DOMINICAN REPUBLIC

In accordance with the 2010 Constitution, the Dominican Republic is a unitary state with a democratic presidential regime and separation of powers. Executive power is exercised by the president of the Republic, who is directly elected every four years (in May) and may be re-elected. Legislative powers are vested in the National Congress, which is composed of the Senate and the House of Deputies, whose members are also elected every four years, also in May. The Senate, which is the body of territorial representation, has 32 seats, one for each of the thirty-one provinces and one representing the national district, while the House of Deputies has 178 seats. Judicial power lies with the Supreme Court of Justice as the supreme court and other courts. The Supreme Court of Justice has 16 members nominated by the National Council of the Judiciary.

The country has a single tier of subnational government comprising 157 municipalities and one National District. These are administered by a municipal council and a municipal mayor, all of whom are elected every four years in February.

The National District and Municipalities Act (176-07), adopted in 2007, defines the current legal framework for local governance and, together with the Constitution, outlines the organisational structure, responsibilities and resources of local governments. Since 2016, a consultation process has been underway at national level to draft a "Local Administration and Territorial System Law". The process involves key stakeholders linked to the subnational governments, such as the Dominican Municipal League (LMD or Liga Municipal Dominicana – which aims to promote cooperation between municipalities and the central government), the Dominican Federation of Municipalities (FEDOMU or Federación Dominicana de Municipios), the municipal mayors and councillors, the directors and members of the municipal districts, and representatives of civic society (professional associations, neighbourhood groups and trade associations, among others). Some disagreements among the stakeholders and, more recently, the COVID-19 crisis have delayed the introduction and discussion of this project in the National Congress.

In 2020 the Solid Waste Management Act (225-20) was passed and is in the process of implementation. Its objective is to promote the reduction, reuse and recycling of waste and to regulate contaminated soils. Other laws pending approval in the National Congress include the Land Use and Development Act and the Regionalisation Act. The Land Use and Development Act aims to complement national economic and social planning with a territorial dimension and to rationalise and guide the development and sustainable use of the territory. The Regionalisation Act aims to create macro-regions in order to facilitate territorial development planning processes.

TERRITORIAL ORGANISATION
Municipal Level [1]	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
1 National District of Santo Domingo (Distrito Nacional) 157 municipalities (municipios)
Average municipal size: 27 600 inh.
158			158

[1] Name and number of sub-municipal entities:
235 municipal districts (distritos municipales)

OVERALL DESCRIPTION: The Dominican Republic has only one level of subnational government composed of 157 municipalities and the National District of Santo Domingo.

The national territory is also divided for administration purposes into 10 regions and 31 provinces. The regions are territorial divisions established to facilitate the processes of territorial planning and other actions executed by central government. These territorial entities have no administrative structures nor technical competences. The provinces are territorial entities run by a governor appointed by the executive power, whose mission it is to represent that power. Although they have an administrative structure termed “governorate”, their functions are merely that of a facilitator or broker with the sectoral bodies of central government.

MUNICIPAL LEVEL: The municipalities and the municipal districts that constitute them at sub-municipal level are territorial entities led by local authorities represented by the councils and boards of municipal districts. These entities have regulatory and administrative competences in their respective territories.

According to article 199 of the Constitution of the Republic, the 235 municipal districts have the same functions as the municipalities with the exception of the areas established by Law 176-07 and the issues that, due to technical incapacity, they cannot solve (urban planning).

The officials of the councils and boards of the municipal districts are elected every four years; both instances are made up of a regulatory or legislative body integrated by the councillors or board members and an administrative body led by the mayor or the chairman of the board of the municipal district. In both areas of government, the regulatory body passes resolutions, bylaws, regulations, procedures and the administrative body manages the application of national or municipal standards in line with the competences established in the Organic Municipal Law 176-07.

The fundamental difference between both instances of local government is that the council is a legal entity of public law with competences to regulate aspects of territorial planning in the municipality, including the corresponding municipal districts, through its technical urban planning structures. The council is also able to establish charges and fees, as well as managing its budget and assets. Where the municipal district boards are concerned, as stated in Article 82 of Law 176-07, council approval is needed in the following cases: making laws; appropriating and divesting any kind of municipal asset; setting taxes of any kind; authorising the commencement of contract work relating to tenders and concessions under the law regulating this subject.

