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Ecuador's finance minister defines roadmap for economic management

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Minister Martínez during an interview with a local media outlet.
Photo: Twitter Finance Ministry

Ecuador’s finance minister explained that foreign debt will not be renegotiated and added that it will be paid “in amounts and within timeframes established.”

Quito, May 18 (Andes).- June will be crucial to Ecuador’s economy since its finance ministry will present reforms to improve the country’s fiscal and productive policies, according to minister Richard Martinez.

“We will work on making figures transparent until the 28th (May) and then we must think what to do with such information. I’ve talked about reducing spending with gradual but disciplined adjustment but we still don’t know what this adjustment will be because figures need to be clarified,” said the minister during a talk with media outlets.

Minister Martinez explained that there is a working agenda aimed at making public debt transparent. Therefore, the finance ministry published debt statistics bulletins whose information was unknown since January this year.

“Our debt amounts to 48 billion dollars and if we take into account other liabilities, there are 10 billion dollars plus other contingent liabilities adding up to 3 billion dollars,” said Martinez during an interview with Teleamazonas.

According to these figures, Ecuador’s public debt exceeds the 40% established in article 124 of the Organic Code for Planning and Public Finance.

The secretary of state informed that the next step will be to create a proposal to repeal executive decree 1218, instrument created by the former administration with the aim of changing the methodology to measure public debt.

In the special examination of public debt management, the Treasury Inspector’s Office concluded that, based on the decree signed by former president Rafael Correa, the debt level was “artificially reduced” when it reached the debt ceiling (40% of the GDP).

On this matter, the institution recommended the Finance Ministry to create a bill to repeal the document current in force since October 20, 2016. With this, the measuring of debt to Gross Domestic Product (GDP) will stop taking into account consolidated debt only (which excludes domestic liabilities).

The Treasury Inspector’s Office also informed that any indebtedness that is not included in the fiscal budget for 2018 must be addressed according to the Code for Public Finance Planning (COPLAFIP by its acronym in Spanish) in order to “gradually adjust” debt.

Another step will be to create a bill that allows making viable the government’s economic plan which is expected to be ready by May 24, when President Lenin Moreno marks his first year in office.

Minister Martinez adds that such bill will include a proposal to eliminate debt limit since it would no longer be necessary and macro-fiscal regulations would be implemented instead to “prevent getting into a debt that cannot be paid.”

The minister also explained that foreign debt will not be renegotiated and added that it will be paid “in amounts and within timeframes established.”

The country is expected to resort to multilateral organizations like the International Monetary Fund and Inter-American Development Bank, among others by mid-June.

“We will have talks with all of them. There’s no stigma here, we will define the best conditions for the country and it involves lower rates and more beneficial timeframes,” he added.

About the proposal to raise customs tariffs for 375 subitems, the minister affirmed he does not agree since it would be a barrier to trade exchange.

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