In 2019, the government must prepare its “wallet” to spend more on fuel imports.
According to proforma 2019, which was presented to the Assembly last Wednesday for discussion and approval, next year 4.841 million dollars will be spent on fuel and gas imports.
The amount, said on Wednesday the Minister of Economy and Finance, Richard Martinez, represents $ 1,700 million more than budgeted for this year. That is, for that purpose, 54% more will be spent compared to what is expected to be spent in 2018.
However, it is still necessary to know in detail how much will be allocated in subsidies in 2019. Although fuels are subsidized, the Government has a margin of income when it sells them. To that also the export of fuels is added, explains Santiago García, Professor of Economics at the Central University of Ecuador.
But, why is it that the Government plans to spend more on fuels? Martinez said that the rise in the price of oil in international markets directly impacts the cost of oil derivatives and that is the main factor.
For proforma 2019, the Ministry of Economy and Finance (MEF) did not add to the total the amount that the Government will spend on imports of petroleum derivatives. Without that data, the proforma reaches 31.318 million dollars. With the import of fuels, the proforma amounts to 36,159 million dollars. That is to say, it exceeds in 1,306 million dollars the proforma 2018.
Martínez assured that they did not add the data on fuel imports to the proforma “for transparency”.
In addition to the increase in the price of oil in world markets, the deficit in the production of the country’s refineries, such as that of Esmeraldas, is another cause to import more fuel, says the former vice president of Petroindustrial, Edmundo Brown.
Another factor is the growth of the country’s automobile fleet. “Imports of cars are growing,” says Brown.
The government’s effort to optimize fuel subsidies is still minimal and has remained in the announcements, García says. For this reason, a national agreement must be reached to solve this problem.
In August of this year, the government announced that it would review the subsidies and ultimately only focused on withdrawing the super gasoline subsidy. In addition, the subsidy to industrial diesel was revised. By 2019, a saving of 42.7 million dollars is expected thanks to the measures.
Other figures of the proforma 2019
The 2019 proforma was drawn up with an oil barrel of 58.219 dollars. In recent days, economists from international banks consulted by EXPRESO indicated that their estimate was between 63 and 65 dollars.
In the pro forma 2019 it is estimated that Ecuador’s Gross Domestic Product (GDP) will grow by 1.43%. While the GDP, nominal, calculated in millions of dollars, would come next year to 113,097 million dollars.
The Ministry of Economy and Finance estimates that inflation for next year would be 1.07%. Annual inflation in December last year ended at -0.20%, according to data from the National Institute of Statistics and Census. (I)