Los principales grupos económicos en Ecuador se fortalecieron durante gobierno de Correa

Fortalecidos grupos económicos | Columnistas | @eluniversocom

Los principales grupos económicos en el #Ecuador se fortalecieron durante la década del gobierno de Rafael Correa, según datos del @SRIoficialEc

Los ingresos de los 27 principales grupos económicos aumentaron del 28,4 % del valor agregado bruto en 2013 a 29,6 % en 2017, según mi artículo ‘Fortalecimiento de los grupos económicos en el #Ecuador en la última década’, Revista “Economía”, No. 114

http://revistadigital.uce.edu.ec/index.php/ECONOMIA/article/view/2222

Los 22 grupos económicos para los cuales hay información del SRI a partir del 2007 duplicaron sus ingresos entre 2007 y 2017, con ingresos de $11.007 millones en 2007 y $21.919 millones en 2017. Se fortalecieron los grupos económicos que se beneficiaron de la política económica del gobierno.

El portal @Pinvestigacion3 reportó sobre los mayores patrimonios declarados. 5.196 personas reportaron un patrimonio superior a un millón, con un total de $16.000 millones. Se estima que 280 ecuatorianos sacaron al exterior $30.000 millones.

Entre los 200 mayores patrimonios constan accionistas de los grupos económicos, tales como Isabel Noboa, L. Bakker, Marcelo Herdoíza y familia Hidalgo. No constan varios beneficiarios de contratos con el Estado, como Enrique Cadena, Conto Patiño, Diego Sánchez, Tomislav Topic o la familia Eljuri.

https://twitter.com/luis_fierro_eco/status/1268872551830355976?s=21

Una apuesta arriesgada y fallida sacrificó la liquidez del Ecuador

Por Luis Fierro Carrión (*)

En 2018, el Gobierno efectuó dos apuestas arriesgadas, una fue el crédito con Goldman Sachs International por $ 500 millones y la otra con Credit Suisse. Los resultados no fueron los mejores.

La justificación para las operaciones de 2018 era conseguir una tasa de interés anual de 6,5%, más baja de la que prevalecía en el mercado financiero en ese momento para el Ecuador, cercana al 10%. Sin embargo, no está claro cuánto se terminó pagando en intereses, comisiones y penalidades por las “llamadas de margen” y el pago anticipado de las operaciones. Es probable que haya sido más que 6% anual en los menos de dos años que estuvieron vigentes.

El problema de fondo es la escasa transparencia que persiste en el Ministerio de Economía y Finanzas con respecto a la deuda externa y a estas otras operaciones financieras, lo cual es herencia del gobierno de Correa, pero se ha mantenido en el actual.

“El fracaso en alcanzar un acuerdo consistente con la sostenibilidad de la deuda con los acreedores hasta mediados de agosto (cuando expira la suspensión del servicio de la deuda con los acreedores externos del sector privado)”, así como la falta de una adecuada contribución por parte de los acreedores bilaterales dejarían al país en condiciones muy vulnerables por un largo período, dice el FMI

(*) Mas en la Revista Gestión: 

https://revistagestion.ec/index.php/economia-y-finanzas-analisis/una-apuesta-arriesgada-y-fallida-sacrifico-la-liquidez-nacional

Fuente: FMI

Ya en 

A risky and unsuccessful bet that sacrificed Ecuador's liquidity

By Luis Fierro Carrión (*)

In August 2018, the government of Ecuador carried out a credit operation with Goldman Sachs International, for $ 500 million dollars; the operation was guaranteed with bonds with a nominal value of $ 1,201 million dollars.

In October, Minister Martínez made another "repurchase agreement" or "repo" for the same amount, with Credit Suisse, likewise with a guarantee of bonds with a nominal value of about $ 1.2 billion.

María de la Paz Vela published back in August 2018 in Revista Gestion an article titled "High risk in the new financing of Ecuador with Goldman Sachs for $ 500 million" (https://bit.ly/3coGHte), in which she highlighted that “It is an extremely high risk for the country in the present and future situation of scarcity of resources, with the high level of indebtedness it faces - of 60% of GDP or more - extending a collateral of 2.4 times the value of the credit, having high maturities of capital expected for bonds contracted in previous years.”

A collateral of 2.4 times the amount loaned was undoubtedly exaggerated, and very risky.

