August 7, 2020

Ecuador announces economic measures to contain the effects of coronavirus

The Government of Ecuador announced on Tuesday that it will apply a set of economic measures to contain the financial effects generated by the coronavirus epidemic and the fall in the price of oil.

The president of Ecuador, Lenín Moreno, in a radio and television network, said that the measures will be for the reduction of state spending, a single vehicle tax, a special contribution from public employees, the improvement of the foreign debt service and other fiscal decisions.

The president said that the global coronavirus disease is generating a crisis worldwide and, according to him, “has hit Ecuador hard.”

According to health authorities, there are 17 positive cases for COVID-19 in the country, most related to an initial patient, an older woman who came from Spain on February 14.

President Moreno gave an example of the effects of the epidemic on the case of oil, the price of which has fallen more than 32 dollars per barrel in recent days.

He recalled that the state budget was calculated with an average price of crude oil of $ 51 per barrel, but remarked that the current price is $ 33.

“Every day we lose just over 8 million dollars a day in revenue,” an amount that could add up to 2.9 billion a year, Moreno added, noting that this scenario puts the entire “economy” at risk.

Therefore, he announced the package of measures, which will not include the targeting or elimination of gas subsidies or an increase in taxes, as feared by productive sectors and unions.

In addition, he insisted that “we must all contribute” to move the country forward, except the poorest in society.

He pointed out that public servants will make a small and unique contribution to salary, a measure that, in his opinion, will prevent the dismissal of “tens of thousands” of officials.

He also said that owners of vehicles that cost more than $ 20,000 must pay a contribution, only once, of 5 percent of the total appraisal of the car.

Moreno said he will also define a process to improve the conditions of the foreign debt and said that loans are managed for about 2 billion dollars with terms and rates in better conditions than those offered in the market.

It will be requested that a part of the maturities of the bilateral debt with other States adapt to the needs of the country, added the governor who has also decided to increase the retention at the source of the Income Tax in companies by 0.75 percent from the banking, oil and telecommunications sectors.

The president, whose management is closely linked to banking and business, praised the national financial sector which, he said, has strengthened its level of international reserves.

He also said that to directly address the epidemic of the coronavirus, he has obtained some 60 million dollars of specific funds from international organizations for such situations.

“Together we are going to get ahead,” Moreno said, emphasizing that his decisions are backed by multilateral organizations and the international community.

He also said that the economic measures he adopted at the end of last year, such as the elimination of the fuel subsidy, sought, according to him, to deal with situations such as the current one, but then agreed to repeal them for social peace in the country.

He referred to the harsh protests that led the social organizations between October 3 and 13, against the elimination of gasoline subsidies, demonstrations that ended with a dozen dead and more than a thousand injured, according to the Ombudsman’s Office .

Precisely, the Confederation of Indigenous Nationalities (Conaie), the main organization calling for these protests, said today that it will analyze the Government’s measures to define a position regarding the adjustments.

In that same tone, the unions have reacted, which have rejected adjustment measures that affect the population and have demanded that a greater tax burden be imposed on the wealthy sectors of the country.


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