Stick and carrot
After the unsettling riots of last October, the Assembly has given stick and carrot to the government. First, a majority of over 70 votes denied the proposed economic bill sent by the Ministry of Finance as urgent at the beginning of November. Albeit there were political motives behind this denial, it is difficult not to recognize that such a lengthy and cumbersome project could not be approved in two weeks.
Also, the budget for 2020 that will be in effect also in 2021 when a new president is elected, was submitted early November. Legislators once again where in disagreement with the Ministry of Finance –especially on the inclusion of $2.0b coming from private concessions of some public companies that were treated as permanent revenues in the budget. This and other discrepancies prevented the approval of the budget in the Assembly and it passed by the authority of the law.
We estimate the General Government to end with a deficit of $3.7b including revenues from oil facilities thanks to severe under-execution of capital expenditures that by December 23 sum $4,624 million versus the $6.2b planned originally. Domestic amortizations would amount to $1930 million and external ones to $3055. Adding CETES, floating debt and the deficit, total financing needs could sum $13.1b. The government has received $12,720 million as of November 30 and $2714 million are still pending to come from external multilateral sources. Even in the event all of these monies arrive before year end, accumulation of deposits might reach around $1580 million still $400 million below the goal under the IMF program. However, the IMF declared the goals for Q2 and Q3 as achieved which brings a rush of fresh air that was much needed after two months of tough times.
Corruption scandals of campaign bribery that involve some public officers from the past government including former President Correa will not see a decision from the judge until January 13, 2020. If Correa is not called for trial, he might be enabled to participate in 2020 as a vice-presidential candidate. His participation might radically change the political panorama as Jaime Nebot might not run in such an event.
Thus, year 2020 will prove to be quite interesting since the beginning. In the meanwhile, we wish all of our clients a wonderful Holiday Season.
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