Ecuador plans to lose 2,500 million in oil and a fall of 4% of GDP



The Government of Ecuador predicts a level of losses from oil revenues of 2.5 billion dollars (2,287 million euros) and a fall of at least 4 percent of GDP this year, due to the collapse in oil prices and the impact of the coronavirus pandemic on the national economy.

"Oil revenues will fall by 2,500 million (2,287 million euros) and tax revenue by 1,800 million more (1,646 million euros). The economy could decrease by more than 4 percent" of Gross Domestic Product (GDP), assured the Economy Minister Richard Martinez in a radio and television message.

The minister insisted on a "Resistance, Reactivation and Recovery" plan that the government has designed to face what he has called the triple "health, economic and social" crisis that the country is facing.

After insisting that the Executive has deployed some 760 million dollars (695 million euros) in health acquisitions to stop the spread of COVID-19 contagion in the country, he recalled that he has started with the distribution of a "protection bond "for 60 dollars a month (54 euros) to a million poor families.

Regarding the "reactivation and recovery" plan, Martínez said that the country's economy does not have the strength of neighbors such as Chile, Peru or Colombia, so the response to face the shocks of the health emergency will be subject to reality.

The dollarized Ecuadorian economy, he said, "does not have fiscal space, does not have public savings, does not have sufficient international reserves, does not have access to markets, and cannot expand credit if it does not receive dollars from abroad."

That is why he indicated that the reactivation will depend on the resources that can be obtained abroad (debt), as well as the collective effort and the "reduction of unnecessary public spending."

However, he said that, in order to provide oxygen to the population and to private companies, whose activity has deteriorated due to the massive and compulsory home isolation, the Government plans to defer the payment of taxes, implement telework, among other measures.

Likewise, the payments of employer contributions to social security will be deferred and long-term lines of credit will be created at interest rates that do not exceed 2 percent, with the aim of "sustaining jobs".

The Government will also promote agreements between employers and workers to sustain employment in the country.

"For example, to avoid layoffs, new wages may be agreed, different working hours may be agreed, as well as extensions of terms and grace periods for debts," added the minister.

In addition, he said that to the contributions that have been requested from workers and private companies, a contribution of 10 percent will be requested from public employees who earn more than 1,000, with the exception of the servers of the health, police and police forces. armed and education.

He argued that when the special regime of "agreement between the parties" ends, permanent labor standards should be applied to achieve "growth with social equity."

The entire economic plan of the Government requires the support of the National Assembly (Parliament), Martínez said after recalling that Ecuador and the world "are going through exceptional circumstances" with the presence of an "invisible enemy" such as the coronavirus.

"The road is difficult, but if we all support and yield positions, there is light at the end of the tunnel," the minister concluded.

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