Ministry of Finance

Public Debt Office

Dominican Republic’s Quarterly

Public Debt Report

July – September 2016

Santo Domingo, Distrito Nacional

Table of Contents

I. PRESENTATION AND SCOPE OF THE REPORT .................................................................................. 3

II. 2016 ASSUMPTIONS ............................................................................................................................... 4

III. NON-FINANCIAL PUBLIC SECTOR DEBT SITUATION AND COMPOSITION ................................... 6

IIIa. Public Debt Portfolio Risk Indicators ............................................................................................. 8

IIIb. Strategic Guidelines and Targets ................................................................................................ 10

IV. EXTERNAL DEBT ................................................................................................................................. 11

IVa. External Disbursements .............................................................................................................. 12

IVb. 2016 External Debt Service and Budget Execution .................................................................... 12
IVc. External Debt New Contracts Approved by Congress ................................................................ 13
IVd. Performance of Sovereign External Bonds ................................................................................. 14
IVe. Country Risk Rating .................................................................................................................... 15

V. DOMESTIC DEBT .................................................................................................................................. 16

Va. Domestic Disbursements and Bond Placements......................................................................... 17

Vb. 2016 Domestic Debt Service and Budget Execution ................................................................... 18
Vc. Central Bank Recapitalization Plan .............................................................................................. 19
Vd. Bonds and Bills Auctions ............................................................................................................. 19
Ve. Performance of Domestic Bonds in the Secondary Market ......................................................... 21
Vf. Domestic Bonds ............................................................................................................................ 22

VI. TREASURY DEBT ................................................................................................................................ 23

VII. CONTINGENT LIABILITIES ................................................................................................................ 23

VIII. REDUCTION OF ACCOUNTS PAYABLE.......................................................................................... 24

IX. LIABILITY MANAGEMENT .................................................................................................................. 25

ANNEX I – EXTERNAL BUDGET RESOURCES AND DISBURSEMENTS EXECUTION ............................................ 27

ANNEX II – EXTERNAL DEBT CONTRACTING IN 2016 BUDGET ...................................................................... 28
ANNEX III – NON FINANCIAL PUBLIC SECTOR DEBT BY CREDITOR TYPE ....................................................... 29

2
I. Presentation and Scope of the Report

In compliance with article 27 of the Public Credit Law No. 6-06 and its Regulation, the Ministry of
Finance has prepared for the National Congress of the Dominican Republic, its third “Dominican
Republic’s Quarterly Debt Report” for 2016.

The regulatory frame establishes that, no later than thirty (30) days after the end of each quarter
the Ministry of Finance delivers to the National Congress: “an analytical report on the situation
and evolution of the domestic and external public debt of the period”1.

The third “Dominican Republic’s Quarterly Debt Report” for year 2016 presents the domestic and
external (direct and indirect) debt stock and its changes, between July 1st and September 30th of
2016, of the non-financial public sector (central government, non-financial decentralized
institutions, social security institutions, non-financial public companies, municipal governments
and the National District).

As of 2009, public debt is reported as the domestic and external, direct and indirect debt
contracted by the non financial public sector, excluding the financial public sector, in
compliance with Article 3 of Public Law No. 6-06, which states that non financial public sector
debt encompasses the debt of the central government, decentralized and autonomous non-
financial institutions, social security institutions, non-financial public companies, municipal
governments and the National District. Excluded from non financial public sector debt are public
sector agencies that are part of the decentralized and autonomous financial institutions and
financial public companies”.

It’s important to note that non-financial public sector debt figures includes the debt incurred by
any of the above referred institutional aggregates with another government agencies (intra-
governmental debt)2, like Central Government’s debt with the Central Bank. In this sense, when
we talk about consolidated public debt, which includes the financial public sector debt, the referred
intra-governmental debt should be excluded.

1
In agreement to Art. 7 of Law No. 6-06, “domestic debt is considered to be the one contracted with physical or legal entities that reside in the Dominican
Republic and whose payment may be claimed within the national territory”, while “external debt is considered to be the one contracted with another State
or international financial organism or with any other physical or legal entity without residence in the Dominican Republic whose payment may be claimed
outside the Dominican Republic”.
2 Intra-governmental debt is defined as debt incurred by a government institution with another.

3
II. 2016 Assumptions
1. Gross Domestic Product (GDP) estimated for year end 20163:

 In Dominican Pesos : RD$3,250,072.0 million

 In US Dollars : US$ 68,848.3 million

2. Gross Domestic Product (GDP) re-estimated for year end 2016 4:

 In Dominican Pesos : RD$3,325,095.3 million

 In US Dollars : US$ 71,507.4 million

3. Estimated average nominal exchange rate: 47.21 pesos per dollar5

4. Re-estimated avarage nominal Exchange rate: 46.50 pesos per dólar6

5. Chapter IV, “Central Government’s Financing Sources”

The “General National Budget” for 2016, contemplates a maximum net financing of RD$75,893.5
million, which is equivalent to a 2.3% of the year end estimated Gross Domestic Product. The
breakdown for financial sources and uses are as follows 7:

a) Financing sources: RD$173,259.7 million (US$3,670.0 million)

 External Financing RD$117,671.0 million

 Domestic Financing RD$ 55,588.7 million

b) Financial Uses: RD$97,366.3 million (US$2,062.4 million)

 External Debt Amortization RD$42,613.9 million

 Domestic Debt Amortization RD$19,903.6 million
 Reduction of Accounts Payable RD$30,272.0 million
 Financial Assets RD$ 4,567.8 million

In the “General National Budget” for the year 2016, the following numbers are being stipulated for
the repayment of public debt. 8:

3 Nominal GDP base 2007 used in the preparation of the 2016 Budget.
4 Nominal GDP base 2007, consensus between BCRD, MH and MEPYD according to the latest framework revised as of September 8th 2016.
5 Exchange rate used in the 2016 budget.
6
Exchange rate, consensus between BCRD, MH and MEPYD according to the latest framework revised as of September 8 th 2016.
7 Average exchange rate used: RD$47.21 x US$1.00.
8 Average exchange rate used: RD$47.21 x US$1.00.
4
 Public Debt Service Detail:

Total Public Debt: RD$168,323.2 million (equivalent to US$3,565.4 million)

 External Debt RD$87,893.5 million

o Amortization RD$42,613.9 million
o Interests and commissions RD$45,279.6 million

 Domestic Debt RD$72,391.4 million

o Amortization RD$19,903.6 million
o Interests and commissions RD$52,487.8 million

 Reduction of Accounts Payable9 RD$ 5,461.5 million

 Financial Assets10 RD$ 2,576.8 million

9 From the amount specified in Reduction of Accounts Payable, RD$24,810.5 million will not be implemented through Chapter 0998 (Public Debt
Management and Financial Assets), but directly by the executors Ministries.
10 From the amount specified in Financial Assets, RD$2,000.0 million will not be implemented through Chapter 0998 (Public Debt Management and
Financial Assets), but directly by its executor (MA).
5
III. Non-Financial Public Sector Debt Situation and Composition
July – September 2016

At the end of the third quarter of 2016, the non-financial public sector (NFPS) external and
domestic debt totaled US$26,479.4 million, higher by US$759.6 million compared to June 30 st,
2016 (US$25,719.8 million)11, which yields an increase of 3.0%. The total NFPS debt represents
the 37.0% of the GDP.12 (Figure 1).

Figure 1: Public Debt Stock (NFPS) and as percent of GDP

Figures in millions of US$ and %
30,000 37.4 36.5 37.0 40
25,000 32.1 35.4 35
28.4 27.5 30
In Millions of USD

20,000 28.6
27.6 27.4 25
18.8 17.0 23.3
15,000 20

(%)
19.3 15
10,000
10
5,000 5
- -
2003

2004
2005
2006
2007
2008
2009

2010
2011
2012
2013
2014
2015
Sep-16
External Debt Domestic Debt
Intragovernmental Debt Public Debt (%GDP)

As of September 30th, 2016, 64.8% of the total NFPS debt corresponds to external debt, with a
balance of US$17,161.5 million, an increase of US$388.3 million compared to June 30 st, 2016
(US$16,773.2 millions), as a result of positive net flows13 of US$379.5 million and a positive
exchange rate variation of US$8.8 million, due to the depreciation of the US Dollar against other
foreign currencies.

