A lot of coffee, 16 hours of daily work and even weekends. This is how the budgetary proforma of 2019 is finalized, according to officials from the Ministry of Economy and Finance (MEF), which will be sent to the Assembly between today and tomorrow for discussion and approval.
Prepare the document that defines, for example, the expense in salaries, the possible income of the Government, the acquisition of debt, among other items for a whole year, requires the work of 60 people of the Undersecretariat of Budget, according to the Ministry of Finance.
This team is joined by 20 or 25 people from the sub-secretaries of Fiscal Relations (which handle autonomous governments and public companies), the Fiscal Policy, Public Financing and the Directorate of Public Expenditure Quality. That is, some 85 officials of the State Portfolio participate in the process.
But not only MEF personnel participate in the work. The Internal Revenue Service (SRI), the National Customs Service of Ecuador (Senae), the Central Bank of Ecuador (BCE), the National Secretariat of Planning and Development (Senplades) also participate in the elaboration.
How long does it take to perform the proforma? Public entities have until August to send their budgets and the MEF is fully dedicated between September and October to make the budget pro forma.
A computer program is added to human talent: Esigef, says Finanzas. Former Finance Minister Carlos de la Torre explains that the figures are uploaded to the computer program to corroborate that they comply with current regulations, for example, the minimum amounts that should be allocated to sectors such as health and education.
To all that “complex process” is added the political lobbying, says De la Torre. According to the expected income for the following year and as allowed by law, the budget must be raised or lowered for various sectors, such as universities or autonomous governments. “It must also be evaluated from a political perspective what should be done,” says De la Torre.
For the former Minister of Finance, Mauricio Pozo, the proforma must be carried out under a principle of prudence. You should not underestimate expenses or overestimate incomes, says Pozo. For this reason, authorities should not get carried away by “too optimistic” when making numbers. “That they have supposed that they are more attached to the reality”, maintains the economist.
Although the policy intervenes and is not usually easy to handle when preparing the proforma, Pozo says that the technical factor must prevail.
Keep shrinking the deficit
One of the challenges that the Ministry of Economy and Finance must face is to continue reducing the fiscal deficit, that is, the lack of resources to cover all expenses. Lack of money means that you have to resort to indebtedness.
Earlier this month, the government announced that between January and September of this year the deficit of the state budget fell by 1,664 million dollars, 57% less than that reported in the same period last year.
The Government seeks to reach zero primary fiscal deficit in 2021, that is, that all revenues cover their expenses, without taking into account the payment of interest on the debt.
Payments to the IESS and interest
Next year brings with it the responsibility of returning to assume the payment of 40% of the retirement pensions that, in numbers of the Ecuadorian Social Security Institute for this year will be 1,730 million dollars.
But it is not the only thing. In 2019, according to analysts, it is also necessary to add other additional expenses such as the interest generated by the payment of the debt. It is estimated that for the next year the debt would increase another 6,000 million dollars, so it is expected that in the interest item is budgeted at least some 3,400 million dollars in the proforma. Some 900 million more than in this year. (I)