Dominican Republic On Edge Of Default

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: SANTO DOMINGO— The Dominican Republic is coming close to a default on its foreign debt as the incoming administration of Leonel Fernandez, who assumes the presidency this month, positions itself to grapple with an economic crisis.

Signs of increased hardship are evident throughout this capital city of 2 million, with prices for basic foods nearly doubling in the last year. Shortages of gasoline and propane have idled many automobiles, and electricity blackouts last as long as 20 hours.

The outgoing administration of President Hipolito Mejia, trounced in a re-election bid in May, has come under criticism for using public money to compensate a relatively small number of depositors who stood to lose from several bank failures in the last year. That bailout cost the government an amount equivalent to about a fifth of gross domestic product.

Meanwhile, Fernandez, who served a previous term as president in the 1990s when the Dominican Republic was one of Latin America’s fastest-growing countries, is under pressure from international creditors to rapidly come up with a plan for dealing with a string of costly bank failures and soaring prices for imported oil and natural gas.