Here's How Bad the Deficit Problem Is in the Dominican Republic

If the Dominican Republic does not decrease its deficit, it will be more expensive for the country to borrow money from banks, and to sell bonds. These funds are crucial to jumpstarting poverty reduction programs and education initiatives that the country needs and that Medina had promised to deliver during his presidential campaign.

Szterenfeld also added that while protests against the fiscal reforms have gained some momentum in recent days, they are not likely to turn into a massive social movement that will destabilize the current government.

Protest numbers have indeed been modest, with just 6,000 people attending the protest at Santo Domingo's Independence Park, according to local media reports. Even if pictures from the crowded site look impressive, it's worth noting that more than two million people live in Santo Domingo's metropolitan area.

Another key factor is that people in the Dominican Republic are not losing their jobs at record speeds like in Spain, or Greece.

In fact, the economy of the Dominican Republic has been performing rather well. Propelled by tourism, mining and manufacturing, its economy has attained one of the fastest growth rates in Latin America over the past three years, and grew by 4.5 percent in 2011.

The country could actually be able to "grow itself out," of the deficit problem if the economy continues to work well, and if the government gets more strict with how it spends its money.

Szterenfeld said that the timing of these fiscal reforms, right at the beginning of President Medina's four-year term, is rather interesting.

"He's trying to get the painful [part] done now," she said. "Once he's able to get the public finances in order, he should be able to start doing the things he was elected for."

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