Which are the municipalities, prefectures and parish governments that received the most money in 2022 and what controls exist on their spending?

The municipalities of the largest cities in the country are the ones that receive the most resources at the time of the distribution of the budget for the Decentralized Autonomous Governments (GAD) that comes from the State every year. When examining the list of the budget assigned by the Ministry of Economy and Finance, a kind of ranking of which were the sectional governments that have handled the most money.

Regarding the municipalities:

• The capital of Ecuador, Quito, with $335 million.
• Guayaquil with $297.6 million.
• Basin with $56.1 million.
• Santo Domingo with $44.3 million.
• Ambato with $38.2 million.

They are the cities that managed the highest budgets in 2022, according to the settlement of the third quarter established by the Ministry of Economy and Finance. In total, the 221 municipalities in the country received $2,112 million in 2022.

A few weeks away from holding a new electoral process (which will take place in February 2023), it is important that citizens know how these resources reach the sectional governments and what are the controls they have for their management.

It is that the budgets of the 2022 for prefectures, municipalities and parish governments in the country will end up costing the State some $3,114 million, according to the data of Finance. Meanwhile for the budget of the In 2023, the assigned resources will reach $3,708.58 million (according to the proforma).

But where do the resources come from? According to the law, the Decentralized Autonomous Governments (GAD) take each year at least 21% of the permanent income of the State (mainly taxes) and 10% of the non-permanent (oil). For example, in the general structure, permanent income for 2022 would reach $13,003.8 million, while non-permanent income would end at $3,114.3 million. Of these figures, what corresponds to the GAD are $2,730.8 million for permanent income and $311.4 million for non-permanent income.

Meanwhile, to the provincial governments, in 2022 $851 million were distributed for 24 provinces. The ones that received the most were:

• Guayas with $158.8 million.
• Pichincha with $97.4 million.
• Manabí with $81 million.
• Gold with $36.6 million.
• Emeralds with $36.3 million.

And finally for the 1,499 rural parishes allocated $189.2 million in 2022. Of the five that received the most money, three belong to Quito and are:

• Calderón with $2,253,464 (Quito).
• I know with $ 1,232,926 (Quito).
• Tumbaco with $895,509.08 (Quito).
• Colonche with $837,560.14 (Santa Elena).
• La Union $794,390.12 (Quinindé).

In accordance with Jaime Carrera, executive secretary of the Fiscal Policy Observatory (OPF), The flows that reach the Decentralized Autonomous Governments (GAD) are regulated by various laws. The first is the Organic Code of Public Finance Planning, as well as the Cootad Law. The way to distribute resources is based on variables, obligations, unsatisfied basic needs, among others. This is the Territorial Equity Model. However, he comments, that at the moment the question remains whether this form of distribution is fair or not. It is that there have been voices that have been raised saying that it is not the best way and that rather it benefits the governments that execute less and ends up punishing the most efficient ones.

For Carrera, the delivery of resources to the GADs is a very important part of the budget. Even more so if one takes into account that only between the GAD (with 21%) and the universities (which take 10% of permanent expenses) already have 30% of the budget pre-assigned. In this sense, he considers that it is complex for the State to manage finances with such an important item already pre-assigned.

Despite the significant amount of resources, Carrera says that, under the pretext of autonomy, there is no real cost control. “They could spend the same on basic needs, such as parties, or superfluous expenses.” This has given rise, he maintains, to a political management of resources. He comments that the issue of spending by sectional governments is one of the most opaque issues in public finance. He even recalls that the management of the figures of the Non-Financial Public Sector, which includes that of sectional governments, was one of the observations made by the International Monetary Fund (IMF) and that it cost the country a very important correction of figures, in order to be able to continue with the agreements.

Meanwhile, The General Comptroller of the State, in accordance with the Constitution and the law, in exercise of its faculties, will control and oversee the use of public resources assigned to the provincial, municipal and rural parochial GADs. However, the control entity can hardly keep up with the number of sectional governments that exist.

In the article 198 of the Cootad indicates that the destination of the transfers must go to permanent expenses only in 30% and that 70% must go to investment, that is to say to public works. In the case of parishes that receive less than 580 basic salaries as a budget, they must allocate 170 salaries to permanent spending. The non-permanent expense cannot be less than 200 basic salaries.

For Carrera, it is important to highlight that the central government has, for a few years, the power granted by the Public Finance Regulation Law to hold sectional governments to account; but unfortunately it does not exercise it.

Regrets that currently the law is not being complied with regarding the percentages of permanent and non-permanent expenses. He assures that personnel expenses are very high and are often poorly recorded in investment accounts.

In any case, the Ministry of Economy and Finance during the current administration has sought to catch up with the GAD, as part of his proposed fiscal order with a social focus. In previous governments several debts were allowed to accumulate against the GAD. Thus, the ministry has been periodically reporting the payment of historical debts to the GAD, both for VAT, irrigation powers and Fingad agreements. According to Finance, in November $274 million were paid to the GADs for the Territorial Equity Model and thus there has been no delay in this item. (YO)