The complex economic situation of the country forces the Government to think about how to raise revenues for the fiscal fund. According to former ministe,r De la Torre, it would be required to raise VAT by 5 points.
The central government’s economic situation is so complicated that the options it seeks to cover the fiscal gap by making little self-sacrifice is to take them out of the pocket of the 16.7 million Ecuadorians or maintain the rate of indebtedness, whose possibility is complicated.
The former Minister of Finance, Carlos de la Torre, told EXPRESO that if only the Value Added Tax (VAT) is to be raised, five more points are required to stop resorting to more debt, which is practically unfeasible.
“There is an immediate need to increase revenues. And if these are permanent, they have to be of an important magnitude, “said the former minister.
Each additional point of VAT would represent about $ 500 million in revenue and, at least, between $ 2,500 and 3,000 million additional in permanent income in this year are required, according to the former official, and thus stop resorting to more debt that already reaches the limit legal of 40% of GDP.
For this reason, the former official thought some mechanisms to increase resources to the fiscal fund, such as the increase of tariffs to 375 items or the sale and concession of State assets. This is compounded by the spending cut between 5 and 10% of each public entity, as announced by President Lenin Moreno.
The dilemma is on the economic front, where the voice opposed to proposals such as raising tariffs, according to former Minister De la Torre, has been that of the Minister of Foreign Trade, Pablo Campana.
The economic plan is scheduled to be presented on March 28. Economic analysts consider the possible measures that will be incorporated.
For ex-Minister of Finance Fausto Ortiz there is an urgency to raise taxes and that the actions that are announced next week may be to raise tariffs and resort to some increase in taxes.
Likewise, said Ortiz, it will seek to continue reducing spending on public works or the other option is to fall behind in payments, in this area, as the previous Government did. A possible reduction of public workers “is more difficult”, according to the former minister.
For the director of the Corporation of Studies for Development (Cordes), José Hidalgo, the foreseeable is that it seeks to transfer the weight of the adjustment to the private sector.
“The current economic team maintains a vision similar to that of the latest economic teams, added the director of Cordes. The measures will seek to limit the purchase of consumer goods and that can be harmful for the country’s economic activity, according to Hidalgo.
And it seems that the future is also mortgaged: the deficit until the end of the year would reach more than $ 6,000 million. And 2019 will have to increase the $ 1,260 million that will mean the return of 40% of retirement pensions to Social Security.
The Government of Moreno announced its first package of economic measures in early November of last year.
From May 2017 to January 2018, 13,230 new employees were incorporated into the public sector, according to Labor Minister Raúl Ledesma.
For this year, the Government set itself the goal of reaching a fiscal deficit of $ 4,103 million. (I)