Ecuadorian Government: Whatever it takes
Despite cuts of $1.4 b in expenditures, the 2015 budget still shows financing needs above $10 b. China came to the rescue with a comprehensive package of loans that amount to $7.5 b but only about $4b will be available in this year. This issue combined with falling yields for the Ecuadorian bonds have pushed authorities to reach Wall Street again to raise an additional $1 b. However, the financial gap would still be above $2.5 b and the additional $1 b in bonds will cover only a fraction of that. Total debt as % of GDP has increased 8% since 2012 and external debt is up 5%. In this scenario, the government should come up with additional cuts to expenditures, but it seems to be ready to finance the deficit whatever it takes. On the side of the external sector, the government has responded to the dramatic fall in oil exports with additional import taxes on 2,800 products that go from 5% to 45%. Minister Rivera also announced some incentives for exports mainly tax refunds (around $253 m) and expedite export procedures.