Arrears amount to USD 5,017 million. Finance talks about selling the ECB’s gold, issuing internal bonds, and analyzing targeting fuel subsidies.
Juan Carlos Vega, Minister of Economy (center), together with the Vice Minister of Finance, Daniel Falconí; and Ana Cristina Avilés, vice minister of Economy.
Due to the shortage of public resources, the Government plans to close the year 2023 with record delays in payments for USD 5,017 million in the General State Budget.
Arrears include pending payments to State suppliers, to local governments and social security, and salaries for public officials.
The Minister of Economy, Juan Carlos Vega, said this in a press conference held on December 18, 2023.
Vega said that the treasury account, which is like the current account or State cash money, began December 2023 with barely USD 95 million.
Gold for sale
Given the resource needs, the Government is already preparing a new economic plan, in addition to the tax reform project that would only leave income for 2024.
Among the measures that are being analyzed are that the Central Bank of Ecuador (BCE) sell a part of the gold in its reserves.
According to Vega, currently 40% of the ECB’s reserves are in gold and the rest in other assets, such as cash and investment papers.
For the minister, the percentage of gold reserves is too high, as he believes that the ECB should have more liquid assets.
The intention is that a portion of that gold is sold and thus, at least 10% of that metal is converted into cash.
Right now, the ECB has USD 2,201 million in gold as of December 8, 2023.
However, the minister clarified that the Government will not touch the money resulting from the sale of ECB gold.
He explained that, by law, 70% of the profit from that sale that the ECB will make would be delivered to the Ministry of Finance. /span>
“With Ecuador’s risk conditions, the ECB needs more liquid reserves. “Having that liquidity would give the ECB significant interest because international rates are high, in addition, it would be more difficult for it to have that gold in Switzerland,” he said.
Given the urgent liquidity needs, in addition, the Ministry of Finance hopes to reprofile the debt that maintains with the ECB, which would imply deferring payments for up to 20 years, at an interest rate of 1 .3% annually.
This is a proposal included in the tax reform project, which is scheduled to go to the second and final debate on December 19, 2023 in the Assembly.
According to the Ministry of Finance, the debt with the ECB that would enter into this reprofiling would be USD 4,000 million.
“Great efforts to pay salaries”
Vega also explained that they are making great efforts to pay the salaries of public officials for December and a part of the allocations that correspond to local governments.
To cover this gap, Finance plans to issue more internal debt, for around USD 844 million.
Of that amount, about USD 350 million would be short-term debt, that is, Treasury Certificates (Cetes). And the remainder would be longer-term government bonds.
Another measure that Minister Vega analyzes is the targeting of subsidies, he added.
“We are analyzing (the subsidies, ed.) in great detail, so as not to affect those most in need. It is one of the alternatives that we are studying,” said Vega.
