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China credit for $ 900 million does not cover the 2018 deficit
Posted On 14 Dec 2018
Ecuadornews:
The $900 million loan obtained by President Lenin Moreno of the China DevelopmentBank (CDB) at a rate of 6.5% during his visit to China is not enough to closethe 2018 deficit. This is based on figures that the Government itself hadindicated that what it lacked was $ 2,000 million. This is the opinion ofexperts consulted.
According to Jaime Carrera, executive secretary of the Observatory of Economic Policy, the Government would be forced to get even the extra $ 1,100 million, but if he did not do so, he would send the balance to the fund.
Healso commented that the resources will surely be destined to the payment of theneeds of December, among which are payment of salaries, suppliers, and evendebts.
For his part, Alberto Acosta Burneo, editor of Análisis Semanal, explained that surely the money will go to cancel suppliers. But he explained that the remaining balance to cover could be unpaid until next year.
The Ministry of Economy and Finance, through its Twitter account, explained that the destination will be “coverage of investment projects 2018”.
Deputy Minister Fabián Carrillo had mentioned in previous interviews that the main liquidity pressures the State has in December are precisely the payment of the thirteenth salary, as well as maturities of internal and external debt. In any case, Carrillo also commented that the $ 2 billion that was required to cover the deficit would come on the one hand from international disbursements and even from internal debt that would be obtained from Cetes bonds.
On the conditions of the new Chinese credit, both Carrera and Acosta argue that they are better than the previous ones. For Acosta, it is still necessary to clarify what is the guarantee that Ecuador has given to have achieved the rate (6.5%) that is not the market rate.
Meanwhile, for Carrera, the government’s actions on the issue of debt have not been well received by the market. On the same day that the credit was announced, the rating agency Moody’s lowered its rating to Ecuador from stable B3 to negative B3. This means that there is a perception of the market that the country’s payment capacity is complicated.
The agreements with China this week also had to do with softer credits and even a non-refundable one. The possibility of delivery of $ 3,500 million more was also established.
Minimumsalary
At the penultimate meeting of the Labor and Wages Council, workers proposed an increase of $ 46.80 to the unified basic salary (SBU), while the employer requested that there be no increase, due to the situation in the country.
RodrigoGomez de la Torre, of the employer sector, said that increasing wages wouldmean less employment. The final meeting will be next December 19. (I)