But even so, back then it could not be foreseen that the value of the bonds in the secondary market could drop below 40% of the nominal value, which would trigger a “margin call” to maintain the real value of the guarantees.

But that was exactly what happened after the October 2019 Indigenous Uprising, when the 2022, 2023 and 2026 bonds fell below 40%, and later, as a result of the COVID-19 pandemic and the collapse of the oil price in the international market, they would drop to less than 30% of the nominal value.

This led to the government having to pay a total of $ 762.9 million to compensate for the drop in collateral value between November and March, with the bulk of $ 506 million paid in March, in the midst of the pandemic. Additionally, $ 220 million had been amortized (it is not clear when); therefore, to close the two “repo” operations in April 2020, the government indicated that it had to pay an additional $ 35.9 million.

In the Ministry's bulletin, an amortization of debt with banks for $ 865 million appears in April, plus $71.2 million paid in "interest and commissions". According to the Ministry's explanation, only $35.9 million was paid in cash, and the rest corresponded to previous payments for “margin calls” of $762.9 million. It is unclear whether other bank debts were amortized in the month.

The justification for the 2018 operations was to achieve an annual interest rate of 6.5%, lower than that prevailing in the financial market at the time for Ecuador, close to 10%. However, it is not clear how much the country ended up paying in interest, commissions, and penalties for the “margin calls” and the advance payment of the operations. It is likely that it resulted in more than 6% per year in the less than two years that they were in force.

The underlying problem is the lack of transparency that persists in the Ministry of Economy and Finance regarding foreign debt and these other financial operations, which is a legacy of the Correa government, but has continued in the current government. The payment of the two operations was first reported by the "Dollarization Observatory" and then picked up by "Bloomberg", before the Ministry reported what had happened.

A potential risk is that the payment of the total capital of these two operations could have an adverse effect on the renegotiation of the outstanding bonds (by inferring unequal treatment of different private creditors).

In April, the consent of the bondholders was requested and obtained, to suspend the payment of interest for four months, in order to renegotiate in that period the terms of the bonds: amount (possible reduction of part of the principal), interest rate, term, grace period etc. A grace period would be sought (without paying principal or interest); possibly an extension of the term (especially those that expire in 2022, 2023 and 2026); and if possible a reduction in interest rates (which average nearly 9 % per year). The renegotiation of Argentina's debt with private creditors could be taken as the basis, although an agreement has not yet been reached.

In a conference on May 29, Minister Martinez mentioned that another financial transaction with Goldman Sachs for $ 500 million is also planned to be canceled in September; this operation was guaranteed with gold from the reserve (according to the "Dollarization Observatory" the amount would be $ 515 million).

The truth is that the government carried out two very risky operations, with the aggravating circumstance that they had to advance the payment precisely in the most precarious moments due to the pandemic and quarantine; unlike other contingent bonds based, for example, on GDP growth or on natural disasters, this one was designed to be paid just in the moment when Ecuador's country risk skyrocketed.

Relationship with the IMF: emergency loan and suspension of the EFF

On May 28, documents related to the approval of the "Rapid Financing Instrument" for $ 643 million by the International Monetary Fund (IMF) were published. The curious thing is that the approval of this emergency loan occurred on May 2, but the documents were only released on May 28.

This was perhaps because the report mentioned, precisely, the payment of the "margin calls" for the two "repo" operations with Goldman Sachs and Credit Suisse, and the government preferred not to disclose it at that time. It is noted that the international reserve fell by about $ 1.5 billion until the end of March, "the decline was driven by the payment of margin calls on transactions with some private banks ... and public sector external debt service". Net international reserves ended at a negative amount of - $ 3.1 billion at the end of March.

The report also projects a contraction of 6.7% in GDP in 2020, and a financing gap of 8.4% of GDP in 2020 and 7.6% in 2021. In 2019 there was growth of 0.1%, higher than the expected contraction of 0.5%. Total GDP is not expected to return to the 2019 GDP level until 2023.

The report also mentions a reduction of $ 1 billion (2.3% of the total) in deposits from the private financial system at the end of March. However, it indicates that the financial system is well capitalized and has adequate reserves for bad debt. While noting that systemic banks are relatively more resilient, smaller banks and credit unions are "comparatively weaker, especially in terms of asset quality and profitability, and exposed to the shock through a loan portfolio concentrated in consumers loans and microfinance”.

