Ng Cortiñas states that neither the government nor the population are prepared to assume the cost of rising oil and fuel prices

The economist warns of rising crude oil, inflation and falling liquidity reduce households’ ability to cope with further price increases Santo Domingo.- Economist Haivanjoe Ng Cortiñas stated this Wednesday that the recent statements by the Central Bank governor, calling for prudence in the face of rising oil prices and inflation in the United States and Europe, contrast with the position of the Ministry of Finance, which maintains that the Dominican Republic is prepared, with sufficient solvency and liquidity, to face the current energy shock. Ng Cortiñas warns that both visions should be analyzed in greater depth, since, although the Dominican economy has a capacity to respond in the short term in the external sector, it faces significant fiscal restrictions that should not be underestimated.

It argues that the increase in the international price of oil, driven by real geopolitical tensions in the Persian Gulf, does not respond to speculative factors, but to concrete risks to global supply. “This context places energy-importing economies, such as the Dominican Republic, in a situation of structural vulnerability,” he added.

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The economist stated that the impact is not isolated, but rather transmitted through multiple channels: a higher oil bill, exchange rate pressure, an increase in the fiscal deficit and, especially, inflationary pressures, he explains. The latter not only respond to the direct rise in fuels, but also to second-round effects, adjustments in relative prices and inflationary expectations, which amplify the initial shock.

In that sense -he explained- the recent partial increase in fuel prices and the increase in the weekly subsidy -which already exceeds RD$1,100 million- show that the Government has begun to pass part of the impact on to the consumer, while trying to contain it fiscally.

“However, the margin for maneuver is limited. The General State Budget for 2026 estimated an oil price close to US$48.9 per barrel, well below current market levels, which reduced the fiscal space to face a scenario that, given international conditions, was foreseeable”, he said.

Added that to this is added a projected fiscal deficit of 3.2% of GDP, a high rigidity of spending and an interest burden that absorbs a significant proportion of tax revenues.

“In this context, maintaining high subsidies – given the fact of an estimate far removed from reality that was approaching regarding the price of oil for 2026-, for several weeks or months would imply greater pressures on public finances,” he emphasized.

Ng Cortiñas indicated that, if the subsidy remains around RD$700 million per week, the available resources would allow for approximately 15 additional weeks to be covered. He said that, in a more demanding scenario, close to RD$1,000 million weekly, that margin would be reduced to about 11 weeks, which confirms that the current policy is sustainable only in the short term.

He stated that, from a macroeconomic point of view, the impact would also be relevant, noting that the projected growth of 4.5% could moderate towards a range of 4.0%, while inflation, initially estimated at around 4%, could approach or exceed the upper limit of the Central Bank’s target range, reaching up to more than 5.0%.

However, the economist emphasizes that the main risk is not only macroeconomic, but also social. “Food inflation already reaches 7.15% year-on-year, directly affecting the basic consumption of households. In addition, 54.1% of employment is informal, which limits the ability to adjust income in the face of the rising cost of living,” he specifies.

“Adding to this is that, according to our estimates, more than 5 million workers do not generate sufficient monetary income to cover the basic basket of the poorest quintiles, while nearly 8 million do not cover the national average basket,” he argued.

He affirmed that, in parallel, monetary indicators reflect a recent reduction in money held by the public, which went from approximately RD$272 billion in February to RD$262 billion in March 2026, representing a drop of nearly 3.6% in a single month, evidencing a weakening of the liquidity available for consumption.

In other words, the problem is not only whether the State can absorb the shock, but whether the population can withstand it, points out economist Haivanjoe Ng Cortiñas.

He maintains that the Central Bank’s call for prudence is consistent with the identified risks, but warns that the discourse of full preparedness from the fiscal sphere omits a key element: the Dominican economy can temporarily absorb the oil shock, but not without significant costs for households.

He emphasized that the real debate is not whether there are reserves or liquidity in the system, but how much economic and social space the country is willing to sacrifice to face this shock and what the government is doing to mitigate the impacts.
Finally, it warns that each peso allocated to energy subsidies is a peso that is no longer invested in development, which poses a structural paradox: the country may withstand the oil shock in the short term, but doing so implies losing economic ground in the medium term.

For the economist, the current context demands a more realistic assessment of the economic situation. “Prudence should not only be monetary, but also fiscal. The country needs a clear strategy to manage an adverse international environment that is already impacting the real economy and the pockets of Dominicans,” he concluded.