Héctor Valdez Albizu Bank Governor of the Year Latin America 2023 

Hector Valdez Albizu’s most recent accolade stands as a testament to his exceptional leadership at the helm of the Central Bank of the Dominican Republic (BCRD). Under his stewardship, the BCRD has provided an economic “playing field”, allowing the Dominican Republic to emerge as a beacon of resilience within the Latin American landscape. 

Governor Valdez’s leadership of the BCRD, which spans well over two decades across two prolonged tenures, has been marked by a steadfast commitment to preserving macroeconomic stability and fostering sustainable growth. His strategic vision has enabled the BCRD to navigate through various economic downturns, including the unprecedented challenges posed by the Covid-19 pandemic and its aftermath. 

In fact the performance of the Dominican economy in 2023 and its outlook for 2024 are further testament to this central bank’s effectiveness. Overall, 2023 saw an average economic growth of 2.4%, surpassing the Latin American average of 2.2% projected by the World Bank. In 2024, economic activity is projected to continue its upward trajectory, with an estimated growth of around 5.0%, nearing its potential and ranking among the highest in Latin America, as forecasted by international organisations like the International Monetary Fund. 

It is also clear that given the timely implementation of restrictive monetary measures from November 2021 to October 2022, together with government subsidies, year-on-year inflation in the Dominican Republic has declined significantly, converging to the target range of 4%±1% as of May 2023 and closing 2023 at 3.57 %, below the central value of the target. Likewise, core inflation, which excludes the prices of the most volatile goods and services, has sustained a marked downward trend, standing at 4.32 % in December 2023, also within the BCRD’s target range. Moreover, when analysing data from 18 Latin American economies at the end of 2023, it is evident that the Dominican Republic’s year-on-year inflation is among the lowest in the region. 

Benefiting from this moderate inflation, the Central Bank has seized the opportunity to implement monetary stimulus measures aimed at reigniting economic growth, which had faced a slowdown in the initial half of 2023. Consequently, the monetary policy rate underwent a cumulative reduction of 150 basis points from its May 2023 level of 8.50% to 7.00% by December 2023, providing impetus to the economy. Furthermore, the Monetary Board authorised a liquidity provision program through financial intermediaries, with Central Bank and Ministry of Finance securities as collateral. This initiative facilitated the flow of loans to various sectors, including productive enterprises, micro, small, and medium-sized enterprises (MSMEs), and households, totalling approximately RD$190 billion (equivalent to around 3% of GDP). These loans were made available at competitive interest rates of up to 9% per annum. 

As a result of these monetary interventions, lending to the private sector in local currency witnessed a notable upsurge, expanding at around 20% year-on-year by the end of 2023. This expansion is primarily attributed to increased credit access for the construction and manufacturing sectors, as well as households. 

The favourable monetary environment, coupled with an uptick in public investment, is expected to sustain the momentum of economic recovery, propelling growth towards its potential of 5% in 2024. 

IMPORTANT INDICATORS 

Once described by Governor Valdez as the “spearhead of the economy”, tourism has seen noteworthy growth. Tourism revenues for 2023 reached US$9,828.9 million, registering a significant increase of 16.9% from 2022. A result driven by non-resident visitor arrivals, which reached 10.3 million for the first time in 2023. A further breakdown of the numbers show that this influx comprises over 8.0 million air arrivals and 2.3 million sea arrivals. Put simply, these figures reestablish the country’s appeal as a premier tourist destination, contributing substantially to foreign exchange inflows and job creation. 

Likewise, Foreign Direct Investment (FDI) continued to surge, reaching US$4,381.0 million in 2023, marking a 9.2% increase from the previous year, with notable contributions from the tourism, energy, and real estate sectors. The upward trend in FDI is projected to persist, surpassing US$4.5 billion in 2024, reflecting investor confidence in the Dominican Republic’s economic prospects and favourable business environment. 

Exports reached US$12,899.2 millions in 2023, demonstrating resilience particularly from free trade zones, with notable performances in medical and surgical equipment exports. The free zone sector, a vital contributor to the economy, generated over one hundred and ninety-seven thousand direct jobs by the year’s end, highlighting its role in the labor market and export diversification. 

International reserves also witnessed a marked increase, reaching approximately US$15,464 million by the end of 2023, exceeding the recommended thresholds by the International Monetary Fund and providing a robust buffer against external shocks. The stable exchange rate further enhanced economic resilience, with a modest year-on-year depreciation of 

3.2%, reflecting the country’s strong economic fundamentals and foreign currency-generating activities. 

JOB CREATION 

While every aspect of the BCRD’s functions ultimately impact the quality of life of the average Dominican, two noteworthy metrics, by which the direct effect of policy measures can be gauged, include job creation and the poverty metrics. 

According to data from the Central Bank’s Continuous National Labor Force Survey (ENCFT), in 2023 total employment reached its highest historical level of around 4.9 million workers, reflecting a notable creation of approximately two hundred and thirty-seven thousand jobs compared to before the pandemic. With these results, the open unemployment rate stood at 5.0% for the fourth quarter of 2023. 

Moreover, ongoing efforts to address unemployment contributed to the poverty rate declining to 23.0% in 2023, marking a 4.7 percentage point reduction from 2022. The adoption of an updated poverty measurement 

methodology, coupled with enhanced data collection techniques, enabled more accurate assessments of poverty levels and therefore allowed more targeted interventions to alleviate economic disparities. 

OUTLOOK 

The impressive performance of the Dominican economy in 2023 and the favourable economic outlook for 2024, underscore the BCRD’s commitment to macroeconomic stability and sustainable growth. Hector Valdez Albizu’s exceptional leadership of the BCRD has clearly helped propel the nation’s economy to new heights of resilience and growth within the Latin American context. As the Dominican Republic continues on its path of economic prosperity, Valdez’s visionary leadership and the BCRD’s steadfast commitment to excellence serve as pillars of stability and progress. With clear indicators of success and a bright outlook for the future, the nation stands poised as a model of economic resilience and growth in the Latin American region, underlining the significance of Valdez’s leadership at the helm of the Central Bank.