Leonel Fernández, who left the presidency of the Dominican Republic four years ago, returns to office as an economic crisis grips the nation.

BY PETER PRENGAMAN

Associated Press

SANTO DOMINGO, Dominican Republic - Four years after stepping down as the Dominican Republic's president, Leonel Fernández returns today, promising improvements as the Caribbean nation suffers its worst economic crisis in decades.

Economists warn that a turnaround will require painful sacrifices. Fernández's government inherits $6 billion in foreign debt, worsening power outages and a desperation among the poor that is driving thousands to risk illegal voyages by boat to the wealthier U.S. territory of Puerto Rico.

U.S. authorities have intercepted more than 7,000 Dominicans trying to reach Puerto Rico in the past 10 months.

Last week, authorities rescued 39 Dominicans who drifted for 10 days after their motorboat broke down on the way to Puerto Rico. Forty-seven others disappeared at sea -- many of them jumping overboard in desperation -- and eight died of dehydration after being rescued.

HURDLES LIE AHEAD

Fernández, whose 1996-2000 term as president was marked by an economic boom, trounced incumbent Hipólito Mejía in the May election after promising a return to stability.

But economists say that cannot happen quickly, given 16 percent unemployment, 32 percent inflation and a Dominican peso that has lost half its value against the dollar in two years, doubling prices in the import-dependent Caribbean nation of 8.8 million people.

''This crisis will last at least two years and will be painful,'' said Miguel Ceara-Hatton, an economist with the U.N. Development Program in Santo Domingo.

Economists say a turnaround requires steep tax increases and spending cuts, meaning fewer social services, government jobs and subsidies for electricity and gas.

Fernández is expected to present a blueprint for such changes in his inaugural address this morning. So far, he has been mum on details.

More than a dozen heads of state and ex-presidents are scheduled to attend, including former President Carter and Brazilian President Luiz Inácio Lula da Silva.

POLITICAL COMEBACK

Fernández left office in 2000 because of a single-term limit that later was rescinded. He stepped down amid a scandal involving $100 million that allegedly disappeared from a government fund. He denied wrongdoing, but successor Danilo Medina was defeated easily by Mejía in 2000.

Many Dominicans now say they are frustrated with Mejía, who blamed his troubles on a tourism lull after the Sept. 11 attacks and on a 2003 bank scandal that cost the treasury $2.2 billion.

One key obstacle for Fernández will be his Dominican Liberation Party's minority in Congress.

He has backed a proposal to raise taxes 10 percent to 20 percent on tobacco, alcohol, phone services and international travel, but it has stalled in the Senate, where Mejía's Dominican Revolutionary Party holds 29 of 32 seats.