The IMF estimates an increase in the fiscal deficit by 6% of GDP, with a drop in oil revenues and tax revenues, as well as additional expenses for health, social protection and social security.

Public debt would increase to 69% of GDP in 2022 and would remain at that percentage until at least 2024 (a possible reduction in the amount as a result of the renegotiation is not taken into account).

The document also cancels the existing Extended Financing Facility (EFF) program, which was approved in March 2019, in anticipation of another long-term loan being negotiated (also, theoretically, before August, according to the terms of the consent request to bondholders to defer payment of interest).

Among the risks at the international level mentioned in the IMF report:

• Lower-than-projected oil prices.

• A more severe and/or protracted COVID-19 pandemic.

• Weaker-than-expected global growth, which would affect the demand for export products.

• Increased protectionism in international trade

• A reduction in international financial flows (which would not affect Ecuador as much, since in practice it does not have access to the private markets).

Regarding domestic risks, apart from the continuation or worsening of the pandemic, the following are mentioned:

• A shortfall in fiscal revenues

• Health expenses higher than expected.

• "social discontent that causes economic disruptions and policy missteps"

• “lack of political cohesion in pursuing much-needed structural reforms and policies to support the population in crisis and to restore macroeconomic stability”

• “intensification of financial sector vulnerabilities”.

The IMF adds that "failure to reach an agreement consistent with debt sustainability with creditors by mid-August (when the standstill on debt service to external private sector creditors expires)" as well as the lack of an adequate funding by bilateral creditors would leave the country in very vulnerable conditions for a long period of time "including through the forthcoming presidential election period".

A "substantial debt operation" is required to address large and persistent financing gaps in the medium term; but, the Fund adds, a substantial fiscal consolidation (of at least 6% of GDP) will also be required.

(*) This is an English translation of the article published by “Revista Gestión” on June 4, 2020.

https://revistagestion.ec/index.php/economia-y-finanzas-analisis/una-apuesta-arriesgada-y-fallida-sacrifico-la-liquidez-nacional

The author is an economist graduated from the Pontifical Catholic University of Ecuador (PUCE), with graduate degrees from the University of Oregon and the University of Texas at Austin. He was a staff member of the IDB from 1997 to 2013, and Representative of Ecuador to the IMF in 2006. Advisor on climate finance and development issues. These are his personal opinions.

Source: IMF  

Los desaparecidos "fonditos" nacionales hubieran amortiguado la crisis en #Ecuador

Para combatir la crisis, el gobierno de Noruega liquidó 3% de su fondo de inversión soberano. Esta sería una realidad soñada para Ecuador, que en los últimos años vio eliminar estos Fondos de Ahorro

Conoce más en mi artículo en Revista "Gestion"::

https://revistagestion.ec/economia-y-finanzas-analisis/los-desaparecidos-ahorros-nacionales-hubieran-amortiguado-la-crisis

The lost savings Funds would have cushioned the crisis in Ecuador

By Luis Fierro Carrión (*)

On May 11, Norway's sovereign wealth fund decided to liquidate 3% of the fund's value, to support the government's efforts to combat the COVID-19 pandemic and boost economic recovery.

That withdrawal of 3% of the value was equivalent to 37 billion dollars. This is so because the fund has accumulated a value of 1.18 trillion dollars. It is the largest sovereign wealth fund in the world; it is followed by SWFs from China (China Investment Corporation), Abu Dhabi, Kuwait, and Saudi Arabia, all with more than $ 500 billion in assets at the end of 2019.

In Latin America, some countries have stabilization and savings funds, but with much smaller amounts. For example, Chile has an economic and social stabilization fund ($ 14.7 billion) and a Pension Reserve Fund ($ 9.4 billion). Other countries with smaller funds include Peru, Brazil, Mexico, Trinidad and Tobago, Colombia, and Bolivia (all linked to the export of natural resources). Venezuela had a substantive fund, but with its protracted crisis it has vanished.

In the case of Norway, the fund has the official name of “Global Government Pension Fund”, and was created in 1990 to save the oil income that the Nordic country was receiving; The objective was to reduce the volatility of tax revenues due to the fluctuation of oil prices in the international market. A secondary objective was to reduce the macroeconomic impact of oil revenues, which in other countries (including Ecuador) has generated the so-called “Dutch disease”, in which the productivity of other economic sectors was affected.

