Voters Taking a Wait-and-See Stance
Ecuador is experiencing a revolting yearend, due to several corruption scandals linked to government officials, and to severe social disruption over mining issues in the large Morona Santiago province.
The web of corruption discovered in Petroecuador has reached its highest officials, has implicated over 30 people and has already sent two to jail. But former Petroecuador president Carlos Pareja Yanuselli, a friend of President Rafael Correa’s, has fled the country, taking advantage of the fiscal attorney general’s slow reaction. There have also been several accusations against Vice President Jorge Glass, the ruling Alianza Pais’ 2017 vice presidential candidate. The government calls those false accusations raised by the opposition, as part of a dirty political campaign. Meanwhile, the U.S. Department of Justice revealed that the Brazilian company Oderbretch paid some $33 million in bribes to Ecuadorian government officials between 2007 and 2016.
These scandals have not helped ruling party presidential candidate Lenin Moreno, who is losing political ground. Moreno started with 38% of voter intentions back in June, a figure now dwindled to 32% to 34% and falling, according to recent polls. Since Guillermo Lasso of the centrist CREO and Cynthia Viteri of the rightist Social Christian Party show percentages of between 17% and 22%, it looks as though the official party might not achieve the 40% of required votes, plus a 10% difference over the second runner up, to win in the first round. However, 49% of voters are still undecided; some may be waiting to see which candidate becomes the clear runner-up, in order to throw their support to that person, and against Moreno.
Minister of Finance Fausto Herrera, undoubtedly one of Correa´s best ministers, has resigned for health reasons, and has been replaced with the controversial former minister coordinator of economy, Patricio Rivera. Herrera did an outstanding job of financing the public budget, in a year when financing needs more than doubled from the previous one, to over $13 billion. Ecuador has three main financing sources: China, private bondholders, and the Central Bank. The latter has provided the central government with $2.96 billion in 2016 alone, according to former Central Bank General Manager Diego Martinez, funds coming from internal assets coming of all public entities. Apparently Martinez failed to mention that part of these funds also came from private banking reserves.
ECLAC revised its negative GDP growth projections for Ecuador, from 2.5% to 2%, and is projecting positive growth of 0.3% for 2017. We maintain our 2016 GDP estimate at -2.5% until we see results for Q3 2016.
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