The new Ecuadorian journalism website www.4Pelagatos.com has published a report from economist Marco Flores on the state of the Ecuadorian economy. Below are selected excerpts.
1. Between January 2007 and November 2015, the eight years of Rafael Correa’s regime, the total expenditure of the Non-Financial Public Sector (NFPS) reached an unprecedented $264.9378 billion and, of that total, $181.1231 billion, i.e., 68.4%, was current expenditure.
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2. Of every ten Ecuadorians who are able to work, more than five are either unemployed or underemployed (in inadequate employment with precarious income). In December 2006, more than 53% of the Economically Active Population (EAP) was unemployed or underemployed. The most recent available figures, issued in September 2015, show that this figure has risen to 53.5%. According to the Fiscal Policy Observatory, the situation is even worse if the rural sector is taken into account, with over 60% of the EAP unemployed or underemployed.
3. In December 2009, after the Government announced the default or non-payment of the 2012 and 2030 global bonds, Ecuadorian debt totaled $10.199 billion, equivalent to 16.3% of GDP. By November 2015, that figure had risen to $32.8475 billion, representing 32.9% of GDP, despite the Government’s decision not to include in the total the so-called oil advances, its arrears with suppliers, or other financial obligations it had accumulated by the end of 2015. The most recent report from the International Monetary Fund (IMF), issued on October 21, 2015, predicts that in 2016 public debt will exceed 40% of GDP, i.e. above the macro fiscal rule or legal limit established and authorized in Ecuador.
4. Ecuador’s country risk index now stands at 1500 basic points. The risk indexes of neighboring countries are substantially lower: Colombia at 354 points and Peru at 263 points. With a risk level this high, foreign investment is unlikely to grow, even less with any kind of stability.
5. According to reports from the Economic Commission for Latin America & the Caribbean (ECLAC), in 2014 Ecuador’s Net Direct Foreign Investment (IEDN for its Spanish acronym) was just $600 million. In neighboring countries, IEDN was much higher: Peru $6.860 billion; Colombia $12.818 billion.
6. The most recent report from the World Justice Project, which publishes the Rule of Law Index, places Ecuador at the shameful rank of 77 among 99 countries.
7. Ecuador is in outright economic recession, with GDP decreasing during the first three consecutive quarters of 2015. In fact, the growth rate has been in decline since 2011. Several international organizations, including the World Bank, predict that Ecuador will show negative growth in 2016.
8. According to the Association of Private Banks of Ecuador, between November 2014 and November 2015, total deposits in national private banks declined by $2.693 billion.