VIII. TRADE PROJECT FINANCING BRIEF DESCRIPTION OF THE BANKING SYSTEM: THE DOMINICAN FINANCIAL SYSTEM INCLUDES COMMERCIAL BANKS, MORTGAGE BANKS, SAVINGS AND LOAN ASSOCIATIONS, AND DEVELOPMENT BANKS. THE CENTRAL BANK REGULATES THE MONEY SUPPLY AND CONTROLS OFFICIAL FOREIGN EXCHANGE RESERVES. COMMERCIAL BANKS ARE THE MAIN SOURCES OF FINANCING TO THE PRIVATE SECTOR. MOST COMMERCIAL LENDING IS IN THE FORM OF SHORT-TERM LINES OF CREDIT, WITH SOME MEDIUM AND LONG-TERM FINANCING AVAILABLE, PRINCIPALLY FROM CENTRAL BANK DEVELOPMENT FUND RESOURCES. MORTGAGE BANKS TRADITIONALLY HAVE PROVIDED MEDIUM AND LONG-TERM LOANS FOR THE CONSTRUCTION AND TOURISM SECTORS. HOWEVER, DUE TO THE UNCERTAIN LENDING ENVIRONMENT, MEDIUM-TERM, ANNUALLY RENEGOTIATED LOANS ARE MOST COMMON. SAVINGS AND LOAN ASSOCIATIONS PROVIDE MEDIUM AND LONG-TERM LOANS ONLY FOR RESIDENTIAL HOUSING AND MAY ACCEPT SAVINGS AND CD DEPOSITS. DEVELOPMENT BANKS, BOTH PUBLIC AND PRIVATE, OFFER MEDIUM AND LONG TERM LOANS TO FINANCE PROJECTS IN PRIORITY SECTORS, INCLUDING AGRICULTURE, TOURISM, INDUSTRY, SERVICES, AND TRANSPORTATION. MOST SHORT-TERM FINANCING IS OFFERED THROUGH COMMERCIAL BANKS, NORMALLY IN THE FORM OF LINES OF CREDIT. FINANCE COMPANIES (FINANCIERAS) PROVIDE SHORT AND MEDIUM-TERM LOANS TO COMMERCIAL AND INDUSTRIAL SECTORS. THESE COMPANIES PROVIDE LOANS WHEN COMMERCIAL BANKS ARE UNABLE OR RELUCTANT TO DO SO. LONG-TERM LENDING IS RESTRICTED TO CENTRAL BANK FUNDS, DEVELOPMENT BANKS, MORTGAGE BANKS, AND SAVING AND LOAN ASSOCIATIONS. FOREIGN COMPANIES CANNOT OBTAIN INTERNAL CREDIT FOR A PERIOD GREATER THAN ONE YEAR WITHOUT PRIOR APPROVAL FROM THE CENTRAL BANK (LAW 861, ARTICLE 28 OF JULY 1978). LAW 861 WHICH REGULATES FOREIGN INVESTMENT IS UNDER REVIEW. THE DOMINICAN FINANCIAL SYSTEM IS UNDERGOING A REFORM PROCESS WITH THE ASSISTANCE OF MULTILATERAL ORGANIZATIONS (WORLD BANK, INTERNATIONAL MONETARY FUND, INTERAMERICAN DEVELOPMENT BANK). THIS REFORM SEEKS TO UPDATE THE DOMINICAN FINANCIAL STRUCTURE IN ORDER TO HAVE IT FUNCTION EFFECTIVELY AS PART OF THE INTERNATIONAL FINANCIAL SYSTEM. THE REFORM IS STILL AWAITING PRESIDENTIAL APPROVAL. ON DECEMBER 11, 1992, THE CENTRAL BANK ENACTED A RESOLUTION DICTATING THE PROCEDURAL GUIDELINES AND POLICIES FOR FINANCIAL INSTITUTIONS TO CONVERT TO MULTIBANKS. THE CONCEPT OF MULTIBANK IS TO MERGE INTO A SINGLE FINANCIAL INSTITUTION, COMMERCIAL, DEVELOPMENT AND MORTGAGE BANKING FUNCTIONS. TO DATE, ONLY TWO BANKS HAVE BEEN AUTHORIZED TO OPERATE UNDER THOSE TERMS, BANCO BHD AND BANCO MERCANTIL. TWO OTHERS HAVE SUBMITTED THEIR PROPOSALS AND ARE AWAITING