Lasso leaves a small financial gap, but a stagnant economy

The budget deficit was reduced during Guillermo Lasso’s government, but no investment or employment was picked up.

Guillermo Lasso Daniel Novoa leaves the country A small cash gap in the budget State and A Small external debtCompared to what was received in May 2021.

However, the statistics also show that it will give up Ecuador with poor economic development And the unfulfilled promise of attraction More private and foreign investment.

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By the end of 2023, the forecast of the Central Bank of Ecuador (BCE) is GDP 1.5% of the country’s (GDP) growth.

The International Monetary Fund (IMF) is less optimistic, predicting growth of 1.4%. This would be 2.3%, below the average for Latin America and the Caribbean.

This rate Economic development Ecuador is the opposite GDP 2021When Lasso came to government, this It was 4.2%.

Lasso came in a year of economic recovery

Lasso began to rule By the middle of the year, the country had slowly started to emerge from strength Economic crisis who left The international spread of Covid-19.

Therefore, 2021 is considered to be the year of economic recovery after a sharp decline of -7.8% in 2020. This category A rebound was seen in economies around the world.

and the Government of Laos It had high liquidity in its first yearBecause they increased Oil price And because Payment has been made A loan program linked to the IMF.

On the other hand, Novoa will have limited financing options in 2024 as it is considered a transitional government. A country’s risk is 1,921 points As a result Issuance of external bonds is not possible to finance his government.

But the biggest cash flow in 2021 does not translate into large public investments. The Lasso government prioritized the goal of reducing the resource deficit in the state budget.

Part of this dissatisfaction was Arguments for a national strike Convened by tribal movements in June 2022, it left Economic loss of USD 1,115 million.

Also, during the national strike, the Country risk rose from 853 to 1,945 points.

And 2023 is an even more complicated year: The Oil revenues fell During the first semester and A wave of insecurity levels reached Never seen before.

All this in the middle Political crisis led to Early conclusion of Lasso’s decree.

This is how key indicators of Ecuador’s economy look for the government of Daniel Nobo.

  • Impact of the Covid-19 pandemic a Sharp increase in unemployment in 2020Due to systematic changes, the rates cannot be compared to 2021.

    Thus, Lasso became the President He promised to create two million new jobs Until 2025.

    But towards the early end of his tenure, the target was not achieved, although the population ratio was a Appropriate employment is developed and mastered from 30.2% in May 2021 35.5% by September 2023.

    Sufficiently employed earn a basic salary of at least USD 450 and work a full eight hours a day.

    He Unemployment has also decreased 3.7% from 6.3% in September 2023.

    But a large number of inadequate employment includes people who work informally or without basic wages A pending issue for Noboa.

    He 60.4% of the population Economically active Inappropriate employee.

  • Noboa will rule a country 27 out of every 100 Ecuadorians live in poverty.

    A person is considered poor in Ecuador Living on less than US$3 a dayThis is 20% of the basic salary, which is USD 450 in 2023.

    The Poverty rate is low Compared to June 2021, 32 out of every 100 Ecuadorians were poor.

    However, there are more risks in 2024 The quality of life of poor people deteriorates.

    The above, because people in poverty Very vulnerable For potential outcomes El Nino phenomenon.

  • In 2020, the Resource scarcity To cover expenses in the budget A total of 6,472 million US dollarsThis is equivalent to 7.8% of GDP.

    That deficit was the result of one year Oil revenues fell And due to the Covid-19 pandemic, tax revenue has declined.

    But the situation changed in 2021 Post-pandemic recovery and tax reform That increased Income tax rate Created temporary levies for companies and high net worth individuals.

    By 2021, the The deficit narrowed to USD 1,819 million And in 2022 it was 1,342.7 million.

    But with falling oil revenues and a higher demand for public spending, especially salaries for the bureaucracy, the outlook for 2023 looks different.

    The government’s forecast is that there will be a deficit USD 4.2 billion or 3.5% of GDP. Although analysts predict that there will be Over 5,000 million US dollars.

    Also, till October 2023, according to the data of the portal of the Ministry of Finance, the government accumulates 1,749 million USD outstanding With suppliers, IESS and local governments.

    Finance Minister Pablo Arosmena said efforts were made during his administration to reduce the historical or accumulated arrears from previous years to US$2,767 million in June 2022.

  • Daniel Noboa’s public debt will be less than Guillermo Lasso’s in 2021.

    By reducing the budget deficit, the Credit requirements are reduced.

    Thus, the Total public debt A total of USD 75,227 million till August 2023 62% of GDP. In June 2021, total public debt was equal to 71% of GDP.

    However, the Noboa government has a bigger problem Limited financial resources To meet general expenses and compensation Maybe Tax cut You plan to implement.

    Besides, Between 2025 and 2026 Amortization or very long maturities of installments External debt.

    As a result, international markets have panicked Ecuador falls into default or stop payments on external debt.

  • One of Guillermo Lasso’s campaign promises was to open Ecuador to the world and Attract more private investment.

    During his reign, they were promoted Important Trade Agreements, like China. This agreement still needs to go into effect Consent of the National Assembly.

    The Foreign Direct Investment (FDI) Ecuador is attracted in the first half of 2023 USD 106.6 million.

    This is an 87% drop compared to the US$811.2 million the country received during the same period in 2022. In addition, it Low foreign investment since the first half of 2016.

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