On the other hand, the domestic debt makes up 35.2% of the total public debt, totaling
RD$431,313.8 million (equivalent to US$9,317.8 million14). Of this total, RD$409,289.3 million
(US$8,842.0 million) is Central Government borrowing, represented by the Ministry of Finance
(MoF), and RD$22,024.5 million (US$475.8 million) corresponds to other non-financial public
sector institutions. As of September 30th, 2016 the domestic debt stock increased by US$371.2
million compared to June 30st, 2016 (US$8,946.6 million)15, as a result of positive net flows of
US$436.1 million, and a negative exchange rate variation of US$64.9 million, due to the
appreciation of the US Dollar against the Dominican Peso during the third quarter of 2016.

11 Figures updated.
12 Preliminary figures nominal GDP base 2007 at the end of 2016 according to consensus between BCRD, MH and MEPYD in the latest framework
revised as of September 17th 2016, RD$3,325,095.3 million (US$71,507.4 million)
13 Disbursements and capitalizations minus amortization and debt waivers.
14 Converted at the official exchange rate of purchase as of September 30th, 2016: RD$46.2892 x US$1.00 (Source: BCRD)
15 Revised data includes operations contemplated in Law No.160-13.Source: Banco de Reservas de la República Dominicana.
6
 Table 1: NFPS Debt Stock and Evolution
July-September 2016
Figures in million USD
preliminary data in million US$
Stock Debt Service Evolution July-September Principal Exchange Stock
Disbursement /
30/06/2016 Capitalization
Debtor/Financing Source Indebtedness Premiums/Dis Principal Interests Total Waiver Rate Variation 30/09/2016
Commissions
counts
(a) (b) (c) (d) (e) (f) (g)
1/

Total Public Debt NFPS 25,719.8 1,149.8 0.9 7.8 335.1 513.1 3.2 851.4 - (56.1) 26,479.4
Total External Debt NFPS 16,773.2 623.6 0.9 - 245.0 242.1 3.1 490.2 - 8.8 17,161.5
Total Domestic Debt NFPS 8,946.6 526.2 - 7.8 90.1 270.9 0.1 361.1 - (64.9) 9,317.8
Central Government Obligations 25,494.0 852.1 0.9 7.8 294.9 506.2 3.2 804.3 - (54.6) 25,997.6
External Debt 16,767.2 623.6 0.9 - 245.0 242.1 3.1 490.2 - 8.8 17,155.6
Multilateral Institutions 4,147.2 11.7 - - 59.4 23.8 0.7 83.9 - 0.5 4,100.0
CABEI 228.1 - - - 2.4 - 2.4 - - 228.1
IADB 2,695.7 2.2 - 34.9 11.9 0.4 47.1 - 0.5 2,663.6
WB 924.8 3.0 - 2.0 6.6 0.1 8.6 - (0.0) 925.8
EIB 22.1 6.5 - - 0.3 - 0.3 - 0.0 28.7
CAF 179.4 - - 5.6 1.8 - 7.4 - - 173.8
IMF 14.6 - - 14.5 0.0 - 14.5 - (0.1) -
Other 82.3 - - 2.4 0.9 0.2 3.5 - 0.1 80.0
Bilaterals 2,497.2 112.3 0.5 - 73.4 18.0 1.9 93.3 - 8.3 2,544.9
París Club 2004 17.5 - - 0.8 0.0 - 0.8 - 0.1 16.8
París Club 2005 38.6 - - 0.6 0.0 - 0.6 - 0.1 38.2
Post-Cut Off Date 1,251.9 5.7 - 32.1 8.0 0.1 40.2 - 5.6 1,231.1
Other Bilaterals 1,188.5 106.6 0.5 39.5 10.0 1.8 51.3 - 2.4 1,258.5
Pre-Cut Off Date 0.7 - - 0.4 0.0 - 0.4 - - 0.4
Commercial Banks 554.3 - - 48.1 10.9 - 59.0 - 0.1 506.3
Bonds 9,568.5 499.6 0.5 64.1 189.4 0.4 253.9 - - 10,004.4
Domestic Debt 8,726.8 228.5 - 7.8 49.9 264.0 0.1 314.1 - (63.4) 8,842.0
Commecial Banks or Other
418.8 - - 49.9 26.8 - 76.7 - (1.4) 367.6
Financial Institutions 2/
Bonds 5,424.0 228.5 - 7.8 - 190.1 0.1 190.2 - (39.7) 5,612.8
Recap Bonds 2,884.0 - - - 47.2 - 47.2 - (22.4) 2,861.6

Rest NFPS Obligations 160.4 105.9 - - 40.2 5.0 - 45.3 - (0.3) 225.8
External Debt 6.0 - - - - - - - - 0.0 6.0
Suppliers 6.0 - - - - - - - 0.0 6.0

Domestic Debt 219.8 297.7 - - 40.2 6.9 - 47.0 - (1.5) 475.8

Commercial Banks 3/
219.8 297.7 - 40.2 6.9 - 47.0 - (1.5) 475.8

1/ Debt Stock: (g) = (a) + (b) + (c) - (d) - (e) + (f)

Central government figures shown in this report are those referred to in section 0998 of Public Debt Management and Financial Assets.
2/ It includes public debt contracted with commercial banks, savings and loan associations, brokerage firms, investment funds and other private creditors.
3/ Debt of public institutions contracted directly with the Banco de Reservas. Source: Banco de Reservas de la República Dominicana.

7
IIIa. Public Debt Portfolio Risk Indicators

At the end of the third quarter of 2016, the risk indicators of the NFPS debt experienced slight
changes from the situation presented in the previous quarter, reflecting a slight improvement in
the exchange rate risk while the other indicators, remained stable. (Table 2)

Table 2: Risk Indicators

Risk Indicators Dec-13 Dec-14 Dec-15 Mar-16 Jun-16 Sep-16

Solvency Indicators
Total Debt/GDP 37.9% 37.2% 35.9% 35.8% 37.0% 37.0%
Of wich Recap. Bonds 5.2% 42.6% 4.3% 4.2% 4.1% 4.0%

Market Risks
Exchange Rate Risk
Foreign Currency Debt Ratio (incl. Recap) 72.7% 72.6% 71.2% 70.9% 68.6% 68.5%
Foreign Currency Debt Ratio (excl. Recap) 83.9% 83.0% 81.0% 80.2% 77.3% 76.8%

Interest Rate Risk

Variable Rate Risk 25.9% 20.2% 20.2% 19.2% 18.6% 18.0%
Average Time to Refixing (year) 5.9 7.5 8.5 8.6 8.5 8.3
External Debt 6.6 8.7 10.1 10.1 10.0 9.8
Domestic Debt 4.5 5.1 5.4 5.5 5.8 5.5

Refinancing Risk
Short Term Debt 11.6% 8.6% 7.2% 6.0% 5.9% 7.2%
Average Time to Maturity (years) 7.0 8.6 9.9 9.9 9.7 9.5
External Debt 8.2 10.2 12.1 12.0 11.8 11.6
Domestic Debt 5.0 5.3 5.4 5.5 5.9 5.6

Other Indicators
Weighted Average Interest Rate 6.6% 6.8% 6.8% 7.6% 7.7% 7.8%
External Debt 3.6% 3.7% 4.1% 5.4% 5.4% 5.5%
Domestic Debt 12.6% 12.6% 12.4% 12.2% 12.1% 12.1%
In Dominican Pesos 13.7% 14.0% 13.2% 12.8% 12.6% 12.6%
In US Dollars 8.3% 7.9% 7.7% 7.4% 7.5% 7.5%
Source: Public Debt Office. Preliminary numbers GDP base 2007.

Regarding solvency indicator, the ratio of “NFPS debt as percentage of the gross domestic
product”, remained stable at the same level from the previous quarter, 37.0% of GDP.

Regarding market risk, the indicator "percentage of foreign currency debt" decreased from 70.9%
to 68.5%. The NFPS debt portfolio is composed by different foreign currencies such as the US
dollar (66.2%), Euro (1.8%), Special Draw Rights of the IMF (0.1%), and others currencies such
as Japanese Yen, Canadian dollar, among others (0.4%). The remaining 31.5% of the debt is
denominated in Dominican Peso. (Figure 2)

8
 Figure 2: NFPS Public Debt by Currency

The market risk indicator, “floating rate debt ratio”, decreased from 18.6% in June 30st 2016 to
18.0% as of the end of the third quarter of 2016, given a higher net debt financing at fixed rate
versus floating rate.

