Things are going so that oil and dollarized Ecuador disappear.

We have never optimally managed our oil wealth, but the turn for the worse was set in 2006 with the divestiture of Occidental. Later, in correato, the profits of other private oil companies were confiscated and thus their investment ended. The central government is forcing Petroecuador to hand over all its revenue to satisfy its appetites, and there are no more funds to invest in exploration.

Since then, we have used up our oil reserves without replacing them. Petroecuador is seeking to compensate for the drop in production by tapping the last untapped oil block, the ITT. But the Constitutional Court approves the referendum to dismantle the infrastructure and stop the production.

Without the contribution to ITT, national oil production will be reduced. Also exports whose value would be lower than fuel imports. Ecuador would cease to be an oil country.

In the short term, nothing can replace ITT as the Court has also stopped industrial mining. It will take time to produce our wealth of gold and copper, if it can overcome the obstacles. With the end of the ITT, we will go down a step lower in the standard of living.

The closure of ITT will hit the state coffers: it will not recover the $1.5 billion that the infrastructure cost and will have to spend another $500 million to dismantle it. The public sector, not just the budget, will lose annual revenue that amounted to $1.2 billion in 2022. It will be another blow to the already deteriorating situation of the Treasury, whose deficit is opening up and causing delays in paying its bills. The country would not be in a position to face an ultra-strong El Niño like 97-98, if it were to occur.

Who will face this situation? The political crisis cut Las’s term to five months, and his successor will have a year and a half, motivated not to make waves in order to maintain popularity and be re-elected in 2025. These are two short-lived governments that are unlikely to take fundamental action , such as reducing waste in public spending, reducing the fuel subsidy or raising VAT (in the order we prefer).

At least three presidential candidates say there is a painless way to solve the problem: tapping international reserves to finance public spending. The Central Bank (BC) has no money, reserves are the money of depositors in banks and cooperatives that financial institutions have deposited in the BC.

When Rafael Correa took some of our deposits and spent them to stop the increase in imports that would result from that spending, he taxed imports with safeguards and taxes. As a consequence, everything became more expensive. If the attack happened again, the same thing would happen. In addition, banks and cooperatives could not serve their depositors in the event of mass withdrawals unless they partially surrendered government securities.

Such a destructive measure would enable the Government to cover the needs for 2024. And for 2025? Also? Once the dollars are used up, it would not be feasible to maintain dollarization.

That’s the way we’re going. But this tragedy can be avoided. You have to stop and turn around. Who will do it? (OR)