HORIZONTAL COOPERATION: The Dominican Federation of Municipalities (FEDOMU or Federación Dominicana de Municipios) and the Dominican Municipal District Federation (FEDODIM or Federación Dominicana de Distritos Municipales) contribute to the promotion of inter-municipal cooperation through training, information and advice on issues of interest to local governments, usually in coordination with the Dominican Municipal League (LMD). These two organisations, whose role it is to defend local autonomy, also collaborate with the LMD to support the implementation of the Municipal Public Administration Monitoring System (SISMAP or Sistema de Monitoreo de la Administración Pública Municipal), which was designed to improve local administration and facilitate civic participation and control.

The National District and Municipalities Act 176-07 establishes three types of competences for the municipalities: own, shared and delegated. Following a 2016 study on the competences and typologies of municipalities and a process of socialisation with the different stakeholders linked to the municipalities and civic society, a draft project of municipal law was drawn up that establishes two main types of competences: own and shared. Own competences include most of the competences established in current law and others taken from the 2016 study (including regulating and managing the maintenance and use of green spaces, gardens and parks; regulating and managing the protection of hygiene and public health). Shared competences are those that correspond to the function of central public administration, except for those that the Constitution assigns exclusively to central government (including regulation of vehicle and pedestrian traffic on urban and rural roads, regulation and management of potable water and residual water; public health, public safety). This project has not yet been presented to Congress.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Municipal level
1. General public services (administration)
2. Public order and safety	Municipal police; civil fire brigade, urban signage
3. Economic affairs / transports	Urban roads; urban transport, urban planning, street maintenance, country roads, markets, cemeteries, slaughterhouses
4. Environment protection	Parks and green spaces, waste management, public road cleaning
5. Housing and community amenities	Construction/renovation public lighting, town planning, urban development and housing
6. Health	Preventative measures such as fumigation and vaccination, in coordination with the Ministry of Public Health
7. Culture & Recreation	Sports, libraries, local museums, cultural centres, music bands
8. Education	Adult literacy measures in coordination with the Ministry of Education and general civic education
9. Social Welfare	Social protection for children and young people, family support services, student grants and help for the homeless

Scope of fiscal data: 124 municipalities and 151 municipal districts

SNA 2008

Availability of fiscal data: Medium

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: Municipal finances in the Dominican Republic largely rely on the transfer of resources from central government and, to a lesser extent, on direct revenue collection efforts by local governments. The Municipal Revenue Act 166-03 should regulate the amount and allocation of the transfers from central government but in practice it is not applied correctly. However, from 2021, the central government has significantly increased the resources transferred to local governments in an attempt to comply with Act 166-03, which stipulates 10% of the current revenue of central government. Two fundamental principles set out in Act 176-07 provide the framework for municipal finances: (i) financial sufficiency (Art. 254) - “The councils have the right, within the framework of the national political economy, to have sufficient resources of which they can freely dispose in the exercise of their competences”; (ii) financial autonomy (Art. 255) - “The councils will have autonomy to establish and collect taxes in accordance with the provisions of the Constitution and the law”.

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	76	0.4%	2.0%	100.0%
Inc. current expenditure	66	0.4%	1.9%	86.3%
Compensation of employees	31	0.2%	3.5%	40.3%
Intermediate consumption	23	0.1%	5.6%	30.0%
Social expenditure	-	-	-	-
Subsidies and current transfers	3	0.0%	0.2%	4.5%
Financial charges	0	0.0%	0.1%	0.5%
Others	8	0.1%	-	11.1%
Incl. capital expenditure	10	0.1%	2.4%	13.7%
Capital transfers	0	0.0%	0.1%	0.1%
Direct investment (or GFCF)	10	0.1%	3.9%	13.6%

EXPENDITURE: In 2020, local government expenditure represented 2.0% of total public spending and not quite 0.4% of GDP. 86.3% of local government spending is spent on current expenditure and 13.7% on capital expenditure. Most of the resources destined for current expenditure are used to pay salaries (40.3%) and buy the necessary supplies to provide the services that correspond to their competences (30.0%).

Art. 21 of Act 176-07 establishes 60% for current expenditure and 40% for capital expenditure. However, since they do not receive the resources laid down in Act 166-03 via central government transfers, local governments have to use a large part of the resources destined for capital expenditure to cover their current expenditure.

DIRECT INVESTMENT: Due in large part to the lack of the necessary transfers from central government as laid down in law, the direct investments of local governments have declined in recent years. They have dropped from 19.1% of local government expenditure in 2017 to 13.7% in 2020. This trend was due to be reversed in 2021, since central government decided to increase its transfers in accordance with the law.

