President Ecuador announces new public spending cut package to face pandemic

QUITO, May 19 (Reuters) – Ecuador’s President Lenín Moreno announced on Tuesday a new package of cuts in public spending, which includes a reduction in the working day, and a new fuel pricing system, in a I try to alleviate one of the worst liquidity crises facing the Andean country.

The fall in oil prices and the economic effects of the pandemic have lowered the country’s income by some 8,000 million dollars, in addition to another 4,000 million fiscal deficit that the government was already facing.

“In total, it is 12,000 million dollars. About 50% of income as a country. It is as if a family lost half of what it needs to live,” Moreno said in a televised intervention.

In the scenario of low crude oil prices, Ecuador will apply a band to fix the prices of extra gasoline, the one with the highest consumption, and diesel, an issue that led to Moreno protests from social and indigenous movements in October of the year. past.

“From now on, with the formula that we will apply, a band will be established that prevents the price of gasoline and diesel from rising dramatically if the price of oil rises,” Moreno explained on radio and television.

The cut in public spending adds up to some 4,000 million dollars, which points to a reduction of two hours in the working day, which will also imply lowering the monthly salary of officials.

In addition, it includes capital expenses and the renegotiation of the debt that had been announced by the Government, which would save the country some 1,300 million dollars.

Moreno also announced that he will eliminate some public institutions and close several embassies and consulates, as well as the return of dozens of diplomats to the country.

The pandemic has hit Ecuador with more than 33,000 infections and nearly 2,800 deaths from the coronavirus, but it is also putting pressure on its dollarized economy to look for alternatives to obtain higher incomes.

Moreno has received nearly $ 1.5 billion in recent weeks from multilateral organizations to face the effects of the pandemic. (Report by Alexandra Valencia)