The new government takes office on December 1 in the midst of the fiscal crisis. There are different ways you can go about solving it, but they all end up in our pockets.

Low country risk after Daniel Noboa’s triumph, a ‘tepid’ reaction from the international market, which remains nervous about the 2025 elections.

The immediate problem is paying for the bureaucracy. There is $429 million in the single treasury account, accounts payable is $1.6 billion, and the role of paying the national budget for December will be $1.3 billion. Noboa must pray that the oil pre-sale is completed in time to pay the public administration.

By 2024, it will need about $10 billion in loans, partly to repay overdue loans and partly to cover the shortfall. International banks doubt that the Government will pay its due debt in 2026 and will no longer lend to us. Noboa has two paths: one with the Monetary Fund and the other without it.

Daniel Noboa defined the security and economic agenda with the members of the ADN assembly

The Fund will be willing to find solutions for Ecuador, and the World Bank, IDB and CAF would contribute as long as Ecuador takes fiscal measures: fuel or tax increases. If Noboa opts for taxes, the options are VAT (three points) or capital.

Noboa has two paths: one with the Monetary Fund and the other without it.

The second way means renouncing external financing. The IESS has been emptied, hence the temptation to issue Ecuadorian dollars, which is known as “taking money from the reserve”, which is currently prohibited by law, so Noboa would require a legislative majority to abolish it. That would bury the deal with the Fund, with which it pledged to withdraw more than $7,000 million in Ecuadorian dollars issued by Rafael Correa. Lasso did his part and withdrew $2 billion.

Issuing Ecuadorian dollars would require blocking payments abroad and raising the ISD: that way we also reach our pockets. Dollarization was enacted precisely to prevent the harmful practice of governments financing themselves with emissions.

How Daniel Noboa Azín receives Ecuador: this is the economy that the new government will take over

Ecuadorals are like medicine: great relief when given; problems come later. This alternative would tempt the new government, because Chuchaqui would suffer only whoever takes office in May 2025.

The best of these options is an increase in fuel prices. The other three, VAT, VAT and ISD, would be paid only by citizens and formal entrepreneurs. The fuel subsidy benefits transient vessels to which many fishing vessels now sell their fuel quotas instead of catching fish; smugglers and consumers from Colombia and Peru; drug dealers, and citizens who can pay for fuel at the free market price. Higher prices would encourage lower consumption of petroleum products today when the Ecuadorians decided in consultation to sacrifice current and future ITT production.

Daniel Noboa has yet to appoint 16 ministers and 9 state secretaries

Who controls all these illegal activities? Neither SRI nor Petroecuador, but ArceRNNR. But this hydrocarbon control agency would need thousands of incorruptible police officers to control such an illegal business, and it does not have them. Targeting is a pipe dream: when billions of dollars are at stake, there will still be cheating.

An increase in fuel prices would delay the fiscal crisis by several years. That doesn’t cut it, since the Treasury subsidizes retirees’ pensions and the 2008 Constitution requires spending on health and education to increase by $1.2 billion each year. But that’s for another column. (OR)