The Minister of Economy and Finance, Juan Carlos Vega Malo, admitted that salaries for the month of January in the public sector will not be paid on time. It foresees a delay in the payment of salaries of at least two weeks for certain public officials. The payment of salaries will be made according to priority, and priority will be given to the Armed Forces, the Police, and immediately afterwards teachers, health workers and others. This was reported by a Government official in an interview conducted this Sunday on the show Rebeldes sin Pausa, hosted by journalist Amanda Villavicencio, from La Fuente – Investigative Journalism.

The lack of liquidity in the public sector has caused the Government payment complications that affect even current spending issues such as salaries, decentralized autonomous governments, the Ecuadorian Social Security Institute (IESS), among others.

Minister Vega confirmed that, although these payments will be prioritized, the rest will be paid as new funds enter the fiscal coffers. “If we are going to be a little late (salaries), we won’t be able to pay exactly on time. We hope that it will be the most in the first two weeks of February,” he said.

He explained that new liquidity flows are expected in the first weeks of February, such as the first advances of large companies at January sales; He also assured that the profit of the Central Bank of Ecuador (BCE) will enter in 2023, especially related to the sale of gold. By February 12 or 13, the minister also plans to approve the tax law, which increases VAT revenues and other measures.

In this regard, he said that the measure will not affect the most vulnerable, because VAT has a zero rate for products such as food, medicine, health, housing and others. And he commented that the new cost will be paid by the upper middle class.

He also thinks that for April and May, resources could come from abroad, from multilateral organizations, “which would be good for us”. The minister also explained that we hope that between 2,000 and 4,000 million dollars will come from this source “to overcome the crisis”.

Minister Vega Malo explained that the situation in Ecuador is like that of a family that spent more than its income and that even borrowed from neighbors, gave advances on credit cards… Like any family, Ecuador must strive to increase your income, but and adjust their spending and thus become creditworthy again. In the case of a country, the subject of an international loan.

He explained that in the case of Ecuador, the state treasury owes at least 400,000 Ecuadorians between large, medium and small businesses. Likewise, cleaning and private security service providers. At the end of the day, this affects the economy, which also has a human face.

He explained, for example, that money is owed to the dialysis clinics, about 18 million dollars to Solca in Cuenca. A cut in payment chains can even affect the financial system due to payment delays. To the already existing lack of liquidity must be added new requirements to cover security needs, which translates into higher payments for food, fuel for mobility, weapons, among others.

Minister Vega pointed out that other political parties are also allowed to make their proposals, such as taxation of banks, large companies, special contributions. The minister believes that with higher permanent incomes, a reduction in consumption, and therefore obtaining international financing, a good circle can be created in which larger investments occur, debt replacement for environmentally acceptable issues such as the protection of the Amazon and the coastal ecosystem.

Last week, Vega and Deputy Economy Minister Ana Cristina Avilés held meetings with multilateral organizations, with authorities from the US and the European Union, and even with the Chinese ambassador. Regarding the IMF, he said that it is an organization that has been demonized, but that it is more of an entity that is concerned about what is happening in the country and that wants to cooperate, not by providing funds, but by making sure that the country itself is more sustainable..

The minister also said that in addition to these issues, they are working on renegotiating the radio spectrum with the telephone companies, and progress has been made in the negotiation process with the company OCP, which manages the Naftovod for heavy crude oil (OCP) and which was supposed to be transferred to the state in January.

The issue of subsidies that should reach the people who really need them is also on the table. It is not fair to subsidize fuel that goes into the drug trade or that is smuggled out of the country. He explained that the central government spends $3.2 billion on this issue, mainly on petrol, diesel and gas.

For Minister Vega, the national dialogue to reach an agreement on the need to adjust the economy must take place on the basis of a common theme, which is the need to fight against insecurity. “Everyone understands that it is difficult to support the issue of security.”

In any case, he said that if the introduction of VAT fails, there will always be more painful alternatives than this tax increase. Adjust subsidies more tightly instead of doing it surgically; introduce higher tariffs and even continue to be financed through delays.