Deputy Minister of Finance Daniel Lemus assured the judges of the Constitutional Court (KS) that the Government’s proposal eliminate the interest on the national debt with the Ecuadorian Social Security Institute (IESS), Because of the 40% contribution to retirement pensions, it “does not affect” the entity’s rights.

The approach is contained in the Organic Decree on the Emergency Economic Law for the Balance, Organization and Transparency of Public Finances, which was signed by President Guillermo Lasso on September 5, and is now being analyzed in court to determine whether the content of the norm complies with constitutional parameters and it’s urgent.

Lemuš appeared before the Constitutional Court on the morning of Tuesday, September 26, during a public hearing that was held electronically.

“Social security rights are not affected at all. I do not understand why they could be influenced, if they are established by law. Those interests are not funds that are transferred to social security, nor are they registered anywhere,” the official answered a question from one of the judges.

The deputy minister said that the current law It does not clearly establish how interest should be calculated. “They give some general parameters there, but they don’t say since when,” he noted.

He explained that the amounts of the state contribution of 40 percent are not paid at the end of the month, but only after a month and a half because there is a data verification procedure.

“When do you charge me interest, from the first day or from the moment of data verification?” It talks about the returns it should have, but what is that return and what should be considered; (the norm) doesn’t say anything,” Lemus insisted.

In addition, he indicated that the total amount of the national debt has not yet been defined. That the Ministry of Economy and Finance (MEF) works with IESS to determine this value. He said that there is no calculation or nostrification of interest in MEF; while IESS indicates that it is Interest is around 1,080 million dollars, and the debt is close to 3,000 million dollars.

Lemus stated that the Government’s intention with the proposal “is Unlock those ways you can transfer resources to IESS. This is what is urgent at this moment,” he emphasized to the judges.

Regarding another proposal for the state to pay 33.33 percent to the IESS tripartite solidarity fund for the treatment of catastrophic diseases, the Deputy Minister of Finance pointed out that the current regulations do not prescribe how the transfers should be made.

Miriam del Carmen Toro, the lawyer of IESS, also appeared at the hearing. He pointed out that the legal decree has “inconsistencies with constitutional norms”. He explained that non-payment by the state caused a decapitalization of social security, prevented investment, affecting the funds, reserves and financing of IESS benefits.

The prosecutor pointed that out The total debt has been calculated and amounts to 3000 million dollars, while interest for the contribution amount of 40%. 1.129 million dollars.

Budgets for health and education

Another of the proposals of the decree of the law is change the formula for calculating the increase in budget allocations for education and healthbe based on the total budget.

The Constitution stipulates that each year the budgets for health and education must be increased by an amount corresponding to 0.5% of the gross domestic product (GDP). Increases must be implemented until they reach 6% of GDP, in the case of the education sector, and 4% of GDP, in health.

Regarding the measure contained in the legal decree, the Deputy Minister of Finance stated that it is not intended to violate the Constitution because the increases will continue, but the intention is to “The calculation is based on accruals, that is, the actual capacity that the state of Ecuador had to finance all costs, including health and education.”

However, he admitted it Calculated values ​​may be lower or reduced “in case of economic crisis”, and the necessary financing has not been secured to cover the costs.

“The only case in which this number could be lower, or could decrease, compared to what is expected is if it there was no funding to be able to specify that cost that is there. And these are situations that can happen, if you have them economic crisis, external shock or economic growth not going according to the expected dynamics“, warned Daniel Lemus.

Near the Constitutional Court, in Quito, there are members National Union of Educators (UNE), labor unions and pensioners’ groups to protest the rejection of the decree law. There were also marches in Guayas, Azuay and Santo Domingo.

They demanded that the constitutional judges not allow the implementation of the reforms because it would cause about one billion dollars in damage to the education sector, affect public health and deepen the social security crisis.

Isabel Vargas, president of UNE, reminded that the Court’s resolution from 2021 establishes that the Organic Law on Education is fully constitutional, and Article 20 states that “The budget for education is progressive and irreducible and if the whole budget is not carried out, a new budget for the next year will be added to it.” “We are looking for consistency from the nine judges. “We are awake here,” said the leader.