Correa The Chess Player
Six months ago, Correa was ready to run for another election in 2017 and was strongly pushing reforms to the Constitution that would allow indefinite re-election. A few weeks ago, he declared his presence in the 2017 elections was not necessary given the evidence of a week and not articulated opposition.At the same time, he proposed a transitory amendment to ban the participation in the next election of all those who have been elected in the two past elections.
Soon after implemented the above strategy, the president started to talk about the possibility of “cross dead” in 2018.This is a figure authorized by the Constitution by which Congress could put a president out of office but at the same time, all legislators would have to resign and new elections will be called for all appointments.These declarations have half of Ecuadorians perplexed and asking what is that Correa really wants.For many, the political events of Argentina and Venezuela announce the end of “Correismo” in Ecuador as well but we are not sure as we think Correa is right in his assessment of the opposition.
On the bright side, history was made when the government paid the $650 million par value of Global bonds 2015 honoring its international debt in full for the first time in 175 years.Additional good news came when Colombia and Peru recently accepted the inclusion of Ecuador in the trade agreement with the European Union.In the context of a trade deficit of around 2.7% of GDP despite import controls that would have to be reduced or eliminated next year, any effort to increase exports seems crucial.
On the Fiscal sector, we expect an overall deficit or around 5.3% of GDP accompanied by negative growth between 0.5% and 1% of GDP for 2015.
The government also announced two important mining projects to be developed in 2016.The Ecuadorian/Chinese Ecuacorriente will develop Mirador and the Canadian Lundin will invest in Fruta del Norte both with important reserves of copper, gold and silver.Also, the government is expecting to receive soon $1000 million from the French Schlumberger in exchange of exploiting Auca an oil field property of Petroamazonas.
All of those projects together with the hydroelectric ones will bring relief to the Ecuadorian economy but not before 2017 or 2018 leaving 2016 as one of the toughest years since the insertion of dollarization.
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