By the fusion or elimination of public institutions around 1,500 people will be disconnected from the Government. The Federation of Chambers of Commerce described the economic measures as positive, but lack of competitiveness. University students and unions prepare a march in rejection of the Government’s announcement.
Amidst opinions for and against economic measures, this Wednesday 22 August, representatives of the Government gave a press conference in which they assured that the decisions will lead to configure an efficient state apparatus and achieve the balance of the economy.
First, public institutions will be eliminated or merged according to the government’s priorities and the National Development Plan, and maintaining competencies without altering the provision of services. So far the government has suppressed 13 institutions and from now on, 20 more will be eliminated among ministries, agencies and public companies.
Reducing the size of the State has been a constant observation by analysts, because in the last ten years it grew rapidly and to maintain it requires a large amount of resources that are mainly used for current expenditure. Between 2000 and 2006, the expenditure of the consolidated public sector in relation to the Gross Domestic Product (GDP) had an annual average of 21%, while from 2007 to 2017 it was 38.6%.
In the same way, in the past decade, current spending came to occupy 70% of public spending compared to 30% of capital expenditure. This has led to the extremely complex fiscal situation resulting from a very high public expenditure disorder, said Richard Martinez, Minister of Economy and Finance.
The problem, added Martinez, is that the future support of investment, health and education spending is put at risk. The measures are expected to generate savings of $ 1 billion per year. These resources will cover obligations such as $ 1,500 million to the Ecuadorian Institute of Social Security (IESS).
The new institutional structure will comprise 20 ministries. The previous government had 40. For this, a process will be carried out that consists of analyzing the current regulations, issuing executive decrees, and drawing up the competency matrix, the budget allocation and the statutes. José Agusto Briones, National Secretary of Planning and Development, mentioned that around 900 people will be disconnected from the State due to the optimization of the entities. But Eduardo Jurado, secretary of the Presidency, added that in public companies approximately 1,500 officials will be removed, mainly due to duplication of functions.
The personnel cut is not recent. By arrangement of the Ministry of Labor, occasional contracts that have already completed their cycle were reviewed. In this way, 42,000 have been separated until May 2018, Agusto said.
In the opinion of Santiago García, professor at the Central University of Ecuador, the economic measures are adequate for the current context and, far from what other experts consider, they do not pave the way for the International Monetary Fund (IMF). If the government decreases its presence as the engine of the economy, it is for the private sector to act, take the post, invest and prevent the country from falling into recession, said García, who also highlighted production credits.
The plan is to grant $ 800 million in financing to the construction and housing sector, $ 200 million to agriculture and $ 235 million to MSMEs and popular and solidary economy. For the National Federation of Chambers of Commerce of Ecuador the fiscal adjustment “is positive and necessary”, but it is necessary to work on improving the national competitiveness. In that sense, the employers estimate that there are still taxes “harmful to business” such as the advance payment of income tax and the tax on the exit of foreign currency.
They also ask to review the conditions for employment with greater adaptability. But not all sectors agree. The Federation of University Students of Ecuador (FEUE) and the Workers Unity Front (FUT) called for a march in Quito to be held today from 4:00 pm. The FEUE maintains that the measures adopted, plus the Law of Productive Development, reflect the direction of international organizations and benefit large companies.
Although it is recognized that the previous government established an “obese” state apparatus, the students suggest taking action on the salaries received by high officials and that the optimization of the institutions is based on the utility they provide. José Villavicencio, president of the FUT, said that the decisions of the Executive are contradictory because on the one hand interests and fines are condoned to employers, while on the other the super gasoline subsidy is eliminated and later a national dialogue is called to focus the subsidies.
The leader questioned that thousands of public servants have to be separated, which will increase the level of unemployment. In front of the government announcements, the FUT proposes that people be relocated, collect interest, fines and surcharges to the economic groups, adjust the income tax, end the oil intermediation, recover the money from corruption and renegotiate the contracts with cell phone companies.
The organizations will march from the Social Security Fund to the Plaza Grande. Subsequently, new mobilizations will be announced at the national level. (I)