On the other hand, the weighted average interest rate of the external debt yields a small increase
compare to the previous quarter from 5.4% to 5.5%, while the weighted average interest rate of
the domestic debt remained stable at 12.1%. Finally, the annual weighted average interest rate
of the NFPS debt portfolio increased from 7.7% to 7.8%.

Table 3: Interest Rate and

Average Time to Maturity for the NFPS Public Debt
In terms of refinancing risk, the indicator Financing Source/
As of December 31st, Weighted
Total Debt Share
2015
Average Time to
“percentage of short term debt”, Creditor (%)
Average Interest
Rate (%)
Maturity
increased 1.3% standing at 7.2% of the EXTERNAL DEBT 64.8 5.4 11.6
total debt. On the other hand, the Multilaterals 15.5 3.0 8.6
“average time to maturity (ATM)” Bilaterals 8.8 3.6 5.9
experienced slight changes standing at Petrocaribe Agreement 0.8 1.0 13.5
11.6 years and 5.6 for the external and Commercial Banks 1.9 8.1 1.9
domestic debt, respectively at the end of Bonds 37.8 6.8 14.6

the second quarter. Suppliers 0.0 0.0 0.5

The lowest weighted average interest

DOMESTIC DEBT 35.2 12.1 5.6
Commercial Banks
rate corresponds to the concessionary Dominican Pesos 1.4 16.0 1.1
Caracas and Petrocaribe Agreement US Dollars 1.8 8.0 0.9
(1.0%). The highest average time to Bonds
maturity (ATM) of the whole NFPS Dominican Pesos 19.3 12.3 7.4
portfolio corresponds to the external US Dollars 1.9 7.0 7.0
bonds, standing at 14.6 years at the end Recap Bonds
of the third quarter of 2016. (Table 3) Dominican Pesos 10.8 12.6 3.3

NFPS TOTAL DEBT 100.0 7.8 9.5

Source: Public Debt Office.

9
IIIb. Strategic Guidelines and Targets

The Medium Term Public Debt Management Strategy comprises the major strategic guidelines
that will guide the public debt management for the period 2016-2020, among which we highlight:

o Reduce the currency risk, by reducing the proportion of debt denominated in foreign
currency.

o Development of the local capital market.

o Diversify funding sources, maintaining presence in international capital markets.

o Maintain longer maturities for both external and domestic financing, and implement liability
management operations that would contain exposure to refinancing risk.

o Structure the debt maturity profile to reduce fiscal pressures by debt service in one year
and / or month.

To measure the result of the implementation of the strategy, the Government as defined indicative
ranges for a set of indicators expressing the targets in terms of the structure of the portfolio to be
achieved in the medium term.

Table 4: Strategic Targets

Target Range
Indicator 2015 Sep-16
2020
Currency Risk
% foreign currency debt 77% ± 3% 81.0% 76.8%

Refinancing Risk
% short term debt ≤12% 8.2% 7.6%
ATM Domestic Debt 7 ± 1 años 6.1 6.5

Interest Rate Risk

% re-fixing debt in a year 17% ± 3% 28.5% 25.5%

1/ The scope of the Medium Term Public Debt Management Strategy excludes the bonds issued by
the Central Government to recapitalize the Central Bank, as those instruments are not available f or
new f inancing, theref ore these indicators exclude such bonds.

As part of the implementation of this strategy during 2016 the Governments as prioritized, among
others, placements of fixed rate bonds denominated in Dominican pesos, which, added to the
liquidity conditions in the local capital market, resulted in more than 44% of the funding received
by the Central Government during the period from January to September 2016. This has resulted
in a reduction in the proportion of foreign currency debt of 80.1% in December 2015 to 76.8% in
September 2016, very close to the lower bound of the range designed, thus decreasing the
portfolio's exposure to the volatility of foreign currencies.

The bond issuances made during 2016 internationally have had a maturity of 10 years, while in
the local market there have been issuances and reopenings with maturities of 6, 10 and 13 years.
This has enabled an improvement in the refinancing risk indicators by reducing the percentage of
debt maturing in the short term to 7.6%, and extending the average maturity of domestic debt to
6.5 years, standing in the middle of the set range.

10
The prioritization of the use of long-term instruments and fixed rate for both foreign debt and
domestic debt has resulted in a decrease in the proportion of debt which re-fixed or changes
interest rate in a year, thus reducing exposure variations in interest rates on the public debt
service.

IV. External Debt

As of September 30th, 2016, the NFPS external debt totaled US$17,161.5 million, equivalent to
24.0% of the GDP.

Of the total amount of the external debt, the official creditor’s makes up 38.7%, of which 23.9% is
debt contracted with multilateral institutions and 14.8% is bilateral debt. Private creditors hold
61.3% of the total external debt, of which 58.3% is instrumented in bonds, 3.0% is commercial
banks debt and 0.03% is debt with suppliers. (Figure 3)

Figure 3: External Debt by Creditor Type

The NFPS external debt portfolio is composed by different foreign currencies; the greatest percent
is in US dollars (96.4%). The remaining is made up of debt in Euro (2.9%), Special Draw Rights
(0.1%)16, Japanese Yen (0.3%) and others (0.3%). (Figure 4)

Of the NFPS’s total external debt, 73.8% has been contracted at a fixed interest rate, 26.0% at a
variable interest rate and the remaining 0.2% at a “zero” interest rate. (Figure 5)

16 International Monetary Fund (IMF) currency unit.

11
 Figure 4: External Debt by Currency Figure 5: External Debt by Interest Type

IVa. External Disbursements

During the July-September 2016 quarter, the Government received disbursements from external
creditors for an amount of US$624.6 million, of which US$500.0 million were resources held from
the issuance of bonds in the international market to finance the budget, US$120.6 million were
disbursed by multilaterals, bilateral and commercial banks for investment projects, while the
remaining US$4.0 million were disbursed by multilaterals, bilateral and commercial banks for
budgetary support. (Table 5 and Annex I)

Table 5: External Disbursements Received by NFPS

Preliminary figures in millions (US$)
In US$
Financing Source
Jul - Sep Ene - Sep

Total Disbursements 624.6 1,823.3

Investment Projects 120.60 297.52
of which capitalizations 0.00 0.00
Global Bonds 500.00 1,500.00
of which capitalizations 0.45 1.35
Budget Support 3.96 25.75
of which : Petrocaribe Agreement 3.96 17.2
of which capitalizations 0.4 0.9

Source: Public Debt Office

IVb. 2016 External Debt Service and Budget Execution

The “General National Budget” for 2016 contemplates RD$87,893.5 million (US$1,861.8 million17)
for Central Government’s external debt service, of which RD$42,613.9 million (US$902.6 million)
are stipulated for principal payments, while the remaining RD$45,279.6 million (US$959.1 million)
are for interest and commissions payments.

17 Calculated at average exchange rate of RD$ 47.21 x US$ 1.00.

12
During the period January-September 2016, the Central Government accrued debt service
payments for an amount equivalent to US$1,563.3 million. Moreover, the actual amount paid in
the period totaled US$1,403.0 million, of which US$715.6 million were principal payments,
US$668.6 million were interest payments and US$18.7 million were commission payments.
(Table 6)

Table 6: External debt service: Budgeted vs. Execution

Preliminary figures in millions (US$)
External Debt Accrued Paid % Accrued % Paid
Original Budget Actual Budget
Service Jan - Sep Jan - Sep Sep-30-2016 Sep-30-2016

Total External Debt

Service 1,861.8 1,861.8 1,563.3 1,403.0 84.0% 75.4%
Principal 902.6 902.6 769.8 715.6 85.3% 79.3%
Interests 943.2 936.3 775.1 668.6 82.8% 71.4%
Commissions 15.9 22.8 18.4 18.7 80.6% 82.2%

Source: Public Debt Office

The paid amount includes capitalized interest and commissions.

The difference between the accrued and the paid amounts can be explained by Article 52 of
Regulation 630-06 of the Public Debt Law, which stipulates that the debt service must be
processed within thirty (30) days prior to the due date, in order to ensure timely payments and
avoid delays and arrears charges.

