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Ecuador Accused of Boosting Taxes to Cover Costs of Earthquake Damage

ISSN:1060-4189
LADB Article ID: 79984
Category/Department: Ecuador
Date: 2016-05-20
By: Luis Ángel Saavedra

Ecuador has a pro-forma 2016 budget of approximately US$25 billion and a fiscal shortfall of some $US8 billion, caused mainly by a dependence on oil exports that have suffered falling prices in the last two years. Now, the government has decided to deal with the economic crisis by creating new and unexpected taxes, arguing that more funds are needed to face the damage caused by the April 16 earthquake on its northern coast. Since the beginning of the year, faced with criticism from political opponents, the government has defended its 2016 budget, arguing that most allocations were for social investments in education, health, housing, and similar areas––items not considered public spending and therefore not to be reduced. As a show of sensitivity, the government said it would review some budget items that are considered expenditures, such as travel and per diem expenses of high-level officials, the expenditures of some government ministries, and non-urgent public works. It did not touch the publicity budget. The right-wing opposition insists government spending is too high, and includes in this assessment the salaries of teachers, doctors, and other professionals working in fields related to social investment.

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