chartered WITH NEW VERVE
By forming new ties and strengthening old ones, Ecuador is showing friends and investors alike that it’s brimming with good ideas and open for business.
Ecuador aims to make its economy more competitive, the proof of which is its new commercial and investment policy. Through which major reforms is the government planning to achieve greater economic revitalization?
The government of President Lenín Moreno has established the Prosperity Plan, which has two components, namely employment and industrial reactivation. In this sense, we have adopted several actions to open Ecuador to the world and attract private-sector investment, the true engine of growth. We have left behind an economic model that hurt Ecuador by generating distrust between the public and private sectors. We inherited a sick economy, but we are healing it with the orderly management of public finances, through which we have reduced the fiscal deficit from 8% of GDP to 3% as of end-2018, the lowest in six years. We have also formed new international relations and strengthened old ones. Equally important, we have strengthened our democratic institutions, which is a fundamental factor when it comes to providing legal security to companies. We have introduced powerful, region-specific tax incentives, such as income tax exemptions for periods ranging from eight to 20 years. In this way, our private sector has begun its dynamic journey. 2018 closed with a historic increase of USD4 billion in private investment. Moreover, non-oil exports grew by 5% and total private sales rose 4%. We have made considerable progress and are aware that we must continue working to strengthen Ecuador’s status as an investment destination. In this sense, we are proposing a package of structural reforms to further promote entrepreneurship, innovation, and job creation. Specifically, we intend to reduce informality in the labor market, particularly of women and young people. Similarly, we are proposing another legal reform to facilitate PPPs for infrastructure projects. One of our focuses is to establish a robust stock market that allows the inclusion of SMEs. In regard to public companies, we are proposing a legal reform that gives them the management tools they need to be more efficient and transparent. The reform package also seeks to strengthen our monetary system and provide an order to manage the public budget.
What is Ecuador’s position regarding cooperation with international financial institutions such as the IMF?
Ecuador could not live isolated from the international community. Therefore, we have established a policy of openness and rapprochement toward multilateral organizations and global economies. This has generated more confidence in Ecuador, opening the possibility of accessing cheaper financing, attracting more foreign investment, and exporting to more markets. In 2018, we attracted a record USD1.4 billion in FDI, a 127% increase YoY. Due to the current administration’s efforts, the international community has committed USD10.2 billion to support the Prosperity Plan over the 2019-2021 period. The support of the international community shows that the government’s program is on the right track. Our comprehensive economic program with international organizations also establishes an increase of around USD400 million in social spending in 2019, helping us maintain a social assistance expenditure floor of 1% of GDP.
What did the 2019 meeting of the board of governors of the Inter-American Development Bank (IDB) in Guayaquil mean for the country?
The fact that Ecuador organized the 60th annual meeting of the board of governors of the IDB is a demonstration of international community’s renewed interest and confidence in the country. After 47 years, we returned to host the most important regional event of the IDB, which focused on important economic and social issues of the region and the institutional development of the organization. More than 5,400 participants attended. ✖