Government foresees a spending adjustment equivalent to $ 3,500 million, until the end of the period

The Minister of Economy and Finance, Simón Cueva, reported that within the financial program with the International Monetary Fund (IMF), approved on Wednesday by the Executive Board of the multilateral, an adjustment of at least 4.5% of the product has been foreseen gross domestic (GDP) until the end of the period.

The Minister of Economy and Finance, Simón Cueva, reported part of the goals of the agreement with the IMF. He assured that the letter of intent and other documents of the agreement will be known next week.

This adjustment will be made in two ways, the minister revealed, indicating that the largest proportion (three-quarters) of this effort will come from spending adjustments and the other quarter will be the result of tax revenue. Thus, he explained that until 2025 spending should be lowered by about $ 3,500 million, while $ 1,000 million would close the deficit gap due to the tax reform ($ 700 million) and $ 300 million more for improving tax collection.

The explanation was given after learning that the International Monetary Fund (IMF) had given the green light to the agreement that had already been drawn up together with the IMF’s technical team and the Ecuadorian authorities, corresponding to the second and third combined review of the agreement. The deficit reduction goal is one point less of GDP than was expected in the agreement signed with the Government of Lenín Moreno, in which a reduction of 5.5% of GDP was established.

The slightly less strong adjustment would be due, according to Cueva, to the fact that the IMF sees a government with a longer horizon, with prospects for trade openness, which has led the agency to revise the country’s growth figures upwards. In any case, the minister indicated that the IMF’s growth figures are more conservative than those predicted by the government itself; However, he explained that it is a traditional position in the IMF to be more conservative and to hope that the country performs better to bet on more optimistic scenarios. Ecuador expects to grow by 5% in 2025.

He explained that next week the letter of intent and all the documents related to the agreement with the IMF will be made known in a transparent manner.

At the moment it is known that in these days there will be a disbursement of $ 800 million, while by the end of December another $ 700 million would arrive.

The IMF has indicated that there has been continuous improvement in public financial management and progress in transparency and the fight against corruption, which would underpin trust in public institutions and stimulate private sector activity in the future. (I)