The Ministry of Economy and Finance had to take out again the calculator to fix thenew items of the proforma that was delivered to the Assembly last Tuesday night.
The main novelty is the downward revision of the price of a barrel of oil. The figure went from 58.29 to 50.05 dollars. The MEF said the decision is due to the behavior shown in the international oil market in recent weeks and the result sof the recent meeting of the Organization of Petroleum Exporting Countries(OPEC).
What does that change imply? If the income decreases, expenses should be reduced and the Government decided to cut mainly in two areas: salaries and subsidies.
In the case of salaries, the MEF plans to cut $ 135 million more than expected. That is to say, if it is compared with the budget (codified) of this year, in salaries it is estimated to save 205 million dollars in 2019.
The other adjustment figure has to do with subsidies. The Government plans to reduce some 613 million dollars for this concept. “The National Government, with the purpose of maintaining the oil revenues of the Budget Proforma 2019 and not increasing the financing needs (through generating a greater global deficit), has planned to deepen the optimization analysis of the fuel subsidies during the fiscal year corresponding to 2019, “the MEF saidin a statement.
For the president of the College of Economists of Guayas, Larry Yumibanda, the reduction in subsidies can come from two factors: the first is that due to the lower price of oil in international markets, the amount that is destined for the import of derivatives is also would reduce. The other way is to lower the subsidy for extra gasoline.
Francisco Silva, director of the National Chamber of Distributors of Derivatives of Petróleos del Ecuador (Camddepe), said that in the current economic situation it is advisable to lower the subsidies, and see two options: focus the diesel subsidy and periodically check the price of gasoline extra $ 0.05 each month until it reaches its international price.
The new proposal of the Executive must be voted on by the Assembly. The deadline expires on Friday, December 21, although it is possible that it will be done on Tuesday, December 18, said Patricio Donoso, member of the LegislativeAdministration Council (CAL).
The 1,000 million dollars that the Government expects to receive for concessions is maintained in current revenues. The MEF said that it is explained that “it is in accordance with the international income classification manuals”.
The MEF said in a press release that it is proceeding to reallocate resources in favor of universities and public polytechnics maintaining the global values of this year’s budget.
TheGovernment informed that a plan of meetings between the MEF and the IESS isunder way to validate and purify the information with which social securitycounts on the contribution of 40% to retirement pensions. (I)