The Central Bank has just given a figure that may be relevant: the Ecuadorian economy grew 1.4% in the third quarter of the year that ended. But it is not so encouraging in current conditions, with high fiscal deficit and increasingly high production costs.
The rise of fuels is only a circumstantial factor, but for almost two decades it has been talking about excessive public spending and the high price of services such as electricity, water and even the interest rates that companies must face.
“With respect to the third quarter of 2017, growth was 1.4%. In nominal terms, the GDP reached 27,267 million in 2018, “says a preliminary report (subject to updates) of the Central newspaper released yesterday.
2019 will be complicated for business scaffolding. The industrialist Bernardo Arosemena points out that the costs of water and electricity in Guayaquil are high in relation to those of Lima and Bogotá, for example, and this makes Ecuador less attractive to investors. According to a study by Forbes, in this region the most attractive country is Chile, ranked 33rd in the world, Peru 64, Colombia 67 and Ecuador 99.
Large industries such as Coca Cola in Guayaquil, for the volume of water and the size of the catchment pipes, pay up to $ 6 per cubic meter in Guayaquil, while in Lima $ 2.4 (water and sewer) and in the capital of Colombia $ 2.29. “Interagua’s water is more expensive than Germany’s,” says Arosemena.
The cost of the kilowatt is also one of the most expensive: industries complain that they pay between 8 and 10 cents. In Oklahoma it costs 4.99, in Arkansas 5.078, the Texas 5.20 and Washington $ 4.75. At what cost does the Ecuadorian State produce to sell it in those securities to the sector? How much do distributors earn?
To compensate for these high chaos, says Patricio Alarcón, president of the Ecuadorian Business Committee, it is necessary to lower the tax and tax burden of the country. “The Government, a priori, should stop spending around $ 1.2 billion a year and eliminate the Foreign Exchange Tax,” he suggests. To this must be added a reform of tariffs and procedures and a change in the labor structure.
“The tariff burden and the procedures created to promote protectionism should be lowered.”
Patricio Alarcón, President of the Business Committee. (I)