As the new ruler elected this October 15 takes office, in his first months, he will have to face payments and key decisions: the shutdown of oil field operations that include part of Yasuní and the expiration of the OCP contract are just two examples of what awaits you. Setting the base salary for 2024 – which is the closest – would be ready in the Guillermo Lasso administration, as time permits.

The date of assumption of office of the new president has not been defined, but the election calendar, which had to be changed due to the repetition of parliamentary elections in foreign constituencies, foresees that the handing over of credentials of the winning presidential duo will take place on December 11.

Minimum wage

The basic salary that will rule from January must be defined by the National Council for Work and Wages, and for that it must meet by November 20, as determined by the Ministerial Agreement MDT-2020-185. Since there is no consensus of employers and workers, the decision is up to the Government. The Wage Council was renewed at the end of September, and the United Workers’ Front (FUT) indicates that there is no date for the meeting yet, but union headquarters already have general agreement on their demand.

On December 21, 2021, the government of Guillermo Lass defined a basic salary of $425 that was valid for 2022, and on November 30, it set the salary that was for this 2023 at $450. basic salary from 400 to 500 dollars in four years of mandate, and thus applied increases of 25 dollars per year. Now, near the end of the mandate – shortened by death on the cross – he will be able to define the increase for 2024.

Shutdown of oil production in Yasuní

Ecuador must stop oil production in the block that includes part of the Yasuní National Park, and the current government will leave a plan to close operations, but the decision to implement it will be the new government, according to the Minister of Energy and Mining, Fernando Santos.. “The board indicated that the necessary process of engaging experts for the closure of the oil infrastructure and analysis of the costs and methodology of possible dismantling by Petroecuador. What they will be left with is a neat technical closure plan and a report on how much it will cost. But the decision to implement the said plan will be up to the new government.”

The Constitutional Court approved holding a public consultation on oil extraction in Yasuní. This was held in the elections in August, and the option to keep that oil in the country won with 58.95 percent of the vote. Thus, the gradual and orderly withdrawal of all activities related to oil extraction must be completed within a maximum of one year from the announcement of the official results, as determined by the constitutional ruling. The results of the consultation were announced by the National Electoral Council (CNE) on August 31, 2023.

What will happen to the heavy crude oil pipeline?

The 20-year contract with OCP is about to expire and there have been discussions about extending it or returning the infrastructure to the state. In this regard, Minister Santos indicated that no official request for an extension has been received from the interested companies. “Argentine Pampa and Chinese Andes, who are the main shareholders, are continuing the talks, and we are waiting.” The Committee for Return is still working, the Ministry and OCP staff are visiting station by station, making an inventory of the state of property.

“If there is no formal request for an extension, it will go back to the state. The ball is in their court”, the minister believes. Delivery of the OCP to the state will be at the end of January 2024, taking into account the extension of days due to cases of force majeure.

In the first year, the new government must pay 7.689 million dollars for the public debt

In 2024, Ecuador must pay $7,689 million in amortization (capital) and interest on internal and external debt. These items include interest on junk bonds, first amortization payments of what was borrowed by the International Monetary Fund (IMF) and other multilateral institutions, debts with China, with the Central Bank of Ecuador (ECB), the Ecuadorian Social Security Institute (IESS) and Biess. This is explained by Jaime Carrera, from the Fiscal Policy Observatory. It is a figure of one million, the financing of which will be a challenge for the new Government.

Interest on foreign debt due next year is $1,964 million, of which $572 million directly corresponds to bonds issued by international markets, especially during Correismo, and later renegotiated in Lenin’s government. In addition, about 939 million dollars must be paid according to interest with multilaterals, on loans acquired after the pandemic. Among them are financial agreements with IDB, World Bank, CAF and IMF. According to Carrera, interests with international organizations expanded as international rates rose.

But there is also a debt amortization payment to be made: about $1.3 billion to multilateral organizations, of which $519 would go to the IMF. Also about 600 million dollars of capital in debts with Chinese banks.

Internal debt is also an important item. 954 million dollars must be paid in interest alone, between IESS, Biess and the Central Bank. In addition, it must cover some $2.565 million in domestic debt capital payments, with the same entities. Normally, governments tend to implement renovations or familiar ones tip over long.

While these items are important for 2024, payouts will increase over time. Thus, by 2024, total external and internal debt payments (amortization plus interest) will reach 8,473 million dollars, while by 2025, the figure will increase to about 10,039 million dollars.

Guillermo Lasso’s government insisted that it managed to reduce the public debt by prudently managing the numbers. So the Minister of Finance Pablo Arosemena said that in May 2021, when the current Government came, the debt amounted to 61.5 percent of GDP, and by December 2023 it will be closed at 54 percent, or 7.5 percentage points. less. He also highlighted as an achievement that he renegotiated the debt with China by extending the terms and releasing the oil committed to the bond. There was also a debt-for-nature swap to reduce the external debt of $1,000 million, and about $400 million was obtained for the conservation of the Galapagos.