On Tuesday April 3rd, the Minister of Economy, María Elsa Viteri, detailed the first thematic section of the Economic Program of Fiscal Stabilization and Productive Reactivation, focused on Stability and Fiscal Equilibrium. The objective will be to reduce the fiscal deficit through a fight against evasion, a greater efficiency in tax collection and a renegotiation of the external debt. The three remaining sections, Restructuring of the State; Balance of the External Sector; and Productive Reactivation, will be explained April 10th and April 17th.
During a press conference Viteri explained the measures that will be part of the economic program, with which the ruling party seeks to reactivate the economy. The presentation focused on its first axis: Stability and Fiscal Equilibrium. The objective is to reduce the fiscal deficit by 3% by 2021. In order to do this, the following measures will be implemented:
- Efficiency in Tax Revenue and Fight against Evasion. These policies improve tax collection through the Internal Revenue Service (SRI) and the National Customs Service of Ecuador (SENAE). The temporary increase of tariffs will be relevant.
- Reduction of Public Expenditure. It reassesses public expenditure as well as the elimination of unnecessary procedures and the reduction of state plans. This measure will be complemented with the second axis of the Program that eliminates unnecessary state dependencies.
- Improve financing conditions and debt reduction. The main objective will be to renegotiate the existing debts with the country’s main creditors, while at the same time seeking new lenders.
The details of three other axes remain to be known:
- Restructuring and Optimization of the State. It will revolve around the elimination of state agencies as well as national companies. At least seven of the 22 public companies will be privatized.
- Balance of the External Sector and Sustainability of Dollarization. Focused on the reduction of imports, by increasing tariffs in 375 sub-items of products that should be defined by the Foreign Trade Committee (COMEX). These values can not exceed those established by the World Trade Organization (WTO) and will last up to one year. This will be complemented by a Project for the Effective Valuation of Imports.
- Productive Reactivation. Focused on generating incentives for the private sector in the Ecuadorian economy through tax simplifications, tax exemptions and public-private partnerships.
Both the dependencies and companies to be eliminated, as well as the modified tariff items and the incentives for the private sector will be presented at two future press conferences, April 10th and April 17th, respectively.