The Minister of Economy and Finance Pablo Arosemena assures that this Government has paid 4.989 million dollars of historical debts of the two previous governments, between 2015 and 2020. The current situation is affected by the drop in the price of crude oil and high international rates and therefore there will be some 1.7 billion dollars unpaid obligation. Ecuador’s Institute for Social Security (IESS) has been paid more than $4.2 billion as part of historical debts and current payments, but has not confirmed whether there will be an opportunity to pay more this year.

You announced that in these two years, several debt payments of past governments were made, what was done?

We are the government that has paid the largest amount of historical debts, and I will explain this in detail. We paid $4.989 million in historical debt and arrears. These items are not debts created by this Government. We have paid Social Security $1.253 million for debts from 2011 to 2020. We have paid GAD $690 million for debts from 2015 to 2020. I would like to stop, this is in addition to current payments, since these are historical debts. We have paid about $80 million to Armed Forces and Police Social Security since 2019 and 2020. $59 million in debt to universities has been paid since 2016, and $309 million from 2016 has been paid due to litigation. An important payment is the one made to the Central Bank which the socialism of the 21st century took away from it, they left a big gap and we managed to pay 2.026 million dollars. In addition, we have paid out $516 million in retirement incentives since 2008.

Fulfilling all these debts meant that you have arrears in payments that suit you, how deep are they?

We have caught up with GAD, we are not only paying backwards, but we are up to date with the model of territorial equality. This is the merit we have returned, but also the present one. As of May 2021, we have transferred $4.230 million to Social Security, of which $1.253 million has been used to pay down prior historical government debts and the remainder for ongoing payments. If they hadn’t returned it, we as the government would have been in the loop. To put it in perspective, in 2015 the Government of the time remitted 56 million dollars; In 2016, they gave $27 million; In 2017, they gave $43 million: in 2018, $41 million was paid. In 2021, we transferred 1.108 million dollars, and in 2022, 2.458 million dollars. In 2023, 665 million dollars were transferred. It is incredible how that government transferred less than 150 million dollars in four years, and 4.23 billion dollars in two years.

State debt to IESS of $10.151 million puts pension payments at risk and weakens fund, authorities warn

Was it then a problem to cancel 40% of those years and leave the pension fund without parents?

It was a mistake, and Ecuador is still paying the bill for the mistakes, fallouts and waste of 21st century socialism. They spent both what they had and what they didn’t have, and we had to fill that void.

They tried, but despite that there is a debt to IESS and since that fund is so affected, there is some plan to pay off the debt.

We are the government that transferred the most to social insurance. In addition, Social Security has its own resource generation. Biess has $26 billion in assets. However, we prioritized spending on social impact. It must be taken into account that oil revenues have fallen, but due to the global rise in interest rates, interest payments have also increased. Therefore, there is a liquidity shortfall of $1.5 billion. The government prioritized the security budget and set aside 3.4 billion dollars, 250 million dollars more than last year, and expenditures due to the El Niño phenomenon, such as strengthening school infrastructure, housing and roads, are also priorities.

Wouldn’t you then consider making new payments to IESS?

I would insist that no one has transferred as many funds as this Government. I would insist on that answer.

What the state owes the IESS is $1,429 million for pensions and health insurance that is due in 2023.

And faced with this reality, how big will the deficit be in 2023?

We have a projection for 2023 of about 3.2 to 3.5 billion USD, which in percentage terms is 2.5% or 2.6% of GDP. Before this government, the deficit was 7.7 percent. A conceptual issue that must be known is that in 2022, many experts spoke about the fact that the Government must open its arms and spend more, and not control the deficit. Despite the reality of lower oil revenue sources, higher debt interest payments, despite renegotiating the debt with China and having done a debt-for-nature swap and reduced the debt by $1000 million, we have provided more resources to Security. As a reminder, we hired 10,000 new police officers, thousands of teachers and other resources for social investment. The deficit also depends on how the price of crude oil will behave in the next three months, which is now on the rise, but there is still little time left to make up for the entire first half of the year when oil was low.

In terms of debt, what would be the second category, how soon will it be closed, if they are currently at $1.7 billion?

We are receiving a Government with more than $3.6 billion in arrears and we will be able to reduce that number, maybe get closer to the number you mention. In addition to tax and debt reductions, we reduced 19 taxes, which represented a reduction of $600 million for the national treasury, but which went to the manufacturing sector and this increased sales and therefore increased collections. We don’t just lower taxes, we collect more of them.

IESS said that they will not be able to finance the Government if more is not paid, did you hope that Biess would finance you more this year?

Our financing program is public and we submit it to the Assembly. I would like to make a record of the relationship between Government payments to IESS and investment in IESS. In 2015, Biess bought securities from the state for $850 million, but that government paid him only $56 million. In 2016, investments amounted to 880 million dollars, and the government paid 27 million dollars. In 2017, Biess invested $775 million and the government paid him $44 million, in 2018, $480 million was invested and he was paid only $42 million. On the other hand, in 2021 Biess invested 1,098 million dollars, but the Government paid 1,341 million dollars, i.e. more than what they invested. And last year, Biess invested 2.540 million dollars, and the government paid 2.458 million dollars to IESS. You can clearly see, there are additional resources, and we have paid all the interest, which is 700 million dollars of securities this year. Previous governments took money from IESS and did not pay it.

What will be the need for financing in 2024? You said there are some lines of credit that are ready. Which are?

For fiscal responsibility, we secured 896 million dollars in contracted loans, ready for payment starting from January next year. Of this, $437 million comes from CAF, $264 million from the World Bank; $92 million from the IDB; 70 million dollars from French cooperation and 21 million dollars from IFAD. Be careful, this is at the Government level. Apart from the non-financial public sector, including public enterprises and public banks, we have received more disbursement funds from the next government. It would be nice if we had something like that.

But will the next government have access to credit if we are high risk and unlikely to come from multilateral sources?

I think it depends on whether the next government shows fiscal commitment. I will say three things that we have done and that the next government could do: we have abolished and reduced subsidies to the industrial shrimp sector; We lowered the interest rate and reduced the amount of crude oil. We reduced the external debt by 1000 million dollars. It is fiscal discipline. If you reduce the value of capital, organizations will provide you with resources.

If they don’t have discipline, then they could go and get a reserve, as they already announced…

You have four problems there. The first is that Juan cannot take Pedro’s money, and 95% of these funds are not from the government in power, but from depositors’ reserves, from IESS, from GAD and the Government’s current account, which is not a savings account. Second, the law does not allow confusion: it is forbidden. The third thing is that it reduces your credibility with multilaterals. If you eat that money, you can hardly replace it. I would ask the socialism of the 21st century if they will return the money from the reserve. It is not logical to take a higher reserve if you have not yet paid what you have already taken.