IVc. External Debt New Contracts Approved by Congress

External debt new contracts18 are divided those destined to finance public investment projects
and for budgetary support purposes. The “General National Budget” for 2016 stipulates new debt
contracts for an amount of US$1,510.9 million. (Annex II)

During the third quarter of 2016, no new debt contracts were approved by the National Congress.
(Table 7 and Annexes II and III).

Table 7: External Debt New Contracts Approved by Congress

Figures in millions (US$)

Grace Amount
Interest Rate/ Maturity
Creditor Currency Period (millions
Type Margin (Years)
(Years) US$) 1/

TOTAL CONTRACTED 17.2

Loans Contracts 0.0

Total Petrocaribe Agreement/2 17.2

Petrocaribe Agreement PDVSA Fixed 1.0% USD 2 25 15.6
Petrocaribe Agreement PDVSA Fixed 2.0% USD 2 17 1.6

18 The contracts refer to loan contracts signed between the creditor and the Ministry of Finance; which are approved once they are ratified by
Congress and promulgated by the Executive power.
13
Moreover, during the January-September 2016 period a total of US$17.2 million were disbursed
under the Petrocaribe Agreement framework, corresponding to the long term financing of
petroleum imports to Refidomsa. (Annex I)

IVd. Performance of Sovereign External Bonds

As of September 30th of 2016, the prices of Sovereign external bonds had an upward trend in
comparison with the previous year, with an increase in all cases except for RD18. (Table 8)

Table 8: Evolution of spreads between the Dominican Sovereign Bonds Yields

versus the US Treasury Bonds (Basis Points)
ΔJun16- ΔJun16- ΔJun16- ΔJun16-
Bond Coupon Price Yield
Mar15 (bps) Jun15 (bps) Mar15 (bps) Jun15 (bps)
DR 2018 9.040% 105.13% 0.2 -1.3 2.0515% -0.3 -1.6
DR 2021 7.500% 112.50% 1.3 4.5 3.5906% -0.6 -1.8
DR 2024 5.875% 108.25% 3.6 8.6 4.3208% -0.7 -1.5
DR2 2024 6.600% 113.25% 4.8 9.3 4.3811% -0.8 -1.5
DR 2025 5.500% 106.50% 4.5 9.6 4.5509% -0.7 -1.4
DR 2026 6.875% 116.25% 5.8 - 4.6998% -0.8 -
DR 2027 8.625% 122.50% 4.8 6.3 5.4610% -0.6 -0.9
DR 2044 7.450% 119.63% 9.6 17.0 5.9870% -0.7 -1.2
DR 2045 6.850% 112.50% 9.5 15.9 5.9324% -0.7 -1.2
Source: JP Morgan.

Figure 6: Prices Evolution (%) Figure 7: Yields Evolution (%)

9
122
8
117
112 7
Prices (%)

6
Yields (%)

107
102 5
97 4
92 3
87
2

RD18 RD21 RD24 RD 24 (2) RD25 DR18 DR21 DR24 DR24 (2) DR25
RD26 RD27 RD44 RD45 DR26 DR27 DR44 DR45

Source: JP Morgan. Source: JP Morgan.

Figure 8 shows the spreads in basis points, between the yields demanded by investors for
Dominican sovereign bonds and yields for US Treasury bonds (UST) of similar maturity. During
the July-September 2016 quarter, the spreads of the bonds RD18, RD21, RD24, RD(2)24, RD25,
RD26 RD27, RD44 y RD45 decrease by 38 bps, 70 bps, 77 bps, 90 bps, 78 bps, 87 bps, 75 bps,
75 bps y 77 bps.

14
 Figure 8: Evolution of spreads between the Dominican Sovereign Bonds Yields
versus the US Treasury Bonds (Basis Points)
600 590
550 540
500 490
Spreads over UST (Basis

406
450 440 395
400
350 390 387
300 340 320
290
Points)

250 306
308
200 240 308
150 190 277
193

Jun-16
Jun-16
Dec-15
Dec-15

May-16
Jan-16

Mar-16

Jul-16
Aug-16
Apr-16
Apr-16
Nov-15

Feb-16
Feb-16

Sep-16
Sep-16
Oct-15
Oct-15

Jul-16

Aug-16

Sep-16
DR18 DR21 DR24
DR18 DR21 DR24 DR24 (2) DR25 DR24 (2) DR25 DR26
DR26 DR27 DR44 DR45 DR27 DR44 DR45

Source: JP Morgan. Source: JP Morgan.

IVe. Country Risk Rating

During the third quarter of 2016, the credit rating in foreign currency of the Dominican Republic
remained in “positive” in B1, “stable” in BB-, “positive” B+ according to the rating agencies
Moody’s, Standard and Poor’s y Fitch, respectively, after Moody’s revised its outlook on the
country on the country risk rating from “stable” to “positive”. (Figure 9)

Figure 9: Evolution of Sovereign Credit Rating

Ba2 BB- (stable)
B+ B1(positive)/
B+ (positive)

Moody's Standard and Poor's Fitch

Source: Rating Agencies.

Table 9 provides the Emerging Market Bond Index (EMBI) spreads and credit ratings from the
agencies Standard & Poor’s, Fitch and Moody’s as of September 30th, 2016, for fourteen Latin-
American countries, and provides the changes in these values compared to the previous quarter
and year.

Throughout the third quarter of 2016, El Salvador's credit rating was revised downwards by rating
agency Moody's. In its report the rating agency highlights a deterioration in the debt profile given
the high fiscal deficits and low economic growth of this country.

During the third quarter of 2016, the debt spreads of Latin American economies shown in Table
9 showed a decrease of 66 bps compared to the average value of the previous quarter. Venezuela
was the country whose margin decreased to a greater extent, followed by El Salvador and
Jamaica. Meanwhile, the margin of the Dominican Republic decreased by 77 bps, standing at
351 bps as of September 30th, 2016.

15
Comparing these values over the same period of last year, a decrease in economies risk is
perceived in most economies (except for Belize). Venezuela and Ecuador were the economies
which index decreased the most, 1,076 bps and 606 bps, respectively, well above the average of
174 bps.
Table 9: Credit Ratings and EMBI Spreads for Emerging Countries
As of September 30th, 2016
EMBI* (Basis Pts) Credit Ratings**
Sep-16 ∆Sept16-Jun16 ∆Sept16-Sept15 S&P's Fitch Moody's
Global 360 (47) 355
Latin America 456 (66) (174)
Chile 180 (22) (64) AA- A+ Aa3
Mexico 294 1 (19) BBB+ BBB+ A3
Peru 154 (46) (103) BBB+ BBB+ A3
Panama 170 (44) (71) BBB BBB Baa2
Colombia 221 (36) (97) BBB BBB Baa2
Brazil 324 (43) (168) BB BB Ba2
Uruguay 232 (38) (72) BBB BBB- Baa2
El Salvador 486 (185) (124) B+ B+ B1
Dominican Rep. 351 (77) (86) BB- B+ B1
Jamaica 396 (81) (66) B B Caa2
Argentina 441 (54) (150) B- B B3
Belize 1,297 12 493 B- N/R Caa2
Ecuador 845 (68) (606) B B B3
Venezuela 2,053 (606) (1,076) CCC CCC Caa3
* The EMBI spread measures the difference in yield betw een a US dollar denominated bond and a bechmark US
Treasury bond of a similar maturity.
** The figures w ritten in red font refer to declines from the previous quarter, the figures w ritten in green correspond to
improvements, w hile those w ritten in black have stayed w ithout modification throughout the quarter.

Source: Bloomberg and JP Morgan.

