Last year’s budget was prepared by the Government of Lenín Moreno; but the incoming government of Guillermo Lasso executed more than 58% of it.
When Guillermo Lasso took office on May 24, 2021, the projections of fiscal deficit (more expenses than income) were nearly $ 4 billion through the end of the year.
The budget it was inherited from the outgoing administration of Lenín Moreno, but more than 58% of its execution was carried out by the new authorities. In addition to the bleak prospects with a large hole in the public fund, Lasso and his Minister of Economy, Simón Cueva, had to manage a long account of cash from the start. arrears.
Seven months later, 2021 closed with $ 1,697 million in outstanding obligations (arrears), that is, 37% less than what is inherited. Also, the fiscal deficit totaled $ 2,916 million, the lowest level compared to the past four years.
Roberto Arce, economist and researcher, commented that upon arriving in Carondelet, Lasso faced a monthly gap of $ 400 million; But at the end of this year, that gap dropped to $ 243 million.
“The situation continues to be difficult. The state continues to spend more than it receives; but it was possible to pay a part of the pending and ended up with better fiscal figures because the economy grew more than expected, “he said.
According to Arce, the role played by the successful vaccination plan cannot be underestimated, which before Lasso’s arrival was shipwrecked between inefficiency and citizen outrage.
This plan promoted an economic growth of around 3.5% of the Gross Domestic Product (GDP), when the most optimistic projections did not give more than 2.5%.
In this context, although the country is still at the fore in the economic recovery within Latin America, sales and tax collection increased considerably during the past year, after the steep decline in 2020.
Thus, for example, the last month of 2021 was the second December with the highest payment of taxes to the treasury in the last 10 years.
According to Fausto Ortiz, former Minister of the Economy, the total collection for the 12 months totaled $ 13,017 million. That amount represents $ 1.16 billion less than pre-pandemic levels.
Another factor that helped reduce the deficit It was the rise in oil prices that allowed, before the stoppage of the oil pipelines, it was possible to generate an extra $ 1.5 billion in tax revenue.
If analyzed as a percentage of GDP, the fiscal deficit 2021 is the least burdensome and costly of the last 11 years.
Quality of spending is the main challenge in 2022
During Lenín Moreno’s government, a policy of indiscriminate reduction of public spending was established, without taking into account criteria of efficiency and quality of services. This action, together with inefficiency and corruption, caused, for example, important processes such as the purchase of medicines and maintenance of schools to be carried out halfway.
Those gaps were part of the black heritage that Lasso assumed. Therefore, according to Arce, this 2022 should be the year in which a real evaluation of public spending is made and more resources are directed to where they are really needed and less where they are not productive.
In total, Lasso spent $ 20,634 million in the four main items of the budget state: salaries, current transfers, interest on debt and capital and investment spending. That amount is $ 494 million more than the $ 20,140 million disbursed for the same items in 2020.
However, outstanding debts continue to accumulate with important entities such as the Ecuadorian Social Security Institute (IESS), an educational system (primary and secondary) with the need for more than $ 600 million to rehabilitate infrastructure in poor condition, or a road network that it is full of gaps throughout the country, among other elements.
In other words, the destinations of scarce public resources are still not prioritized, and the current government dedicated itself to putting out fires during its first seven months in office.
On the other hand, in the face of a greater economic reactivation in 2022, Ortiz considered that the authorities should consider directing part of the growing international reserves to investment and productive credit. That would also be another way to spend better and at the same time boost production and employment. (JS)
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