The "Tiny Funds" in Ecuador

In Ecuador, apart from the international reserves, there were some attempts to create a stabilization or savings fund:

• In 1998, the Petroleum Stabilization Fund (FEP) was created to accumulate the surpluses of oil revenues above the budget.

• In 2002, the “Fund for Stabilization, Social and Productive Investment, and Reduction of Public Debt” (FEIREP), a trust managed by the Central Bank, was created.

• Later, in 2005, at the initiative of then Minister Correa, the FEIREP was transformed into the “Account of Productive and Social Reactivation” (CEREPS); 20% of its income went into a “Savings and Contingency Fund” (FAC), apart from the unused CEREPS balances at the end of the fiscal year. The FAC had among its specific objectives to be able to attend natural disasters and other emergencies.

• In 2006, the “Ecuadorian Investment Fund in the Energy and Hydrocarbon Sectors” (FEISEH) was created, fed with the income of Block 15 (after the declaration of expiration of the Occidental oil contract), as well as the Eden-Yuturi fields and Limoncocha.

Between these “tiny funds”, as then President Rafael Correa derogatively called them, savings equivalent to 12.1% of GDP were accumulated (https://flacsoandes.edu.ec/web/imagesFTP/9431.WP_018_CGiraldo_01.pdf ). Apart from this, the balance of public debt was reduced.

During the Constituent Assembly, an Organic Law was approved in 2008 for the “Recovery of the Use of State Petroleum Resources and Administrative Rationalization of Debt Processes”. In practice, it meant the elimination of these funds and facilitating the contracting of additional debt.

Oil revenues and fuel subsidies

During the decade of Correa's government, the country had oil revenues for a total of $95,581 million (35% of all oil revenues in the history of the country, in real terms, according to a study by Alberto Acosta and John Cajas, “A Wasted Decade”). Between 2007 and 2016, the non-financial public sector had total revenues of $ 283 billion. 

Notwithstanding this massive level of income, not only were the savings and contingency funds eliminated, but the net international reserve was left in negative terms; and Correa bequeathed a total public debt of about $ 60 billion.

Of the total oil revenue, about $ 23 billion (a quarter) was used for fossil fuel subsidies. This subsidy is very regressive, as more than 50 % benefits the two quintiles with the highest incomes: apart from which a significant part of the subsidy escapes by contraband. The subsidy also encouraged fossil fuel consumption, with adverse effects on climate change, health, pollution, etc.

After a failed attempt in October 2019 to eliminate subsidies for extra gasoline and diesel (the subsidy for super gasoline had previously been eliminated), on May 19 the President issued Decree 1054, which establishes a new market price system for extra gasoline, extra gasoline with ethanol and diesel. A “price band” system was established, taking into account the cost of fuels, the marketing margin, plus a monthly variation limit of +/- 5%.

In the initial period of application of this new price system, the result was that the price decreased, given the significant drop in the international price of crude oil and derivatives in international markets. Thus, the retail price of extra gasoline (including the commercial margin) decreased to $ 1.75 per gallon, and the price of diesel decreased slightly to $ 1 per gallon.

The Ministry of Economy and Finance will design the “necessary compensation instruments as a consequence of the application of the price band system”. Minister Martínez indicated that the government is analyzing social protection mechanisms in the event of sustained growth in the prices of gasoline and diesel. There is a preliminary proposal to increase the Human Development Bonus cash transfer program by $ 10 and compensate the most vulnerable in the event of an increase in public transport tickets. Another alternative is to subsidize public transport (either to users or carriers). 

Laws approved by the Assembly

In the laws approved by the Assembly, the Solidarity Law or COVID-19 and the Law on Public Finances, there are two aspects to highlight regarding the issue of oil revenues.

On the one hand, the possibility of contracting insurance to hedge the risk of lower oil prices is introduced, as the Mexican government has regularly done (Minister Martínez argued that previously he did not have the legal backing to do so, which will now be made possible by a provision of the Public Finance Regulation Law).

On the other hand, a Fiscal Stabilization Fund is created again, from income from the exploitation and commercialization of non-renewable natural resources (oil, gas, mining) that exceed what is contemplated in the annual public budget.

Obviously, with current prices, it will not be possible in the short term to accumulate resources in the fund, nor to contract a price insurance, but the reform is designed for the future, so that, if another pandemic, natural disaster or abrupt fall in the prices of exports occurs, Ecuador has a financial “cushion” – a cushion that the Correa government took away from us.

