The media, numerous journalists and analysts, as well as political actors talk about the failure to implement the budget. The majority consensus is that there is a huge inability of the Government to execute.

In addition to numerous failures in management that have occurred, which is particularly expressed in the great instability of Petroecuador, as well as other key state companies, it is necessary to conduct a deeper analysis on this topic.

The big confusion that exists in the country is to believe that the game means that there are funds. In order for all of us to understand this better, I will use an example. Someone makes a reservation for a trip to the Caribbean: Book a hotel, book tickets, and book an island cruise. The time has come for the reservation to take effect, this is the execution of the reservation, and it turns out that the subject has no money in his accounts, no credit card and no one wants to lend him money. The result is obvious: that person is not going to the Caribbean, not flying, not using a hotel or a cruise.

It is a logical decision, but also a forced one. There is no choice. Exactly the same thing happens in budgetary matters. The budget, possible works, possible expenses and investments are planned, but if there is no money in the treasury at the time of execution, then the point is not executed.

The government does not realize that the level of consumption is higher than the income. The state does not understand that the budget “sucks” as much as it can from Petroecuador, from the CNT, from the Directorate for Civil Aviation, from the supervision of banks and companies, etc. That is, from where it can collect money, because revenues are not sufficient for expenditures, and because expenditures are squandered mainly in regressive subsidies, which go least to the poor.

Between January and May of this year, the accumulated budget, or “executed”, has a balance of 9.759 million dollars. But what the fiscal fund paid for those already incurred costs, of those already incurred costs, is barely 8,543, that is, 1,216 million is owed. In turn, the fiscal fund had 453 million deposited with the Central Bank as of May 31, but the vast majority of that balance is in trusts to settle a special popular housing loan that was taken out with the approval of the IDB, and therefore has that conditionality. In other words, cash is almost at zero, no liquidity, no resources for further execution.

From January to May, compared to 2022, oil revenues fell from 1,822 to 756 million, as far as the budget is concerned, and tax revenues from 6,780 to 6,608. Therefore, the drop in income amounts to 850 million dollars, while in the same period current expenses increased by 1,492 million. Thus, there is an imbalance of $2,742 million between the decrease in income and the increase in current spending. If we add to that that capital and investment expenditures increased by 408 million, there remains a “gap” of more than 3,000 million compared to the previous year. So how can you say, cut my taxes, keep my subsidies and invest more at the same time?

Ecuador’s fiscal problem is extremely serious, for many years now, since consolidated public spending was raised from 23% of GDP in 2006 to 42% of GDP in 2015. Simply insane increase. And today, without an analysis of this reality and these figures, it is absolutely ridiculous to ask for a greater execution of the budget, just as it would be ridiculous to demand that the subject of the example from the beginning of this article go to the Caribbean.

Candidates will certainly talk about budget failure. They won’t talk about subsidies eating up the budget. He won’t talk about cutting government staff. He will not say that the pension system must be solved. Those things don’t get votes, but if we don’t deal with those things because they don’t get votes, the economic crisis breaks out, not in the polls but in the streets.

The transitional government should have a fundamental goal: to make the country realize the seriousness of the crisis that was created by decades of maintaining gigantic and structural distortions and produce that national agreement, start to solve them, because if it is not In that case there will be no fiscal sustainability, and therefore there will be no economic , political or social sustainability. (OR)