The General State Budget (PGE) will be affected due to the pandemic of the coronavirus . The health emergency would cause the Ecuadorian economy to decrease by 6%, according to estimates by the Ministry of Economy and Finance.
The State portfolio projects an income reduction of $ 8,000 million for this year. The PGE 2020 was approved with $ 35,498.42 million, which included permanent income of $ 23,853 million and non-permanent income of $ 2,792 million.
Among the values that will not reach the state coffers are $ 2.7 billion in oil revenue. Prior to the pandemic , for 2020, the PGE was estimated at a price of $ 51 a barrel of oil , but the value has reached less than $ 0. Due to the global crisis by the coronavirus, oil revenues will reach just $ 520 million.
Since mid-March 2020, the President of the Republic, Lenín Moreno , decreed the state of exception for the COVID-19 and the sanitary measures stipulated social distancing and a curfew.
The isolation caused less economic dynamism due to the total suspension of almost 70% of productive activities, which has also had an impact on a reduction in tax collection.
Finance Minister Richard Martinez has explained on several occasions how strong the impact of the coronavirus has been on the country’s economy . In April 2020, there was a drop of $ 312 million in the collection of income tax and profits.
According to data from the Internal Revenue Service (SRI), the loss was almost 30% less than that collected in April 2019. The situation with the value added tax (VAT) is similar. The SRI received $ 180 million less compared to April 2019 (- 36%).
According to Finance data , the total income of the PGE in April 2020 was $ 1,418 million, while expenses came to exceed $ 1,428 million. The fiscal deficit initially forecast for this year was $ 3,384 million. Now the forecast is $ 8,653 million.
Regarding the need for financing, the $ 12,518 million anticipated initially for this year will increase to $ 17,163 million.
How is the General State Budget put together?
Every year the National Government assembles a general budget based on an estimate of the financial resources that Ecuador has. Among the strongest revenues are the sale of oil and the collection of taxes.
Also included in the budget are expenses, among which education, health, housing, security and transportation services stand out . There is also social investment.
The costs are according to the needs identified in the sectors planning and development programs, explains the Ministry of Finance.
Given the complicated picture , the Government has taken some actions. Martinez said last week that the budget cut would amount to $ 5,000 million through the reprofiling of debt , adjustments in public spending , postponing non – priority projects and reduction of the wage bill of the public sector.
Another $ 1.4 billion has already come from international loans and it is expected that the citizen and business contributions contemplated in the Humanitarian Law will further mitigate the impacts of covid-19.
The authorities have insisted that in the face of the complicated economic situation there is a way out with fiscal discipline and the solidarity of all. ( I )