(*) This is an English translation of the article published by “Revista Gestión” on May 23, 2020.

https://revistagestion.ec/economia-y-finanzas-analisis/los-desaparecidos-ahorros-nacionales-hubieran-amortiguado-la-crisis

The author is an economist from the Catholic University of Ecuador (PUCE), with graduate degrees from the University of Oregon and the University of Texas at Austin. He was a staff member of the IDB from 1997 to 2013, and Representative of Ecuador to the IMF in 2006. Advisor on climate finance and development issues. Personal opinions.

Muertes en exceso en Ecuador por COVID-19

Hilo sobre muertes en exceso en Mayo 1-15 en #Ecuador (mayoría atribuible a #COVID19)

Del 1 al 15 de mayo, #Guayas continuó con el mayor número de muertes en exceso según el @RegistroCivilec : 483 sobre el promedio del mismo período en 2018-19.

Muestra una clara tendencia decreciente en últimos días.

#Manabí ocupó el segundo lugar de muertes en exceso en el período Mayo 1 a 15, con 328 muertes (en Abril, el segundo lugar lo ocupó Sta. Elena).

Hay una tendencia a la baja en últimos días (aunque en ocasiones hay revisiones a los datos de los últimos días).

En tercer lugar se ubicó #Pichincha, con 150 fallecidos sobre el promedio de 2018-19.

Lo que es más preocupante es que no hay una tendencia decreciente, más bien ha aumentado desde finales de Abril.

En cuarto lugar #ElOro, con 146 muertes en exceso en el período Mayo 1-15, comparado con 2018-19.

En quinto lugar #SantaElena, con 122 muertes en exceso. Se trata de un aumento del 273 % sobre el promedio de 2018-19.

Hay más provincias en las que ha aumentado el número de fallecidos, pese a la reducción de accidentes y homicidios: Los Ríos, Tungurahua, Esmeraldas, Santo Domingo de los Tsáchilas

https://twitter.com/luis_fierro_eco/status/1262403031863361536?s=21

Cuarentena, muerte y reactivación

Mi columna publicada en el Diario "El Universo" el 11 de mayo, 2020:

https://www.eluniverso.com/opinion/2020/05/11/nota/7837575/cuarentena-muerte-reactivacion

Por Luis Fierro Carrión 

Hay una similitud etimológica entre las palabras ‘cuarentena’ y ‘cuaresma’.

Para los cristianos, la cuaresma es un periodo de 40 días de penitencia, reflexión, ayuno y abstinencia, entre el Miércoles de Ceniza y el Jueves Santo.

Los judíos conmemoran la Pascua, que fue la liberación de la esclavitud en Egipto y la supervivencia de las 10 plagas, incluyendo la muerte de los primogénitos, de la cual se salvaron los judíos al colocar sangre de cordero en sus umbrales, para indicar su fe. En el cristianismo, se cree en la muerte y resurrección de Jesús.

Estas ceremonias están vinculadas a prácticas paganas sobre la muerte y el reflorecimiento de la vida, reflejando el paso del invierno a la primavera (los huevos de Pascua y conejos reflejan este énfasis en la fecundidad)

La cuarentena se refiere al aislamiento de 40 días de personas y bienes sospechosos de portar la peste bubónica durante la pandemia del siglo XIV (la peor pandemia en la historia, en términos de porcentaje de la población que murió).

En 2020, se ha puesto en vigencia una cuarentena forzada de la población en muchos países del mundo, comenzando por China. En el caso del Ecuador, estas medidas fueron tomadas a partir del 12 de marzo, con la suspensión de clases, eventos masivos y restricción de vuelos; y un toque de queda a partir del 17 de marzo. Ya hemos tenido más de 40 días de estas restricciones (a partir del 4 de mayo, se estableció un sistema de ‘semáforos’ por cantones, pero todos se mantuvieron en ‘rojo’) [el 11 de mayo se anuncio que 3 cantones se moverian a "semaforo amarillo": Daule y dos cantones en Morona Santiago].

