After accumulating fiscal deficits for more than a decade, there is no way we can keep hitting the ball. The possibility of lending to multilateral organizations, issuing new bonds with 2,000 country risk points or financing through the International Monetary Reserve, which is prohibited by law, has practically been exhausted.

By the end of November, coinciding with the political transition, the cash had to be drained by a $139 million liquidity transfer from CFN. There is a balance in the state treasury account that covers only three days of compensation. No one knows yet how this month’s black hole of payments to the bureaucracy will be filled, which, when the thirteenth salary is included, amounts to $1.4 billion.

Nobody’s generation

Meanwhile, recourse to the placement of IESS/Biessu government bonds is a source of funding that is drying up due to constant delays in the payment of 40% of pensions that have accumulated $3.374 million over the past five years. . That’s in addition to a health benefits liability of another $4.717 million.

When President Daniel Noboa warned the IMF that he needed new loans to carry out his government plan, he understood the obvious. Ecuador foresees problems in meeting its debt obligations, especially with the $17.375 million in “junk” bonds that were placed on international markets after Koreaism and the regime that followed. Its terms and interest rates were restructured during the pandemic, but this would eventually have to happen again.

Scoliosis and anemia

The economic and financial problem of the country is structural, not conjunctural. Revenues are not sufficient to cover expenses. And the situation continues to worsen. There is no way to sustain the model inherited from an oversized state that represented 38.6% of GDP in 2022 and will continue to do so this year.

According to data from the Fiscal Policy Observatory, there are a total of 491,638 public servants, who on average cost $21,357 a year, or three times more than the per capita income of Ecuador, which is $6,395. Is there anywhere to reduce the “fat”? It can be, given that there are 97,265 bureaucrats on a fixed-term basis, about 20 percent.

With this kind of mess, the fuel subsidy burdens the accounts, which will amount to 2.667 million dollars in 2023 and which urgently needs an adjustment that enables greater rationality of public spending.

The first urgent project

The tax law urgently sent to the National Assembly is just a patch. He will make an extraordinary income of 832 million dollars, which means a little more than a month’s salary that he will spend in the blink of an eye.

It is nonsense that with such economic pressures, the closure of the ITT oil field, which brought in revenue equal to or more than the tax reform itself, is still being considered, with the difference that it is a permanent process. Serious damage resulting from a morally wrong popular consultation.

There is no money, but we squander what we have with childishness and immaturity. (OR)