Dominican Republic | Sovereign Analysis

Recommendation Sensitivity and Risks

Changes in fundamental factors that may warrant a review of our recommendations on these issues include a clear indication of increased risks due to natural events. This includes the possible impact of further disease outbreaks such as monkeypox and the like which may impact travel and consequently the DR’s current account (other events such as an active hurricane season which would fall under risk considerations are also important to watch). Other factors include clear signs of growing fiscal strain of the energy distribution company’s operating losses on the country’s fiscal balance, dramatic slowdown in the structural long run growth, and clear signs of a reversal in the upward trajectory in reserve accumulation and coverage, particularly when contextualized with US monetary policy (i.e., is the US tightening and the impact it could/is having on the external accounts) and overall external balance stability. Any contrary signs that suggest any of the above are becoming less of concern would further cement/improve our outlook, all else being equal.

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