Pese a las restricciones hubo un gran número de muertes en exceso, la mayoría de las cuales pueden atribuirse al COVID-19 (quizás una fracción a personas con otras enfermedades o accidentes que no tuvieron acceso a hospitales). Entre enero y abril, en la provincia de Guayas hubo 10 655 muertos por encima del promedio en el mismo periodo de 2018-2019. La siguiente fue Santa Elena, con 613 muertos en exceso; Manabí 385; Pichincha 308; y El Oro 146. En las demás provincias, el número de fallecidos se redujo, probablemente por menos muertes por accidentes y homicidios (por lo cual también es posible que la cifra atribuible a COVID-19 exceda 12 000).

Considerando una tasa de letalidad entre el 1 y el 2 %, esto significaría que ya ha habido en el Ecuador más de 600 000 casos de COVID-19 (aun con una tasa de letalidad alta del 3 %, tomando en cuenta la pobre infraestructura de salud, tendríamos más de 400 000 casos). Considerando que hasta el 6 de mayo solo se habían tomado 81 000 pruebas, las cifras oficiales de casos y muertes tienen escaso significado.

El impacto económico de la cuarentena será fuerte. De acuerdo con la Econ. María de la Paz Vela en un seminario organizado por la consultora Multiplica y la revista Gestión, el PIB del Ecuador podría caer en 7 % (yo estimo entre 11 y 15 %). El empleo adecuado caerá del 38,8 % al 35,4 %, mientras que el desempleo abierto pasaría del 3,8 % al 9 %. La tasa de pobreza, que ya había subido del 22 % en 2017 a 25 % en diciembre, ahora aumentaría al 35 % (revirtiendo una década de progreso).

Los ingresos fiscales caerían en $7000 millones; el déficit se triplicaría a $8652 millones; los requerimientos de financiamiento alcanzarían $17 000 millones. Esto hace ineludible un proceso para renegociar la deuda externa (con acreedores privados y bilaterales); y extender los plazos de deuda pública interna. El Gobierno ha propuesto una ‘Ley Humanitaria’ para recaudar fondos de las personas con mayores ingresos, y de las empresas con utilidades de más de $1 millón, pero su destino en la Asamblea luce incierto.

Las exportaciones caerían en 26 %, pero las importaciones solo se reducirían en 13 %. Las remesas de emigrantes caerían en 9 %. Se estima una reducción de la reserva en $1045 millones.

El FMI aprobó un préstamo de financiamiento rápido por $663 millones; el BID ha aprobado $700 millones, y se espera $500 millones del Banco Mundial [mas una donación de $6 millones] y $300 millones de la CAF [luego se anuncio $400 millones]. No se ha cristalizado un préstamo chino anunciado.

Se requerirán recursos para la reactivación económica. Se ha propuesto la creación de un fondo de garantía para préstamos de la banca a las PYMES, con recursos de BID Invest, IFC, CAF, BEI y otras entidades financieras multilaterales y bilaterales.

Una reactivación gradual requiere dar paso a las ventas por internet, la entrega a domicilio o para recoger en la puerta de locales comerciales; y la entrega a domicilio de alimentos y comida preparada.

(Versión traducida al ingles: https://economicsandinvestment.blogspot.com/2020/05/quarantine-death-and-reactivation.html).

Quarantine, Death and Reactivation

By Luis Fierro Carrión (*)

There is an etymological similarity between the Spanish (or Italian) words "quarantine" and "lent" (cuaresma).

For Christians, Lent is a 40-day period of penance, reflection, fasting, and abstinence, between Ash Wednesday and Holy Thursday.

Jews commemorate Passover, which was the liberation from slavery in Egypt and the survival of the 10 plagues, including the death of the firstborn, from which the Jews were saved by placing lamb blood on their doorsteps, to indicate their faith (the “Angel of Death” passed over those homes). Christians believe in the death and resurrection of Jesus.

These ceremonies are linked to pagan practices on death and rebirth of life, reflecting the passage from winter to spring in the Northern Hemisphere (Easter eggs and chocolate bunnies reflect this emphasis on fertility).

Quarantine refers to the 40-day isolation of people and property suspected of carrying the bubonic plague in Venice, during the 14th century pandemic (the worst pandemic in recorded history, in terms of percentage of the population that died).

In 2020, a forced quarantine of the population has been put into effect in many countries of the world, starting with China. In the case of Ecuador, these measures were taken as of March 12, with the suspension of classes, mass events and flight restrictions; and a curfew from March 17. We have already had more than 40 days of these restrictions (as of May 4, a system of "traffic lights" was established by municipalities, but as of May 7^th all remained in "red", or full lockdown and curfew).

