Ecuadorean President Lenin Moreno announced Tuesday new economic measures to reduce public spending and reach “fiscal equilibrium.” The measures include the elimination of 20 state institutions, price hikes for gasoline, and the “fusion, optimization, and delegation” of public companies.
Five state institutions will be eliminated, including the Justice Ministry and the Communications Secretariat, and several more will be merged, such as the Commerce and Industry ministries and the Internal Revenues service and customs.
According to the government, this will provide a US$60 million a year saving.
Moreno insisted he “received a bankrupt country… with a total debt of US$60 billion,” as a justification for the austerity measure he has announced throughout his short-term government. Earlier this year, he announced the elimination of 13 state institutions.
Moreno also stressed his government would continue to “enhance Ecuadorean industry, because only in that way can we create jobs and economic stability.”
According to local newspaper El Comercio, the reduction in the size of the state will cost the country at least 900 jobs. This, in turn, will have a negative impact on unemployment and internal demand.
David Suarez, of the Center for Economic and Social Rights (or CDES), tweeted “the announced economic measures reveal that we are taking the path of the sacrifice demanded by the International Monetary Fund (IMF). Austerity continues by the drop. Austerity for us, debt forgiveness for economic groups #ItIsNotTheGovernmentofAll #EconomicMeasures.”
In June, Moreno’s government announced debt forgiveness for private companies that failed to pay their share of taxes to Ecuador’s Internal Revenues Service. Economists estimate the country is giving up at least US$2.2 billion.
During the statement, Moreno was flanked by Eduardo Jurado, Secretary of the Presidency, and Richard Martinez, Economy and Finance Minister.
Jurado announced the increase in the price of the gallon of super gasoline (higher octane), from US$2.32 to US$2.98. Martinez defended the recently approved Productive Development law, saying “all companies, of all sizes, will have between eight and 20 years of exoneration from the income tax.” Critics say this measure does not promote investment but deepens fiscal deficits by reducing state revenue from taxes.
The recently announced measures wouldn't be the last; however, Moreno has said the prices for industrial diesel would not change for public transport but confirmed he would hold meetings to propose a revision in the amount paid for diesel by the industrial sector.