return its shares in Barrick Gold to the Central Bank. This would enable the financial institution to manage the resources necessary to address its deficit, which has been exacerbated by debts in certificates.

Piantini asserts that this is the only viable solution to the problems associated with the Central Bank’s certificates. According to him, this requires merely a political decision followed by an administrative mandate, similar to the historical transfer of shares from the Central Bank to the government involving the former Rosario Dominicana and the Canadian miner Placer Dome, now Barrick Gold.

In August 2006, Barrick Gold acquired the rights of the multinational Placer Dome along with the Pueblo Viejo Corporation. The agreement between the Dominican state and the mining company was ratified by the Congress and later amended. However, Piantini refers not to this deal but to the state’s earlier decision to transfer Central Bank shares to the government, facilitating the entry of the company’s contributions into the national budget.

Recent data from Bloomberg shows that the price of a troy ounce of gold was quoted at $2,375 for June contracts yesterday—a 1.48% increase from the previous day, signaling a strong upward trend in international gold markets.

In a tweet on the X platform, economist Henri Hebrard noted that on Monday, gold prices closed at a significant high of $2,331.20 per ounce, up 0.98% from $2,300, marking an increase of over 15.3% from the price a year ago, which averaged $2,025.16.

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Speaking to the Listín Diario, Hebrard remarked that the gold market is experiencing historic moments. “This is great news for the Dominican Republic, especially after prices reached a new milestone last month: crossing the $2,400 per ounce barrier and closing at an all-time high of $2,398.40 on April 19, 2024,” he added.

The original 2024 budget anticipated an average gold price of $2,016.50 per ounce for the year, while the new Multi-Year Macroeconomic Framework 2024-2028 has revised it upwards to $2,215.30 per ounce.

With last Friday’s close at $2,367.30, the average price over the past 52 weeks has, for the first time in history, surpassed the $2,000 level.

In the short term, this will benefit the balance of payments as the value of exports increases immediately. In a year when Barrick Gold announced in Toronto in February 2024 a potential 35% increase in production volumes to a conservative 700,000 ounces, a $100 rise in gold prices could mean an additional $70 million in exports.

Regarding tax revenues, while the initial positive impacts will start to be seen in the second half of 2024, it is important to note that after collecting only RD$4,329.2 million in 2023, down from RD$9,493.4 million in 2022, the 2024 budget forecasts tax revenues of RD$14,931.2 million. Therefore, substantially higher revenue levels can be expected from 2025, reflecting the full impact on Income Tax and Net Profit Sharing.