FINAL APPROVAL: BANCO NACIONAL DE CREDITO (BANCREDITO) AND BANCO GERENCIAL Y FIDUCIARIO. THIS RESTRUCTURING WOULD CONSOLIDATE RESOURCES IN A MORE EFFICIENT WAY OFFERING LEASING, FACTORING, INTERNATIONAL SERVICES, PROJECT LOANS, CHECKING ACCOUNTS, AMONG OTHERS, IN A SINGLE OPERATIONAL UNIT. COMMENT: SOME BANKS HAVE DELAYED APPLYING FOR MULTIBANK STATUS PREFERRING TO WAIT UNTIL THE NEW LAW IS PASSED. THESE BANKS ARE BEING CAUTIOUS BECAUSE THE SYSTEM IS IN PLACE ONLY BY RESOLUTION. THERE IS ALSO A PROJECT TO RESTRUCTURE AND REVISE THE OPERATIONS OF THE GOVERNMENT OFFICE IN CHARGE OF SUPERVISING BANKING OPERATIONS IN THE DOMINICAN REPUBLIC, SUPERINTENDENCIA DE BANCOS, IN ORDER TO MAINTAIN BETTER CONTROL AND SUPERVISION OF THE NEW FINANCIAL REGULATIONS. THIS REFORM IS CONSIDERED TO BE IMPORTANT, BECAUSE WITHOUT PROPER CONTROL AND SUPERVISION, THE NEW REGULATIONS WOULD BE USELESS. FOREIGN EXCHANGE CONTROLS AFFECTING TRADE: IN JANUARY 1991, THE GOVERNMENT OF THE DOMINICAN REPUBLIC ENACTED A FOREIGN EXCHANGE SYSTEM WHEREIN THE PESO WAS ALLOWED TO FLOAT FOR MOST TRANSACTIONS. EXCEPT FOR A FEW OFFICIAL TRANSACTIONS SUCH AS PETROLEUM IMPORTS, THE CENTRAL BANK CEDED OPERATIONAL CONTROL OF FOREIGN EXCHANGE TRANSACTIONS TO THE COMMERCIAL BANKS. AT THE SAME TIME, THE MONETARY BOARD OF THE CENTRAL BANK FLOATED THE INTEREST RATE FOR COMMERCIAL LENDING. WHAT IS GENERAL FINANCING AVAILABILITY: CURRENT MARKET RATES RANGE BETWEEN 30 TO 36 PERCENT WITH A 22 PERCENT RATE TO PREFERRED CLIENTS. EVEN THOUGH COMMERCIAL BANKS PRESENTLY ENJOY HIGH LIQUIDITY, INTEREST RATES HAVE REMAINED VERY HIGH. HOW TO FINANCE EXPORTS/METHODS OF PAYMENT: THE MOST COMMON FORMS OF PAYMENT ARE LETTER OF CREDIT, CASH (MOST DOMINICAN COMPANIES MAINTAIN DOLLAR ACCOUNTS ABROAD), AND SUPPLIER CREDIT WHEN A TRADING RELATIONSHIP HAS BEEN ESTABLISHED. TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE: U.S. EX-IM BANK FINANCING IS AVAILABLE TO BOTH THE PUBLIC AND THE PRIVATE SECTORS AS IS WORLD BANK AND INTERAMERICAN DEVELOPMENT BANK PROJECT FINANCING. LOCAL FINANCING IS GENERALLY NOT AVAILABLE TO FOREIGN INVESTORS. PROJECT FINANCING AVAILABLE: PROJECT FINANCING IS AVAILABLE FROM THE INTERAMERICAN DEVELOPMENT BANK, WORLD BANK, THE OVERSEAS PRIVATE INVESTMENT CORPORATION AND SECTION 936 FINANCING FROM PUERTO RICO. THE INTER-AMERICAN DEVELOPMENT BANK (IDB) PROVIDES FUNDING TO PRIMARILY PUBLIC SECTOR ENTITIES, FOR THE DESIGN AND EXECUTION OF PROJECTS. IDB PROJECTS AFFORD U.S. SUPPLIERS OF GOODS AND SERVICES SIGNIFICANT EXPORT OPPORTUNITIES, MAINLY IN THE TRANSPORTATION, ENVIRONMENT, HEALTH, EDUCATION, URBAN