V. Domestic Debt

As of September 30th, 2016, the non-financial public sector domestic debt totaled RD$431,313.8
million (US$9,317.8 million), of which the 60.2% corresponds to domestic bonds issued in the
local market, 30.7% corresponds to the bonds for the Recapitalization of the Central Bank 19 and
7.1% is contracted with commercial banks or other financial institutions. (Figure 10)
Figure 10: Domestic Debt by Type of Creditor

19
Intragovernmental debt, it should be netted out when calculating consolidated public debt.
16
Of the total domestic debt with local commercial banks or other financial institutions, 43.6%
corresponds to direct and indirect debt issued and/or contracted by the Central Government,
represented by the Ministry of Finance, while the remaining 56.4% corresponds to other non-
financial public sector institutions (Ministries and their dependencies, autonomous public
institutions, non-financial public companies and municipal councils).
The domestic debt portfolio is composed by 89.6% debt in Dominican pesos (RD$370,105.9
million), while the remaining 10.4% is denominated in US dollars (US$882.5 million). (Figure 11)

Figure 11: Domestic Debt by Currency Figure 12: Domestic Debt by Interest Rate Type

Of the total non-financial public sector domestic debt, 96.7% has been contracted at a fixed
interest rate, and 3.3% at variable interest rates of the local financial system. (Figure 12)

Va. Domestic Disbursements and Bond Placements

The “General National Budget” for 2016 authorized the Ministry of Finance (MoF) to place
RD$55,588.7 million of domestic debt, of which RD$55,487.5 million could be funded by issuing
bonds in the domestic debt market through public auctions, and RD$101.2 million by the issuance
of bonds for the payment of administrative debt approved by Law 193-11 and its amendments.

The authorized amount of financing through bonds in the domestic market increased to
RD$66,500.0 million. This was made possible by the Art. 46 of Law No. 260-15, which authorizes
the Executive Power, through the Ministry of Finance, to modify the distribution and/or
composition of items in the financial sources specified in that law, without leading to an increase
in total funding envisaged for the year. In addition, the Law No.331-15 of the Public Debt
Securities in its Art.10 provides that the amount approved in bond issuances could be increased
in case of any change in the composition in the funding sources envisaged by the “General
National Budget”.

During the third quarter of 2016, the Central Government issued bonds by public auction process
for a total of RD$10,500.0 million20.

20
Includes the amount received on account of the placement of the securities premium and accrued interest.
17
 Table 10: New Contracts and Disbursements Received by NFPS
Preliminary figures in millions
In RD$
Domestic Source
Jul - Sep Ene - Sep

Total Disbursments 24,174.2 89,740.8

Central Government 10,500.0 66,500.0

Commercial Banks 0.0 0.0
Bonds 10,500.0 66,500.0

Rest Non-Financial Public Sector 13,674.2 23,240.8

Commercial Banks 13,674.2 23,240.8
Source: Public Debt Office and Banco de Reservas of the Dominican
Republic.

Vb. 2016 Domestic Debt Service and Budget Execution

In the “General National Budget” for 2016, RD$72,391.4 million were scheduled for the domestic
debt service of the Central Government, of which RD$19,903.6 million were estimated for
principal payments and y RD$52,487.8 million for interest and commissions payments.

However, the current budget contemplates a reduction in interest payments to RD$46,390.5

million given the transfer of funds between accounts to the current transfers account, for the CB
recapitalization plan payments.
During the January-September 2016 period, the Central Government accrued domestic debt
service payments for an amount equivalent to RD$40,347.6 million. Moreover, the actual
payments to local commercial banks and domestic bond holders totaled RD$38,223.4 million, of
which RD$6,881.4 million were principal payments, RD$31,331.8 million were interest and
RD$9.4 million were commission payments.

Table 11: Central Government Domestic Debt Service

Budgeted vs. Execution
Preliminary figures in millions of Dominican Pesos (RD$)

Accrued Paid
Original % Accrued % Paid
Domestic Debt Service Actual Budget Jan -
Budget Jan - Sep Sep-30-2016 Sep-30-2016
Sep

Domestic Total 72,391.4 66,311.4 40,347.6 38,223.4 60.8% 57.6%

Principal 19,903.6 19,903.6 6,881.4 6,881.4 34.6% 34.6%
Interests 52,470.5 46,390.5 33,456.8 31,331.8 72.1% 67.5%
Commissions 17.3 17.3 9.4 10.3 54.2% 59.3%

Source: Public Debt Office

18
The difference between the accrued and the paid amounts can be explained by Article 52 of
Regulation 630-06 of the Public Debt Law, which stipulates that the debt service must be
processed within thirty (30) days prior to the due date, in order to ensure timely payments and
avoid delays and arrears charges.

In addition, during the third quarter of 2016 the Government paid RD$2,168.4 million in interest
for the recapitalization of the Central Bank, which were accrued in 2015. Throughout the same
period in 2016, RD$11,291.8 million were accrued for interest payments for the recapitalization
of the central bank.

Moreover, the rest of the institutions of the nonfinancial public sector (excluding the Ministry of
Finance and the National Treasury), during the period July-September 2016, made principal
payments to local commercial banks for RD$1,847.3 million and RD$317.1 million in interest and
commissions, according to data provided by the Banco de Reservas of the Dominican Republic.

Vc. Central Bank Recapitalization Plan

As of September 30th, 2016, the outstanding amount of instruments for the Central Bank
Recapitalization Plan amounted to RD$132,362.2 million (US$2,884.0 million), distributed among
bonds with maturities of 3, 5 and 7 years.

The “General National Budget” for 2016 contemplated payments for the Recapitalization Plan of
the Central Bank, for a total of RD$22,750.5 million, equivalent to 0.7% of GDP estimated for this
year. During the third quarter of 2016, interest payments were accrued for an amount of
RD$2,997.4 million.

It is important to note that, according to Articles 8 and 11 in the Regulation of Law No. 167-07,
these instruments are not amortized in cash, since they are substituted at maturity for instruments
with market rates prevailing at the time (terms and interest rates). After the Central Bank is fully
capitalized, part of the annual surplus generated by the Central Bank will be used to repay the
Recapitalization bonds outstanding at the time.

Vd. Bonds and Bills Auctions

Based on the authorization by Law No. 331-15, the Ministry of Finance issued reopenings of the
MH2-2022, MH1-2029 series of domestic bonds for the amounts of RD$3,500.0 million and
RD$7,000.0 million, with coupon rates of 10.375% and 11.375%, respectively.

The Ministry of Finance has managed to increase the average maturity of its bond issues in the
domestic market, while it has reduced the cost. The average maturity of the instruments of the
auction program that started being of 2.9 years in 2009, is at the end of the third quarter of 2016
of 10.3 years, and while the average coupon was 13.6% in 2009 it is 10.97% in 2016.

19
 Table 12: Domestic Bonds Auctions
Bid to Cover Weighted
Bonds Auction Date Maturity Date Auctioned Amount Demanded Amount Allocated Amount
Ratio Average Yield

06/09/2016 04/03/2022 RD$3,500,000,000 RD$7,534,300,000 2.15 RD$3,500,000,000 10.1200%

MH2-2022
04/09/2016 04/03/2022 RD$1,000,000,000 RD$2,397,800,000 2.40 RD$0 N/A
Issuance Amount
RD$20,000.0MM
Coupon 10.3750% RD$3,500,000,000
RD$6,500,000,000
15/01/2016 14/01/2026 RD$3,000,000,000 RD$28,311,300,000 9.44 RD$3,000,000,000 10.6700%
18/01/2016 14/01/2026 RD$1,993,000,000 RD$1,993,000,000 1.00 RD$1,993,000,000 10.6700%
02/02/2016 14/01/2026 RD$3,500,000,000 RD$27,040,000,000 7.73 RD$3,500,000,000 10.8709%
03/02/2016 14/01/2026 RD$1,507,000,000 RD$1,507,000,000 1.00 RD$1,507,000,000 10.8709%
MH2-2026 01/03/2016 14/01/2026 RD$5,000,000,000 RD$39,529,900,000 7.91 RD$3,753,900,000 10.8694%
Issuance Amount 02/03/2016 14/01/2026 RD$2,496,100,000 RD$2,496,100,000 1.00 RD$2,496,100,000 10.8694%
RD$20,000.0MM 05/04/2016 14/01/2026 RD$3,000,000,000 RD$35,249,300,000 11.75 RD$3,000,000,000 10.5694%
Coupon 10.8750% 06/04/2016 14/01/2026 RD$750,000,000 RD$750,000,000 1.00 RD$750,000,000 10.5694%