Subnational government expenditure by functional classification
2020 consolidated central government expenditure	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure by economic function	68	0.4%	-	100.0%
1. General public services	24	0.1%	6.8%	35.6%
2. Defence	-	-	-	-
3. Security and public order	2	0.0%	1.1%	2.7%
4. Economic affairs/transports	12	0.1%	2.8%	17.2%
5. Environmental protection	22	0.1%	10.9%	32.6%
6. Housing and community amenities	1	0.0%	1.9%	2.1%
7. Health	0	0.0%	0.1%	0.6%
8. Recreation, culture and religion	2	0.0%	9.6%	3.3%
9. Education	1	0.0%	0.1%	0.9%
10. Social protection	3	0.0%	0.4%	5.0%

In 2020, the bulk of local government resources were allocated to general public services. This item represented 35.6% of the expenditure of the municipalities and municipal districts. The second largest item of expenditure went on environmental protection, specifically the protection of biodiversity and waste management, making up 32.6% of total expenditure (according to the data of DIGEPRES, local governments spend more than central government in this area). The line showing economic affairs/transports (17.2%) includes the costs of fuel, transport, energy, infrastructure construction projects and commercial and labour costs. Expenditure on defence and security and public order as well as housing, health and education is assumed by central government. Local governments invest less money on these concepts.

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	78	0.4%	3.0%	100.0%
Tax revenue	7	0.0%	0.3%	8.9%
Grants and subsidies	61	0.3%	-	78.3%
Tariffs and fees	10	0.1%	-	12.3%
Income from assets	0	0.0%	-	0.2%
Other revenues	0	0.0%	-	0.3%

OVERALL DESCRIPTION: The local governments of the Dominican Republic have limited autonomy and little control over their revenue. They are highly dependent on the transfers from central government.

In 2020, the local governments collected USD 6.9 PPP per inhabitant in tax revenue and USD 9.5 PPP through tariffs and fees; in other words, almost 20% of their revenue came from these concepts.

At USD 61 PPP, transfers from central government represented 78.3% of the municipal revenues in 2020. The transfers are calculated based on the size of the population as the sole criterion for distributing the resources, thus favouring the most populous municipalities.

The draft version of the Organic Law of Local Government that is currently being revised includes various tax concepts which, if approved, would help to improve local government taxation. These include: “Authorisation of public events; Municipal permission to operate economic activities open to the public; Co-participation of local governments in property taxes”.

TAX REVENUE: The local governments do not have full authority to collect the municipal taxes to which they are entitled. The main local tax rules are applied to construction projects, public performance, mortgage registration, civil registry of real estate and property operations, conditional sale of property, hotel taxes, exploitation of natural resources and collection of electricity bills. Both the 2010 Constitution and the National District and Municipalities Act hinder the creation of new taxes. For example, the law states that municipal councils may not levy taxes that may conflict with national taxes, inter-municipal or export trade, or with the Constitution or the laws of the Republic.

Although the municipalities and municipal districts are governed by the same tax rules, there are great differences when it comes to applying them. Larger municipalities of provinces such as Distrito Nacional, Santo Domingo Este and Santiago have the opportunity to collect relatively significant quantities of taxes and fees (through the collection of solid waste, advertising, land use permits, transport of materials, etc.), while medium and small municipalities lack the mechanisms or tax sources to collect such taxes in sufficient quantity. Moreover, in the majority of the medium and small municipalities, the economic activities are conducted informally, which affects their tax base.

GRANTS AND SUBSIDIES: According to the Municipal Revenues Act 166-03, since 2005, the central government is obliged to transfer to the municipalities 10% of the current revenue included in the general government budget (Art. 3). However, this provision has not been respected and from 2008 to 2017 a fixed amount was transferred each year. In the years 2018 and 2019 the central government ordered a small increase to the amount of the transfers, and from 2020 the government began implementing a gradual increase. Despite the increased amount that has been transferred from 2020 onwards, in 2022 the transfers still did not reach 3% of the current income of central government. In addition, the central government awards special sums for the acquisition of equipment and for infrastructure construction projects (the specific sums involved are not made public because they are awarded on a discretionary basis). In 2020, current grants accounted for 60% of the total grants to local governments, compared to 40% for capital grants.

OTHER REVENUE: Local governments, especially those of larger cities, collect a number of taxes and fees for solid waste collection, permits for use of public spaces, market services and slaughterhouses, among others. The fees and their respective tariffs are established through municipal ordinances prepared by the local administration and approved by the municipal council.