DEVELOPMENT, TOURISM, AGRICULTURE AND ENERGY SECTORS. U.S. FIRMS SEEKING INFORMATION ON IDB-FINANCED COMMERCIAL OPPORTUNITIES SHOULD CONTACT: U.S. DEPARTMENT OF COMMERCE LIAISON OFFICER TO THE INTER-AMERICAN DEVELOPMENT BANK U.S. EXECUTIVE DIRECTORS OFFICE 1250 H STREETM, NW 10TH FLOOR WASHINGTON, D.C. 20005 PHONE: (202) 942-8265 FAX: (202) 942-8275 OFFICE OF MULTILATERAL DEVELOPMENT BANKS U.S. & FOREIGN COMMERCIAL SERVICE U.S. DEPARTMENT OF COMMERCE ROOM H-1107 WASHINGTON, D.C. 20230 PHONE: (202) 482-3399 FAX: (202) 273-0927 D.R. COUNTRY OFFICE INTER-AMERICAN DEVELOPMENT BANK AVE. WINSTON CHURCHILL ESQ. LUIS F. THOMEN TORRE BHD APARTADO POSTAL 1386 SANTO DOMINGO, DOMINICAN REPUBLIC PHONE: (809) 562-6400 CONTACT: LEONARDO A. DA SILVA THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD), A MEMBER OF THE WORLD BANK GROUP MAKES LONG-TERM LOANS AT MARKET-RELATED RATES PRIMARILY TO DEVELOPING NATIONS. THE INTERNATIONAL DEVELOPMENT AGENCY (IDA), THE SOFT LOAN WINDOW OF THE WORLD BANK, LENDS TO THE POOREST OF THE DEVELOPMENT COUNTRIES. BOTH THE IBRD AND IAD WORK TO PROMOTE BROADLY BASED ECONOMIC GROWTH, FREQUENTLY FOCUS ON STRUCTURAL ADJUSTMENT, SECTORAL REFORM AND INDIVIDUAL PROJECT LENDING, AND OPERATE UNDER THE SAME SET OF PROCUREMENT GUIDELINES. TYPICALLY THE WORLD BANK DOES NOT FINANCE THE ENTIRE COST OF A PROJECT. RATHER, IT FINANCES THE COMPONENTS OF A PROJECT PURCHASED WITH FOREIGN EXCHANGE, WHICH ON AVERAGE IS ABOUT 40 PERCENT THE TOTAL PROJECT COST. EACH PROJECT MAY COVER A WIDE VARIETY OF SECTORS AND CAN INVOLVE ANYWHERE FROM ONE TO HUNDREDS OF SEPARATE CONTRACTS PROVIDING EXPORT BUSINESS OPPORTUNITIES FOR SUPPLIERS WORLDWIDE. CONTACTS: U.S. DEPARTMENT OF COMMERCE LIAISON TO THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT U.S. EXECUTIVE DIRECTORS OFFICE 1818 H ST., NW ROOM D-13004 WASHINGTON, D.C. 20433 PHONE: (202) 458-0118 FAX: (202) 477-2967 OFFICE OF MULTILATERAL DEVELOPMENT BANKS U.S. & FOREIGN COMMERCIAL SERVICE U.S. DEPARTMENT OF COMMERCE ROOM H-1107 WASHINGTON, D.C. 20230 PHONE: (202) 482-3399 FAX: (202) 273-0927 THE U.S. DEPARTMENT OF AGRICULTURE OFFERS FINANCING PROGRAMS FOR U.S. AGRICULTURAL EXPORTS. LIST OF COMMERCIAL BANKS: BANCO COMERCIAL BHD, S.A. ARQ. JOSE ANTONIO CARO, PRESIDENT LUIS F. THOMEN ESQ. WINSTON CHURCHILL TORRE BHD SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 541-3232 FAX: (809) 566-9569 BANCO DEL COMERCIO DOMINICANO, S.A. JOSE URENA, PRESIDENT AVE. 27 DE FEBRERO ESQ. WINSTON CHURCHILL SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 545-5100 FAX: (809) 544-1298 BANCO DEL EXTERIOR DOMINICANO, S.A. ELIAS F. ATALLAH, PRESIDENT AVE. ABRAHAM LINCOLN NO. 756, PIANTINI SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 565-5540 FAX: (809) 565-5547 BANCO DE LOS TRABAJADORES DE LA REPUBLICA DOMINICANA JOSE A. RODRIGUEZ, PRESIDENT AV. MEXICO ESQ. CALLE ALTAGRACIA SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 682-0171 FAX: (809) 685-6536 BANCO DE RESERVAS DE LA REPUBLICA DOMINICANA LIC. HECTOR VALDEZ ALBIZU, GENERAL ADMINISTRATOR ISABEL LA CATOLICA NO. 72 SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 688-2241 FAX: (809) 685-0602 BANCO DOMINICANO DEL PROGRESO, S.A. TOMAS PASTORIZA, PRESIDENT AVE. JOHN F. KENNEDY NO. 3, MIRAFLORES SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 563-3233 FAX: (809) 563-2451 BANCO GERENCIAL Y FIDUCIARIO DOMINICANO, S.A. DR. JESUS ENRIQUE ARMENTEROS, PRESIDENT AVE. 27 DE FEBRERO NO. 50, EL VERGEL SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 541-9400 FAX: (809) 567-6747 BANCO INTERCONTINENTAL, S.A. MR. ANTONIO NAJRI ACRA, PRESIDENT AVE. ABRAHAM LINCOLN, EDIF. ALICO, 1ER PISO SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 535-5500 FAX: (809) 532-2474 AND (809) 533-9532 BANCO LATINOAMERICANO, S.A. MR. JORGE CASTRO, EXECUTIVE PRESIDENT GUSTAVO MEJIA RICART ESQ. AGUSTIN LARA ENS. PIANTINI SANTO DOMINGO. DOM. REP. TELEPHONE: (809) 562-2662 FAX: (809) 562-1915 BANCO MERCANTIL, S.A. LIC. ANDRES A. AYBAR BAEZ, PRESIDENT AVE. BOLIVAR NO. 308 ESQ. JOSE JOAQUIN PEREZ GAZCUE SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 221-7151 FAX: (809) 688-0608 BANCO METROPOLITANO, S.A. AGUSTIN VERDEJAS, PRESIDENT AVE. LOPE DE VEGA ESQ. GUSTAVO MEJIA RICART EDIF. GOICO CASTRO, ENS. NACO SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 562-4242 FAX: (809) 540-1566 BANCO NACIONAL DE CREDITO, S.A. DR. MAXIMO PELLERANO, PRESIDENT JOHN F. KENNEDY ESQ. TIRADENTES ENS. NACO SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 540-4441 FAX: (809) 567-4698 BANCO POPULAR DOMINICANO MANUEL ALEJANDRO GRULLON, PRESIDENT AV. JOHN F. KENNEDY NO. 20 ESQ. MAXIMO GOMEZ, TORRE POPULAR 11AVO. PISO SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 544-5900 FAX: (809) 544-5999 CITIBANK, N.A. JUAN DE DIANOUS, VICE PRESIDENT AVE. JOHN F. KENNEDY NO. 1 ESQ. SAN MARTIN SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 566-5611 FAX: (809) 567-2255 THE BANK OF NOVA SCOTIA ARIEL PEREZ, GENERAL VICE PRESIDENT IN THE DOM. REP. AVE. JOHN F. KENNEDY ESQ. LOPE DE VEGA ENS. NACO SANTO DOMINGO, DOM. REP. TELEPHONE: (809) 544-1700 FAX: (809) 542-6302