RD$21,246,100,000 RD$136,876,600,000 RD$20,000,000,000

RD$0
B
MH3-2026 03/05/2016 06/11/2026 RD$7,000,000,000 RD$69,924,100,000 9.99 RD$7,000,000,000 10.9700%
o
Issuance Amount
n RD$20,000.0MM 04/05/2016 06/11/2026 RD$13,000,000,000 RD$13,000,000,000 1.00 RD$13,000,000,000 10.9700%
d Coupon 11.0000%
s
TOTAL RD$20,000,000,000 RD$82,924,100,000 RD$20,000,000,000
Available balance RD$0
07/06/2016 04/12/2026 RD$10,000,000,000 RD$20,262,400,000 2.03 RD$10,000,000,000 10.9500%
08/06/2016 04/12/2026 RD$6,000,000,000 RD$6,000,000,000 1.00 RD$6,000,000,000 10.9500%
MH4-2026
Issuance Amount
RD$16,000.0MM
RD$16,000,000,000 RD$26,262,400,000 RD$16,000,000,000
Coupon 11.0000%
RD$0

MH1-2029 02/08/2016 06/07/2029 RD$2,000,000,000 RD$15,189,500,000 7.59 RD$2,000,000,000 10.8500%

Issuance Amount 03/08/2016 06/07/2029 RD$5,000,000,000 RD$5,000,000,000 1.00 RD$5,000,000,000 10.8500%
RD$30,000.0MM
Cupón 11.3750%
TOTAL RD$7,000,000,000 RD$20,189,500,000 RD$7,000,000,000
Available balance RD$0

It is important to highlight that for the series auctioned in the third quarter of 2016, the demanded
amount was higher than the auctioned amount (Bid-to-cover ratio), with values of 2.21, 6.44, 4.15,
1.64, and 2.88 for the bonds MH2-2022, MH2-2026, MH3-2026, MH4-2016 y MH1-2029,
respectively. This ratio is a liquidity indicator of the local financial system and of the appetite for
government instruments. (Figure 13)

Figure 13: MoF Issuances Auctioned vs. Demanded

(Bid to Cover Ratio)
150,000 6.44 7.00

120,000

5.00
Millones de Pesos

90,000 4.15

60,000
2.21 2.88 3.00
30,000 1.64

- 1.00
MH2-2022 MH2-2026 MH3-2026 MH4-2026 MH1-2029

Offered Demanded Bid to Cover Ratio (Axis 2)

Source: Public Debt Office

20
Ve. Performance of Domestic Bonds in the Secondary Market

The Ministry of Finance has taken a series of measures to stimulate the development of the
domestic capital secondary market, and as a result it as created a comparative or "benchmark"
yield curve, which serves as a reference in the local capital market.

In the quarter July-September 2016, the yields demanded by investors for the Ministry of Finance
bonds in the secondary market had a mixed behavior. (Table 13)

Table 13: Domestic Bonds Yields

ΔSep16- ΔSep16-Sep15
Bond Coupon Yield
Jun16 (pbs) (pbs)
SEH1-2017 16.00% 8.30% 130 (75)
SEH2-2017 13.50% 8.35% (61) (70)
MH2-2018 12.50% 9.35% (10) 28
MH1-2018 14.00% 7.93% (160) (166)
MH1-2019 15.00% 9.81% 46 123
MH2-2019 10.40% 9.70% 39 13
MH1-2020 16.00% 9.41% (52) (31)
MH1-2021 15.95% 9.10% (85) (66)
MH1-2022 16.95% 10.10% 16 11
MH2-2022 10.38% 10.08% 18 58
MH1-2023 14.50% 10.60% (5) 57
MH1-2024 11.50% 10.14% (12) (3)
MH2-2026 10.88% 10.58% (3) 0
MH1-2026 10.38% 10.03% (2) (4)
MH3-2026 11.00% 10.56% (21) 0
MH4-2026 11.00% 10.66% (13) 0
MH1-2028 18.50% 10.74% (26) (52)
MH2-2028 13.50% 11.20% 20 28
MH1-2029 11.38% 10.69% 29 27
Source: CEVALDOM and Public Debt Office

The yield MH1-2018 series decreased the most with a decline of 160 bps, while the bond MH1-
2023 transactions were performed at a higher average yield by 130 bps compared to the
transactions of the previous quarter.

Figure 14: Secondary Market Yield Curve

15.0%

13.0%
10.60% 10.58% 10.56% 10.74% 10.69%
11.0% 9.81% 10.10%
9.35% 9.41%
Yields

8.30% 11.20%
9.0% 10.08% 10.14% 10.03% 10.66%
9.70%
9.10%
7.0% 8.35% 7.93%
5.0%

3.0%

Source: CEVALDOM and Public Debt Office

21
In terms of the secondary market transactions, during the third quarter of 2016, the series MH4-
2026 and MH1-2029 registered the highest volume of transactions, of an amount of RD$27,226.3
million and RD$15,832.1 million, at a weighted average yield of 10.7% and 10.6%, respectively;
these rates were 30 bps, and 77.5 bps lower than their coupon rates 11.0% and 11.375%,
respectively. Moreover, the highest volume of transactions was recorded in July, amounting
RD$48,922.40 million. (Figure 15)

Figure 15: Secondary Market Transactions

30,000.0 10.5% 10.7% 11.2% 12.0%
9.5% 9.6% 10.0% 10.2%
9.3%
25,000.0 10.0%
8.7% 10.1% 10.6% 11.0% 10.6%
9.8% 9.8% 9.8% 10.6%
20,000.0 8.6% 8.9% 8.0%
Million of Pesos

15,000.0 6.0%

10,000.0 4.0%

5,000.0 2.0%

- 0.0%

Volume-Sept Volume-Agos Volume-Jul Weighted Average Rate

Source: CEVALDOM and Public Debt Office

Vf. Domestic Bonds

a) Administrative Debt Bonds

1. Laws 193-11 / 353-11 / 02-12: Authorized amount, RD$12,000.0 million (US$261.5 million).
As of September 30th, 2016, the outstanding amount by the end of the year was RD$10,696.2
million, of which 99.0% were in domestic residents hands.

b) Bonds for the Capitalization of Public Financial Institutions

1. Law 167-07: Authorized amount of RD$320,000.0 million. At the end of the second quarter of
2016, the outstanding amount of the instruments for the Recapitalization of the Central Bank
amounted RD$132,362.2 million, distributed into bonds with maturities of 3, 5 and 7 years.

c) CDEEE Bonds

1. Law No. 175-12: Authorized and outstanding amount of US$500.0 million (RD$23,144.6
million) at an annual fixed interest rate of 7.0% and maturing in July 2023. As of September
30th, 2016, the 96.9% of the outstanding amount were in domestic residents hands.

22
 Table 14: Domestic Bond Holders According to Residency
As of September 30th, 2016
Figures in millions of Dominican Pesos (RD$)

No. 193-11/
Bonds Laws No. 167-07 No. 175-12 * No. 353-11/ Auctions
No. 02-12

Amount Authorized 320,000.0 500.0 12,000.0 225,794.0

Outstanding Amount 132,362.2 500.0 10,696.2 225,794.0

Domestic Residence 132,362.2 484.1 10,623.1 192,092.9

Natural Person - 87.8 995.1 6,735.3
Legal Person 132,362.2 396.3 9,628.1 185,357.6

Foreign Residence - 15.9 73.1 33,701.1

Natural Person - 4.9 23.1 579.4
Legal Person - 11.0 50.0 33,121.7

Note: Law No. 175-12 is denominated in millions of US Dollars (US$).

Source: CEVALDOM and Public Debt Office.

d) Public Auctions

1. Ministry of Finance Auction Bonds: As of September 30th, 2016, the outstanding amount
of bonds auctioned by the MH totaled RD$225,794.0 million, of which 85.1% were in domestic
residents hands. Of this total, 34.8% were in in pension fund managers, 24.1% were in
commercial banks, among others.

VI. Treasury Debt

The “General National Budget” for 2016 authorizes the Executive Power, through the Ministry of
Finance, to issue short term Treasury Bills for a maximum of RD$10,000 million and US$210.0
million, which will need to be paid before ending the fiscal exercise for 2016. As of September
30th, 2016 credit lines managed by the National Treasury had a balance of US$423.4 million.

VII. Contingent Liabilities

External Debt

1. Guarantees to Private Sector: The Central Government has provided debt guarantees for
the external debt of certain private sector institutions (INTEC, FUNDAPEC and PUCMM). As
of September 30th, 2016, private external debt publicly guaranteed totaled US$10.1 million,
equivalent to RD$467.5 million.

