Ecuador implements new measures to boost its economy
Reduction in public expenses, removing subsidies and a new labor reform are some of the changes to be applied on the economy of Ecuador
In order to strengthen the economy of the South American country, the government of Lenín Moreno has launched a series of economic adjustments which help to raise the income margin in the nation. Among the government plans is included a reduction in public expenditures, the elimination of subsidies and the implementation of a new labor reform, opening roads to temporary hiring and a series of tax incentives in foreign trade.
The measure, which will enter into force since midnight on Thursday, in terms of public spending aims to release the 1.4 billion dollars annually that the State spends on fuel consumption benefits. According to the head of state “they have delayed the decision for decades. Many of my opponents criticize me and future candidates are not going to say it in public, but they do say it in private fields.”
The Government of Lenín Moreno announced that it would impose measures to reduce the fiscal deficit in addition to the elimination of fuel subsidies, weeks ago. In this regard, the former Minister of Finance, Francisco Swett, told El País: “Removing subsidies is, no doubt, a better option than raising VAT. A third of all the oil revenues that Ecuador has received from oil era have gone to subsidize fuel consumption. This has brought a series of distortions, including the impact of smuggling, which is no small matter.”
Apart from the subsidy cuts, the economic strategy of the Latin American country includes a labor reform that opens the doors to temporary hiring and a series of tax incentives in foreign trade with the withdrawal of tariffs on capital goods and raw materials, according to Iván Ontaneda, Minister of Production and Foreign Trade.
Given this scenario, Finance Minister Richard Martinez said that in four weeks must be presented “the general budget of 2020 and this will have a new face. Finally, there will be a break in the growth inertia of the wage bill. And we will begin to sincere the economy by removing subsidies. The investment plan will adapt to what generates growth, such as construction or social investment in infrastructure.”
K.Villarroel
Source: elpais
