Debts continue to accumulate and the government will have no way to pay them back after 2026.
The scenario facing Ecuador is similar to that of a family whose income has been frozen in the last five years, but expenses and obligations to pay continue to accumulate.
Since the end of 2014, the Ecuadorian economy stagnated and jobs began to be lost steadily. It went from a increase of the Gross Domestic Product from around 3% to an average of 0.5%.
In other words, less wealth and job opportunities are generated for more population (1.5% increase per year).
As a result, while public spending has continued to grow more than 5% annually, revenues were barely constant before the pandemic, when everything collapsed.
In that context, the country urgently needs a change because, if it is now difficult to cover the obligations of the State, the scenario will be more complicated when the relief of the renegotiation of the external debt in bonds.
In four years it is time to start paying debt in bonds
During the Lenín Moreno’s government achieved the renegotiation of the external debt in bonds. This renegotiation allowed the heavy payments that had to be made from 2021 to be postponed.
Thus, the current administration of Guillermo Lasso you will not have to disburse $ 40,000 million in your period. However, that amount of obligations will have to start paying from 2026.
In other words, the country will be forced to spend, on average, an additional $ 2,000 to $ 3,000 million to pay for its debts.
That task will be impossible if from now on we do not begin to return to the path of economic growth and the job.
I know you need that growth to be more than 3% per year so that citizens and companies have more income and employment; with which, at the same time, the treasury will collect more.
Belén Romero, an economist, explained that Ecuadorian society cannot cover the sun with a finger. If we do not generate more wealth from now on, the levels of public debt will be unsustainable.
Photo: Jonathan Miranda / Presidency of the Republic
“If the tax reforms and government labor do not convince, the solution is to improve them with viable alternatives. The worst scenario is to keep things as they are, “he said.
Currently, at State you need $ 400 million each month to cerr on their accounts, so the goal should be for economic activity to rise enough to generate at least an additional $ 2 billion in taxes a year.
Of that amount, only $ 700 million would be obtained with the Lasso tax reform, so the remaining $ 1.3 billion must be the result of the promotion of private investment and greater facilities to create a company.
“Without that push, during 2022 to 2025 we will continue to add more debt and arrears, so the next president will have to go from a current expense of $ 7,000 million in interest and amortizations to $ 10,000 million or more,” Romero said. (JS)
Ecuador paga, en promedio, $2.200 millones en intereses y $4.800 millones en amortizaciones de deuda pública.
La deuda pública ecuatoriana, con corte al 31 de julio 2021, asciende a $63.091,4 millones
Reduce the stock of debt by more than 11% by 2026
Free trade agreements
If agreements are concluded with the following countries, exports to these destinations would increase annually by:
Canada: $ 630 million
United States: $ 1.1 billion
Mexico $ 290 million
Costa Rica: $ 45 million
Panama: $ 25 million
Dominican Republic: $ 25 million
Russia: $ 660 million
Japan: $ 750 million
South Korea: $ 365 million
China: $ 900 million