23
Domestic Debt

1. Law No. 174-07: Authorized the Ministry of Finance to sign a financial guarantee in order to
secure loans from local commercial banks to companies in Free Zones for the amount of up
to RD$1,200.0 million. Of the total of approved financial guarantees, financial institutions
executed guarantees totaling US$28.9 million (equivalent to RD$1,041.6 million), and
RD$147.6 million for a total of RD$1,189.2 million, which were recorded and presented in the
reports as part of public debt of the Central Government.

Moreover, the Atlantic Manufacturing Company was granted a guarantee for US$500,000.0
which has not been executed, therefore it is not considered a debt obligation for the
Dominican government.

2. Law No. 15-08: that approves the “Budget and Public Revenue and Expenditure Law” for
2008, authorized the MoF to issue guarantees for an amount up to RD$1,500.0 million to
ensure the reconstruction of the private sector in areas affected by the Storm Olga.

Based on this authorization in 2008 Hoyo de Lima Industrial was conceded a guarantee of
RD$50.0 million. Moreover, RD$20.5 million were paid directly by Hoyo de Lima Industrial,
while the Central Government assumed a total of RD$29.5 million of the guarantee granted.

Finally, based on this authorization in 2008 the Ministry of Finance subscribed two Stand-By
credit letters to the private commercial banks for a total of US$13.7 million for the company
Bojos Tanning, which as of to date have not been executed. According creditor banks the
amount owed by the company Bojos Tanning amounts US$3.7 million at June 30 th, 2016.

VIII. Reduction of Accounts Payable

The “General National Budget” for 2016 contemplates RD$5,461.5 million for Reduction of
Accounts Payable to be executed through the 0998 chapter. Of this amount, during the second
quarter of 2016, RD$458.2 million were accrued and paid. (Table 15)

Table 15: Reduction of Accounts Payable

Figures in millions of Dominican Pesos (RD$)

AMOUNT AMOUNT
DEBTOR INSTITUTION
ACCRUED PAID
CODACSA 458.17 458.17
TOTAL 458.2 458.2
Source: SIGEF.

24
IX. Liability Management
Conversion of IDB Loan Interest Rates

During the third quarter of 2016, the Government made payments in cash for converted loans for
the amount of US$29.8 million. Under the original conditions, the estimated amount that would
have been paid was US$26.9 million (taking into account the capitalizations and waivers), which
means a dissaving of US$2.9 million, due to the interest rates fixing at higher levels than the
current at the international markets.

These results are consistent with the analysis conducted by the Public Debt Office, which main
conclusions were that with the implementation of IDB proposal of fixing interest rates, the risks of
future variability of interest rates would be reduced, and savings in future interest payments would
be generated in the medium term, when interest rates in international markets are estimated to
return to their pre-crisis levels.

Liability Management Operation with PDVSA

In the first quarter of 2015, the Dominican Republic made a liability management transaction
which consisted in the early redemption of accumulated debt with PDVSA for US$4,027.3 million,
by paying the sum of US$1,933.1 million, i.e., at a price of 48%, resulting in a public debt stock
reduction of US$2,094.3 million.

During 2016, there will be savings in debt service payments of US$72.2 million:

o The prepaid amount owed to PDVSA totaled US$4,027.3 million, would have generated
debt services flows (principal + interest) of US$191.1 million.

o The total amount to be paid during 2016 for the bonds used in the transaction, will be
US$118.9 million.

During the first nine months of 2016, under the original conditions of the agreement, the
Dominican government would have paid a total of US$148.3 million, resulting in savings of about
US$29.4 million versus the payment made by the interest generated by the bonds used for the
transaction, of US$118.9 million.

25
ANNEXES

26
 Annex I – External Budget Resources and Disbursements Execution
NATIONAL BUDGET 2016 DISBURSEMENTS (US$)
INSTITUTION TOTAL
Pesos (RD$) Dollars (US$) Jan - Mar Apr - Jun Jul-Sep

TOTAL EXTERNAL FINANCING 117,671,012,902.00 2,492,501,861.94 1,056,740,688.50 141,978,809.09 624,557,017.78 1,823,276,515.37

Public Investment Projects 15,178,015,000.07 321,500,000.00 41,556,818.38 135,367,076.62 120,598,274.49 297,522,169.49
Global Bonds 59,012,500,000.00 1,250,000,000.00 1,000,000,000.00 - 500,000,000.00 1,500,000,000.00
Budget Support 43,480,497,901.93 921,001,861.93 15,183,870.12 6,611,732.47 3,958,743.29 25,754,345.88
Petrocaribe 15,183,870.12 6,611,732.47 3,958,743.29 25,754,345.88

Total Public Investment Projects 15,178,015,000.07 321,500,000.00 41,556,818.38 135,367,076.62 120,598,274.49 297,522,169.49

Presidency 566,520,000.00 12,000,000.00 3,905,431.41 0.00 7,326,896.80 11,232,328.21

Social Policy Cabinet 566,520,000.00 12,000,000.00 0.00 0.00 307,368.90 307,368.90
Office of State Infrastructure Supervising Engineers 0.00 0.00 3,905,431.41 0.00 7,019,527.90 10,924,959.31

Ministry of Interior and Police 94,420,000.00 2,000,000.00 2,437,048.98 1,384,578.50 3,838,756.21 7,660,383.69

Ministry of Education 1,015,015,000.00 21,500,000.00 0.00 12,453,469.00 0.00 12,453,469.00

Ministry of Public Health 1,929,554,473.68 40,871,732.13 14,742,096.31 7,592,984.50 5,455,583.86 27,790,664.67

Ministry of Public Health 1,463,510,000.00 31,000,000.00 13,376,674.02 1,703,637.09 4,189,235.50 19,269,546.61
National Institute of Potable Water /a 466,044,473.68 9,871,732.13 1,365,422.29 5,889,347.41 1,266,348.36 8,521,118.06

Ministry of Labor 47,210,000.00 1,000,000.00 0.00 0.00 2,229,309.31 2,229,309.31

Ministry of Agriculture 370,598,500.00 7,850,000.00 0.00 5,977,646.88 0.00 5,977,646.88

Ministry of Agriculture 323,388,500.00 6,850,000.00 0.00 4,947,243.28 0.00 4,947,243.28
Plan Sierra 47,210,000.00 1,000,000.00 0.00 1,030,403.60 0.00 1,030,403.60

Ministry of Public Infrastructure and Communications 6,736,867,000.00 142,700,000.00 5,500,000.00 5,176,999.54 0.00 10,676,999.54
Ministry of Public Infrastructure and Communications 3,998,687,000.00 84,700,000.00 0.00 2,676,999.54 0.00 2,676,999.54
Office for Transport Rearrangement 2,360,500,000.00 50,000,000.00 0.00 0.00 0.00 0.00
Nacional Housing Institute 377,680,000.00 8,000,000.00 5,500,000.00 2,500,000.00 0.00 8,000,000.00

Ministry of Natural Resources and Environment /a 1,381,713,874.22 29,267,398.31 5,944,154.94 8,056,053.84 653,222.46 14,653,431.24
National Institute of Hydraulic Resourses /a 1,381,713,874.22 29,267,398.31 5,944,154.94 8,056,053.84 653,222.46 14,653,431.24

Ministry of Economy, Planification and Development 533,986,152.17 11,310,869.57 2,528,086.74 5,612,012.53 2,306,112.00 10,446,211.27

Tresuary Bond Management 2,124,450,000.00 45,000,000.00 6,500,000.00 89,113,331.83 98,788,393.85 194,401,725.68

Dominican Corporation of Electric Companies /a 2,124,450,000.00 45,000,000.00 6,500,000.00 89,113,331.83 98,788,393.85 194,401,725.68

Global Bonds 59,012,500,000.00 1,250,000,000.00 1,000,000,000.00 0.00 500,000,000.00 1,500,000,000.00

Total Budget Support 43,480,497,901.93 921,001,861.93 15,183,870.12 6,611,732.47 3,958,743.29 25,754,345.88

Multilateral Organism 31,205,897,901.93 661,001,861.93 8,539,382.00 0.00 0.00 8,539,382.00

BID: Strengthening Health Sector Management 8,539,382.00 0.00 0.00 8,539,382.00

Bilateral Organism 12,274,600,000.00 260,000,000.00 6,644,488.12 6,611,732.47 3,958,743.29 17,214,963.88

Petrocaribe 6,644,488.12 6,611,732.47 3,958,743.29 17,214,963.88
-
fin
a/ Includes Central Government transfers to decentralized institutions
b/ Central government figures shown in this report are those referred to in section 0998 of Public Debt Management and Financial Assets.
In addition confirmed by the creditor and pending registration in the SIGEF disbursements they are contemplated.

