The call came on a Tuesday afternoon in early May, just days after the term sheet was signed. A senior associate at a mid-sized U.S. Private equity firm, based in Miami, was on the line with an urgent question: How exactly did the Dominican Republic’s Central Bank classify the currency restrictions applied to the newly acquired manufacturing plant in Santo Domingo Norte?
The acquisition—announced in late April by a consortium led by a Delaware-based fund—had been framed as a strategic entry into the Caribbean’s fastest-growing industrial corridor. But behind the press release, due diligence teams were now scrambling. The plant, a former textile operation repurposed for medical device assembly, had been operating under a 2023 exchange control decree that limited hard-currency repatriation for foreign investors. The decree, issued under President Luis Abinader’s administration, had expanded capital controls to stabilize the peso amid a 15% depreciation over the prior 12 months. What the acquirers hadn’t anticipated was the decree’s Article 12(b), which required prior approval for any transfer exceeding $500,000—even for routine operational expenses like supplier payments or payroll.
The private equity firm wasn’t alone in facing this reality. Since the decree’s rollout in January, at least three other cross-border deals—including a $42 million logistics hub in Puerto Plata and a boutique hotel portfolio in Punta Cana—had stalled in finalization. In each case, the stumbling block wasn’t valuation or debt structuring, but the IMF’s growing skepticism over the government’s ability to enforce the controls without triggering capital flight. The fund’s legal counsel, based in Santo Domingo, had spent the prior week reviewing internal memos from the Central Bank’s Foreign Exchange Division, which confirmed that approvals for transfers above the threshold were being granted in weeks, not days—a delay that could violate the acquirers’ financing covenants.
The issue wasn’t just procedural. The decree had been introduced as part of a broader economic package to address a $12 billion fiscal gap projected for 2024, exacerbated by a 7.8% contraction in tourism revenues and rising debt service costs. But private sector officials, speaking off the record, warned that the controls were creating a two-tiered market: foreign investors faced arbitrary delays, while domestic conglomerates—many with ties to ruling-party elites—received expedited processing. “The problem isn’t the law itself,” said a former Central Bank director, now advising a rival fund. “It’s the enforcement. And enforcement is political.”
By late May, the private equity firm had two options: renegotiate the purchase price to account for the delayed liquidity, or abandon the deal entirely. They chose the former, cutting a revised agreement that included a earn-out clause tied to the bank’s approval timeline. But the episode highlighted a broader trend: in an era where Caribbean nations are competing for foreign direct investment, the Dominican Republic’s currency controls were emerging as an unintended barrier—not just for acquirers, but for the government’s own economic diversification goals.
The Central Bank declined to comment on individual cases, but in a statement to World Today News, a spokesperson confirmed that as of June 1, pending transfer requests totaling $380 million remained unresolved. Meanwhile, the ECLAC had flagged the Dominican Republic in its latest report as one of three Caribbean economies where foreign investment had stalled due to “administrative friction.” The question now, for both investors and policymakers, was whether the controls would be tightened further—or whether the government would prioritize easing restrictions to avoid deeper economic isolation.
The next scheduled meeting of the Economic Policy Committee, convened to review the decree’s impact, is set for July 15. No decisions have been announced.
