Public debt remains moderate at approximately 53% of GDP, with fiscal consolidation efforts ongoing despite challenges in broadening the tax base. The government aims to reduce the deficit to 3% by 2026, focusing on targeted reforms and rationalizing subsidies, particularly in the electricity sector. The banking system is robust, with a non-performing loans ratio of around 1.5% and adequate provisioning, adequate capitalization and strong overall liquidity. However, fiscal revenue remains low (16.2% of GDP in 2023), and interest payments consume about 20% of government income, limiting the capacity for public intervention in the event of social difficulties or larger tensions. Insolvency risks are contained, but corporate payment behavior can be affected by economic and political uncertainties, especially in sectors exposed to external shocks. Continued progress in financial regulation and supervision, including the implementation of Basel standards, is essential to maintain investor confidence.

The Dominican Republic offers a favorable business climate, anchored by institutional stability, a strong banking sector and ongoing reforms. Free trade agreements with the US and EU, diversification of free trade zones and infrastructure improvements support competitiveness. However, the business environment faces structural challenges: labor informality remains high, manufacturing is concentrated in export zones with limited domestic linkages and the electricity sector is underpriced and heavily subsidized. Corruption and legal inefficiencies persist, with the country ranking 108th out of 180 on Transparency International’s index. Progress in governance, education and healthcare reforms is critical for inclusive growth. The government’s commitment to the National Development Strategy 2030 and Meta 2036 plan signals a long-term focus on structural transformation, but implementation gaps remain.

Political stability is a key asset, reinforced by President Abinader’s re-election and a congressional supermajority. The administration’s pro-market stance and anti-corruption drive have strengthened investor confidence, though sporadic protests and persistent social challenges – inequality, crime and unreliable electricity – continue to test governance. Relations with Haiti remain tense due to migration and security concerns, with border closures and deportations straining ties with the US. The risk of spillover from Haiti’s instability is significant, but the Dominican government’s decisive actions have so far contained major disruptions. Continued diplomatic engagement and progress on social reforms will be vital to sustaining stability and growth in the medium term.