Business and sales will move slowly this year, and loans will be more expensive and scarce. The reason: the fiscal austerity we discussed last Sunday, exacerbated by the punitive measures against banks promoted by Correismo.

Ecuador has to pay 17,749 million dollars in the next five years for external debt

The essence is the gigantic expansion of the public sector during the Correat. The size of the state doubled from 20% to 40% of the economy during that decade of excess. During that period, they raised our taxes and put the state in debt to the top of its head, but never enough. Consumption grew faster. According to the IDB database, in 2006 we paid $4.692 million in taxes, and there was a fiscal surplus. In 2021, we paid 15,373 million dollars, more than triple, and yet there was a deficit. Yesterday (to you the reader, tomorrow to me, because I’m writing on Friday) the Assembly voted a majority report that raises VAT by three points, along with a number of other taxes and duties for companies. But even so, the deficit remains unstoppable.

The fundamental solution is to reduce the current consumption of the public sector. That it can’t be done because the majority are teachers, doctors and the police, they say. But no. The main part is spent by these ministries. A good reorganization will reduce administrative costs without affecting services. Furthermore, excessive privileges must be stopped. The public sector has higher salaries than the private sector. This is a task that the executive and the legislature must solve together.

(…) If the reader is not a triple-A company, check whether you will not need a bank loan this year.

Another task is to encourage investment: the bigger the economy, the more bearable the tax burden. But a malicious lack of public consultation is forcing the Government to withdraw from oil production. That is, spending in order to stop receiving income. We called it assisted suicide. People should be consulted again, this time they should be made to clearly see the advantages and disadvantages of this measure and to vote conscientiously.

Legislation and the culture of public companies must change to attract private investment in oil and electricity production and free up investment in mining, which is a dam. Investment in oil and mines would boost the economy and generate important tax revenues. Investing in electricity would make it possible to delay power outages. A better perspective would encourage citizens to invest in their activity and start other businesses, all of which results in higher tax revenues.

With a ‘mixed increase’ of VAT, the report for the first debate of the draft law on dealing with internal armed conflicts was approved

Meanwhile, the state is urgently seeking to replace lost oil revenue and foreign loans that are no longer forthcoming, and it is looking at taxpayers: it is taking our income to satisfy its appetite. It asks large companies to pay taxes in advance in 2024, and banks to buy government securities; both things reduce

credit available to the public. The bank is taxed with ISD on the payment of loans it receives from abroad for lending to its clients, which increases the interest, and yesterday it was discussed whether profits from 2022 and 2023 would be retroactively taxed with confiscation tax, which would reduce its assets. A bank that is not growing cannot give more loans.

So, if you’re not a triple-A company to the reader, make sure you don’t need a bank loan this year. (OR)