IMF recommends public sector`s reduction to lower the fiscal deficit
13 julio 2018

The International Monetary Fund, after analyzing the Ecuadorian economy within the framework of Article IV of its Charter, issued a statement this week where it shows its concerns about the “severe fiscal imbalances of the country that have led to a dangerous increase in public debt “. Against this, it recommends temporary tax measures, cuts in capital expenditures and stopping the hiring of new public employees. The IMF will present the final report once the Executive Board considers the information collected, something that could happen in the coming weeks.


The entity is concerned about the severe fiscal imbalances that persist in the country, which is driving a rapid increase in public debt. This is complemented by an international context of increased financing costs that puts even more pressure on Ecuadorian finances and puts into question the country’s financial sustainability.


To modify this, the IMF recommends the adoption of temporary tax measures to encourage tax collection, cut public spending on capital goods and the hiring of new employees. It also recommends the application of laws that reduce the rigidity of the labor market, as well as the elimination of barriers to financial intermediation to favor private sector investments.

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