Government debt higher margin, according to Jose Hidalgo

The general director of Cordes, Jose Hidalgo, in an interview with Ecuavisa mentioned that the first effect of the drop in oil prices will be a drop in the economic activity, and this is because the Ecuadorian economy in recent years has become increasingly dependent on public expenditure, until last year that spending represented 44% of the gross domestic product (GDP).

Hidalgo also took into acount some changes in the methodology of some concepts in the bulletin of the Ministry of Finance. Thus, in the previous months, the Bulletin of Consolidated Public Debt that was the sum of the total balance of domestic and external debt, in July, a “novelty” is introduced, a new concept is created, the aggregate debt replaces what used to be known as consolidated debt.

Now the government calls aggregate debt the sum of the total balance of the domestic debt and the external debt, while consolidated debt is the one that takes into account the totality of the external debt and the internal debt owed to private creditors of the regime, here It is not taken into account the roughly 11 000 billion that the government has aa debt with public bodies, mainly with the IESS.

The consequence of this is that the debt / GDP relation decreases, falling to 21%, so the government would have a much greater margin to increase borrowing, and would no longer have the 32% (debt / GDP). The ceiling set by law is 40%.

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