27
Annex II – External Debt Contracting in 2016 Budget 21

Amount in 2016 Amount Contracted Promulgation

External Financing Sources Beneficiary Creditor
Budget (US$) (US$) date

Total General 1,510,987,690 177,287,947

Total Investment Project Financing 610,987,690 167,566,239

Approved Contracts - -

Contracts Pending Approval and/or Structuring 610,987,690 167,566,239

1 Rehabilitación de Redes de Distribución Eléctrica y Reducción de Pérdidas 100,000,000 100,000,000 CDEEE BEI

2 Obras de Regeneración de Playas 100,000,000 - MITUR

3 Construcción de la Subestación Guerra 345/138 kv /1 19,962,293 19,824,277 ETED KFW
4 Extensión de la Línea II del Metro de Santo Domingo (Línea II-B) /2 79,849,174 47,741,962 OPRET Banco Santander
5 Fomento al Turismo Ciudad Colonial (Fase II) 90,000,000 - MITUR BID
6 Saneamiento Integrado de Santiago 138,000,000 - CORAASAN
Proyecto Ampliación del Acueducto Oriental, Barrera de Salinidad y Trasvase
7 83,176,223 - CAASD
al Municipio Santo Domingo Norte /3

Total Budget Support Financing 900,000,000 9,721,708

Approved Contracts 200,000,000 9,721,708

8 Acuerdo Petrocaribe /4 200,000,000 9,721,708 MH PDVSA

Contracts Pending Approval and/or Structuring 700,000,000 -

MH
9 Apoyo presupuestario con la Banca Multilateral, Bilateral y/o Comercial 700,000,000
-

1/ Loan contracted in Euro, the exchange rate used to conversion is (USD/EUR 0.8913) corresponding to signing date May 23, 2016
2/ Loan contracted in Euro, the exchange rate used to conversion is (USD/EUR 0.880) corresponding to signing date Apr 08, 2016
3/ Loan contracted in Euro, the exchange rate used to conversion is (USD/EUR 0.9017) corresponding to signing date June 30, 2016
4/ Execution of "Acuerdo de Petrocaribe".

21 The contracts refer to loan contracts signed between the creditor and the Ministry of Finance; which they are approved once they are ratified by
Congress and promulgated by the Executive.
28
 Annex III – Non Financial Public Sector Debt by Creditor Type
2012 2013 2014 2015* Sep-16*
DEBT SOURCE/CREDITOR
US$ % US$ % US$ % US$ % US$ %
EXTERNAL DEBT
Official creditors:
Multilateral debt:
IDB 2,220.0 17.2 2,529.7 17.0 2,229.9 13.9 2,705.2 16.9 2,663.6 15.5
World Bank 909.7 7.1 895.7 6.0 883.2 5.5 927.8 5.8 925.8 5.4
CAF 135.4 1.1 138.3 0.9 129.9 0.8 178.9 1.1 173.8 1.0
FMI 845.3 6.6 683.4 4.6 289.8 1.8 43.3 0.3 - -
Other 235.8 1.8 311.8 2.1 333.7 2.1 327.7 2.0 336.8 2.0
Total multilateral debt 4,346.2 33.8 4,559.0 30.5 3,866.5 24.1 4,183.0 26.1 4,100.0 23.9

Bilateral debt:
Brazil 769.1 6.0 734.7 4.9 663.3 4.1 669.2 4.2 588.1 3.4
United States 186.8 1.5 169.7 1.1 118.5 0.7 74.1 0.5 55.2 0.3
Spain 612.9 4.8 588.1 3.9 491.1 3.1 436.4 2.7 399.8 2.3
Japan 103.4 0.8 73.4 0.5 53.4 0.3 42.2 0.3 41.2 0.2
Venezuela 3,086.9 24.0 3,734.5 25.0 4,163.7 25.9 231.9 1.4 242.7 1.4
Of which Petrocaribe Agreement (1) 3,029.9 23.5 3,686.4 24.7 4,121.6 25.6 195.8 1.2 212.6 1.2
Other countries... 991.4 7.7 939.2 6.3 803.6 5.0 1,074.4 6.7 1,217.9 7.1
Total bilateral debt 5,750.6 68.2 6,239.6 41.8 6,293.7 39.2 2,528.2 15.8 2,544.9 14.8

Total official debt….. 10,096.8 78.4 10,798.6 72.4 10,160.1 63.2 6,711.1 41.9 6,644.9 38.7

Private creditors:
Banking 302.1 2.3 225.8 1.5 647.5 4.0 678.9 4.2 506.3 3.0
Bonds 2,466.6 19.2 3,889.0 26.1 5,260.8 32.7 8,632.6 53.9 10,004.4 58.3
Suppliers 6.0 0.0 6.0 0.0 6.0 0.0 6.0 0.0 6.0 0.0
Total private sector debt 2,774.8 21.6 4,120.8 27.6 5,914.3 36.8 9,317.4 58.1 10,516.6 61.3

Total external debt 12,871.6 100.0 14,919.4 100.0 16,074.5 100.0 16,028.6 100.0 17,161.5 100.0

DOMESTIC DEBT
Treasury Bonds (Law 121-05) 95.0 1.4 89.6 1.1 86.5 1.1 - - - -
Of which CB Capitalization Bonds 57.7 0.9 54.5 0.7 52.6 0.7 - - - -
Treasury Bonds (Law 359-07) - - - - - - - - - -
Recap Bonds (Law 167-07) 2,055.1 31.2 3,101.8 37.4 2,994.4 38.7 2,911.0 35.8 2,861.6 30.7
Treasury Bonds (Law 490-08) - - - - - - - - - -
Bonds Auctions 1,853.1 28.1 2,221.5 26.8 2,776.1 35.9 3,503.3 43.1 4,881.6 52.4
Bonds CDEEE 500.0 7.6 500.0 6.0 500.0 6.5 500.0 6.2 500.0 5.4
Administrative Debt Bonds 232.0 3.5 249.3 3.0 242.0 3.1 235.2 2.9 231.2 2.5
Commercial Banks or Other Financial
Institutions (2) 1,628.8 24.7 2,112.7 25.5 1,135.6 14.7 976.3 12.0 843.4 9.1
Other instruments (3) 227.7 3.5 9.4 0.1 - - - - - -
Total domestic debt 6,591.7 100.0 8,284.4 100.0 7,734.6 100.0 8,126.0 100.0 9,317.8 100.0
2012 2013 2014 2015* Sep-16*
SUMMARY US$ % US$ % US$ % US$ % US$ %
External Debt 12,871.6 66.1 14,919.4 64.3 16,074.5 67.5 16,028.6 66.4 17,161.5 64.8
% GDP 21.2 24.1 24.6 23.5 24.0
Domestic Debt 6,591.7 33.9 8,284.4 35.7 7,734.6 32.5 8,126.0 33.6 9,317.8 35.2
% GDP 10.9 13.4 11.8 11.9 13.0
Total Public Debt 19,463.3 100.0 23,203.8 100.0 23,809.1 100.0 24,154.6 100.0 26,479.4 100.0
Debt/GDP (4) 32.1 37.4 36.5 35.4 37.0

(1) The figure includes the liability management operation taken place on January 27, 2015, w hich consisted on an early redemption of the debt accumulated by the Petrocaribe Agreement for
US$4,027.3 million, by paying the total amount of US$1,933.1 million.
(2) It includes public debt contracted w ith commercial banks, savings and loan associations, brokerage firms, investment funds and other private creditors.
(3) Debt stipulated in Law No.160-13.Source: Banco de Reservas de la República Dominicana.
(4) GDP 2007 base. Source: Central Bank. This figures w ere revised by the Central Bank during 2016. The 2016's GDP figure according to the latest macroeconomic framew ork agreed w ith
BCRD, MH and MEPYD.
*Central government figures show n in this report are those referred to in section 0998 of Public Debt Management and Financial Assets.

29