Let’s start by recalling the basic figures for 2022, the last full year we have, from SPNF – the Non-Financial Public Sector, which includes central government, businesses, devolved governments, social security and more –.

Income. Total: $45,000 million. Oil exports and domestic fuel sales: $17 billion. Taxes: $15,000 million which includes income tax 4.5, VAT 6.5, ICE, tariffs, ISD and more. Other: $7,000 million, specifically around GAD, such as assets, sales or patents. Social Security: $5.7 billion.

Costs: Total: $45,000 million. Currently: $37,000 million, which includes wages (11.5) and the purchase of goods and services (13.5, including fuel imports). Investment: 8000 million dollars. Result: 0. Fiscal balance in 2022.

…but otherwise we have a deficit of about $3 billion, which will happen in 2023 and maybe a little more in 2024 (be careful: there is talk of bigger deficits, but this only corresponds to the central government). Obviously, a high deficit implies permanent borrowing, which is how we reached a national debt that exceeds 60,000 million dollars. That is why it is healthy to position ourselves around fiscal balance. But an important question arises: to achieve balance by increasing income or decreasing expenditure? We have generally tended towards the former, which is why the level of consumption has reached very high levels recorded. How to evaluate?: Public finances must be balanced, but we have to decide whether it will be through more income or less expenditure. I point to the second one, because…

Another big issue of public finances, which is much less talked about, although it is more important, is the amount of government spending, which in Ecuador is absurd, 45 billion dollars a year! 25 dollars a day in the name of each family… and with very bad results! Why is it so important? Well, simply because a non-negligible part is non-productive consumption (more precisely, useless) that impoverishes society. Let’s remember that productivity (better use of resources to create more value) is the basis for improving people’s quality of life, and if the country is unproductive, the average productivity of the country falls and the standard of living.

Ask yourself: is waste in your family or business impoverishing you or does it not matter? I think the answer is obvious: it impoverishes, because there would be much better ways to use the resources for progress. It’s the same with the state, but we were filled with the opposite: allegedly, state waste creates jobs, helps economic activity and is therefore positive. Absolutely false. It’s like that terrible advice someone gave: “It suits the state at one moment to employ people to dig a hole, and at another to cover it up.” This is not valid at any time. It is useful to create productive activities, never to “do nothing”. How to evaluate?: Simply, does the state reduce its non-productive costs?

This is how we should evaluate the Government: balancing public finances and reducing government spending beyond what is necessary for that balance. (OR)