ⓘ No detailed data available for this country

FISCAL RULES: The public sector budgetary rules are established in the Organic Budget Law 423-06, complemented by the National District and Municipalities Act 176-07. The former contains the general rules, mechanisms and instruments of the public sector budget process and empowers the Directorate General of Budget to set the additional rules, guidelines and regulations related to matters of budget. The same Law 176.07 stipulates that 60% of the revenue of the municipal governments is destined to current expenditure and 40% is for capital expenditure. It also states that as part of the current expenditure, 25% should be set aside for personnel costs, 31% for expenditure on services and 4% for expenditure on education, gender and health.

DEBT: With respect to borrowing, local governments must apply the provisions of Act 6-06 on Public Credit, which stipulates that all public entities must submit their applications for internal and external loans through the Directorate General of Public Credit. If deemed appropriate, the Directorate authorises the processing of the loan by the National Congress, in charge of issuing the final approval. According to the figures presented in the formulation of the budgets in the year 2021, local government debt in 2020 totalled RD 2130 million (~USD 93 million PPP or USD 8.5 PPP per inhabitant). However, it is unlikely that this value reflects reality because most local governments do not have reliable control over their debts and do not present them in a transparent manner.

TERRITORIAL MANAGEMENT OF THE CRISIS: Following the declaration of a pandemic by the WHO, from March 2020 the national authorities put in place a series of restrictions in order to avoid the spread of the virus among the population and to reduce the effects of COVID-19. These restrictions included the cessation of all production activities with the exception of those businesses dedicated to the sale of food and medicines. In line with Art. 262 of the Constitution, all the extraordinary measures are decided by the president of the Republic once the law has been passed by Congress. Local governments do not have the power to declare or establish extraordinary measures according to the Constitution. The restrictive measures were renewed at the end of each period approved by Congress (45 days).

Most manufacturing activities were paralysed in 2020, and this situation continued to some extent through 2021. On the basis of the positive effects of the vaccination programme, the national government began reactivating the economy in 2021, authorising the opening of shops and crucially tourism as a way of returning the country to a normal level of activity.

Drawing on the law that creates a state of emergency and the issuing of the enabling act by the executive power, and following the instructions of the executive power transmitted through the Ministry of Health, local governments embarked on programmes of disinfection in their respective territories as well as educational campaigns aimed at helping citizens avoid getting infected. The local governments and the bodies that represent them (FEDOMU and the Dominican Municipal League) had no say in the actual decisions that were taken but were only involved in the application of the measures.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: The national government implemented a series of social programmes to provide support to the people most affected by the restrictive measures adopted across the entire country. A programme of coordination with private enterprise was set up to pay employees suspended from work due to the cessation of business. By this means, the government paid up to USD 5 000 (current dollars) a month to each worker, with the remainder paid by the employer. Likewise, the amount of the “Comer es Primero” (Eating comes First) programme was raised from USD 1 500 to 5 000 through the “Solidaridad” card, benefitting more than 800 000 families. The “Quédate en Casa” (Stay at Home) programme was also set up to benefit casual workers who were unable to carry out their work activities due to the restrictions. This programme consisted of providing more than 350 000 households with USD 5 000 a month, as well as food parcels for families with school age children who were unable to attend school.

Local governments played an active role in implementing these programmes, but only in terms of logistics, helping to identify those affected.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Although the resources originating from the transfers from central government to the local government remained in place, the same was not the case for local tax collections, which fell drastically due to the fact that most businesses and industries were closed and infrastructure construction projects were paralysed during 2020 and much of 2021.

The financial position of local governments could remain relatively stable thanks to contributions from the central government in the form of extraordinary transfers to cover part of the running costs for basic services.

ECONOMIC AND SOCIAL STIMULUS PLANS: The United Nations system in the Dominican Republic supported the central government in the formulation of a “Strategic Response Plan for COVID-19”. This plan, published in June 2020, lasted for 18 months at an estimated cost of USD 40.8 million (current dollars). It focussed both on the response to the immediate and most urgent needs in the area of healthcare and other sectors directly affected by the crisis (access to basic services and protection of the vulnerable population) and on the interventions required to respond to the socio-economic impact in the medium and long term. It was made up of 8 sectoral plans, with the 3 main ones being health (USD 4.2 million), food and nutritional security (USD 18.2 millions) and economic recovery (USD 15.1 million).