2024 comes with enormous challenges for the government of Daniel Noboa, which is already thinking about how to get out of the difficult economic situation it inherited. In an interview with Bloomberg Online, the Minister of Economy, Juan Carlos Vega, gave a few hints about how he will try to finance the 2024.

Although at first President Daniel Noboa himself mentioned the Government’s intention to reduce spending by at least 1000 million dollars (1%), now the minister said that the reduction would amount to 2% of the gross domestic product (GDP). This would be achieved by reducing the number of public contractors and eliminating inefficiencies, especially in state-owned companies. This also in search of a new funding program.

In an interview with Bloomberg a few days ago, Noboa said he would seek to approach the International Monetary Fund (IMF) and even get support for other multilaterals to provide financing. In the short term, the Government is working with international banks to obtain emergency liquidity in January. This would be done in two ways. The first will be to sell gold from the central bank’s reserves. Another would be to obtain an oil-backed loan of between $600 million and $800 million.

Minister Vega Malo also said that, given the low fiscal cash flow, he had to temporarily raise around $3,000 million to pay salaries and local authorities through temporary measures. The emergency plan included the sale of Cetes bonds, advance payments of income taxes to the likes of Corporación La Favorita and other large companies, as well as a delay in paying billions to suppliers.

As of December 31, 2023, the government’s accumulated expenditures included in the general government budget were $30,875 million, but disbursements were only $27,252 million. That would be $3,623 in debt. One of the items that has stopped paying is IESS Social Security.

So, according to the implementation of the Ministry’s budget, the Government was supposed to pay IESS 2.154 million dollars for 40% of the pension contribution by December 31, 2023, but only 832 million dollars was paid. That is, 1.322 million dollars less was paid out in this area alone. Also pending were $4.7 million of 40% labor risk and $29 million of peasant social security.

Meanwhile, the Autonomous Devolved Governments (GADs) also remained in debt. Only in payments corresponding to the model of territorial equality, the difference amounted to 188 million dollars. That’s because $819 million was supposed to be paid, but $631 million ended up being paid.

The government currently does not have many financing options. The country finished with 2,062 country risk scores, the third worst in Latin America, behind Venezuela (21,037 points) and Bolivia (2,228 points). On the other hand, Argentina reduced the score and closed the year with 1895 points. Country risk is an indicator that measures the market’s perception of whether a country will be able to meet its external debt obligations.

According to a Bloomberg report, Noboa took office in late November after a difficult year that included the dissolution of the National Assembly by former President Guillermo Lasso amid a political crisis that led to the election of a new president. his term until 2025. One of the candidates in the race, anti-corruption activist Fernando Villavicencio, was killed days before the first round of voting. Polls show that violent crime remains Ecuadorians’ top concern, followed by unemployment.