Posted On 25 Oct 2016
An amount of $ 11,275,000 stays out of the statistics of the public debt with the new method of calculation established last Friday through Executive Order 1218, signed by President Rafael Correa. This decree (found in the Official Register for its publication) states that the debt limit (40% of GDP) will be based on the consolidated debt and no longer on the aggregate one. Thus, the percentage of debt falls from 38.4% to 26.7%, and thus the possibility of higher debt opens.
Jaime Carrera, executive secretary of the Fiscal Policy Observatory (OPF for its Spanish acronym), considered the decision as illegal and inconvenient for the country.
If they wanted to make a change, he said, they should have asked the Assembly to reform the law and not change it through an executive decree. With this, according to the analyst, the lack of solvency of the government for the payment of the debt deepens.
For Carrera, the amount of the Government´s debt did not change, but through a statistical artifice, a portion is disappeared.
Jose Hidalgo, director of Cordes, believes that the government tries to take oxygen by creating more room for indebtedness with this measure. The funny thing is that this was the one that put the legal limit of 40% for now “move on it.”
He explained that countries with more debt have longer terms and lower rates. Instead, Ecuador will have an unyielding level of maturity in the next five years until 2024.