Public finances end the year in an uninspiring, rather disturbing fashion. The difference between income and expenditure was 5,747 million dollars, or a shortfall of 4.8% of GDP, according to the analysis of the Observatory for Fiscal Policy, an absolutely serious entity that monitors the evolution of fiscal figures with great attention and professionalism.

This situation, absolutely unsustainable, is structural and growing. The bureaucracy increased salary expenditures by $564 million, in addition to the incredible fact that raises were granted to unfunded teachers. The observatory notes that salaries and wages absorb all funds generated by VAT and income tax.

Creole Pokémon

But there is not only a very serious problem of this brutal increase in the mass of wages, the poisonous germ of which was injected from 2007 onwards, but also the laws that record ranks, seniority and other privileges, guarantee that wages automatically increase by more than 300 million dollars a year, even if the country burns and goes bankrupt.

In this deficit, much of the absurd obligation that the state treasury must contribute 40% of the value of pensions to the Ecuadorian Social Security Institute (IESS) has again remained unpaid. As a result, the Disability, Old Age and Death Fund, which is the source of funds to pay retirees, has reduced its assets from nearly $10,000 million 7 years ago to an alarming figure of $5,500 million annually as of year-end. Namely, in a very short time it was reduced by half, and since the state will obviously not have the means to pay that 40%, if there is no subsidy reform and social security reform. the moment is approaching when IESS cannot pay pensions.

Big topics in 2024

After all, International Monetary Reserves, which reached $9.226 million by March 2022, fell to just $4.454 million as of December 2023. Dollarization works with dollars and this reserve figure, which is the result of all the fiscal imbalances and structural problems that no one wants to touch, it clearly shows us that our dollarization gives us a yellow light, and it also shows us the perverse and fatal mistake of those who, in order to then attack the ECB and take the dollars, forced the banks to take the money they had safely abroad, guaranteeing depositors’ liquidity.

The figures at the end of the year are screaming, crying out, for the country to open its eyes and face once and for all very serious economic problems that cannot be solved by popular consultation. Either we do it now, or as I have said many times, Ecuador will face extremely difficult, sad days with unforeseen economic, political and social consequences, which may lead us to harsh scenarios like those of 1999.

The economy may take time, but it comes and takes its toll. If you pass it this time, the value of that account will be uncollectible due to inaction. (OR)