Despite the restrictions, there were a large number of excess deaths, most of which can be attributed to COVID-19 (perhaps a fraction correspond to people with other illnesses or accidents who did not have access to hospitals, especially in the provinces of Guayas and Santa Elena).

Between January and April, in the province of Guayas there were 10,655 deaths above the average in the same period of 2018-19. The following was Santa Elena, with 613 excess deaths; Manabi 385; Pichincha 308; and El Oro 146; in Santo Domingo de los Tsachilas, Pastaza and Galapagos there were 2-4 excess deaths. In the other provinces, the number of deaths decreased, probably due to fewer deaths from accidents and homicides (for which reason it is also possible that the figure attributable to COVID-19 exceeds 12 thousand).

Considering a case fatality rate between 1 and 2%, this would mean that there have already been more than 600,000 cases of COVID-19 in Ecuador (even with a high case fatality rate of 3%, taking into account the poor health infrastructure , we would have more than 400,000 cases). Considering that until May 6 only 81 thousand tests had been taken, the official figures for COVID-19 cases and deaths have scant meaning.

The economic impact of the quarantine will be devastating. According to Econ. María de la Paz Vela in a seminar organized by the consulting firm Multiplica and Revista Gestión, Ecuador's GDP could fall by 7% (I estimate between 11 and 15%, based on a prolonged recession that would also continue to impact the price of oil and other exports). Adequate employment will fall from 38.8% to 35.4%, while open unemployment would increase to 3.8% to 9%. The poverty rate, which had already risen from 22% in 2017 to 25% in December, would now rise to 35% (reversing a decade of progress).

Tax revenue would drop by $ 7 billion; the fiscal deficit would triple to $ 8,652 million; financing requirements would reach $ 17 billion. This makes unavoidable a process to renegotiate the external debt (with private and bilateral creditors), and rollover the internal public debt. The government has proposed a “Humanitarian Law” to raise funds from people with the higher incomes, and from companies with profits of more than $ 1 million, but the fate of the law in the National Assembly seems uncertain.

Exports would fall by 26%, but imports would only decrease by 13%. Remittances from emigrants would drop by 9%. A reduction of the international reserves is estimated at $ 1 billion.

The IMF approved a quick financing loan for $ 663 million; The IDB has approved $ 700 million, and $ 500 million is expected from the World Bank [plus a $ 6 million grant] and $ 300 million from CAF [later increased to $400 million]. An announced Chinese loan (of up to $2 billion) has not yet crystallized.

Resources will be required for economic reactivation. The creation of a guarantee fund for bank loans to SMEs has been proposed, with resources from IDB Invest, IFC, CAF, EIB and other entities.

A gradual reactivation requires making way for Internet sales, home delivery or pick up at the door of stores, and home delivery of food and prepared food.

(*) This is the English translation of an opinion column published on May 11th in Diario El Universo of Ecuador:  

https://www.eluniverso.com/opinion/2020/05/11/nota/7837575/cuarentena-muerte-reactivacion

Fortalecimiento de los grupos económicos en el Ecuador en la última década

Mi artículo en la Revista “Economía“ de la Universidad Central del Ecuador

El proceso de concentración y centralización del capital en el Ecuador no se detuvo durante la década de Gobierno de Rafael Correa pese a que se utilizó retórica como «socialismo del siglo XXI» y «revolución ciudadana». Por el contrario, se fortalecieron los grupos económicos, particularmente aquellos vinculados al mercado interno, la importación, y la construcción de infraestructura. Varios grupos tuvieron un apogeo, destacándose los grupos Wright (Favorita), Eljuri, PRONACA, KFC, Nobis e Hidalgo & Hidalgo. Los ingresos de los 27 principales grupos económicos aumentaron del 28,4 % del valor agregado bruto (VAB) del Ecuador en 2013 a 29,6 % en 2017.

http://revistadigital.uce.edu.ec/index.php/ECONOMIA/article/view/2222

Evolución de ingresos de algunos grupos, en millones de dólares nominales.

Comentarios a las propuestas de académicos holandeses sobre escenarios post pandemia y modelos de decrecimiento

Interesantes, pero muy radicales, las propuestas de un grupo de 170 académicos holandeses sobre un nuevo modelo económico y social post-pandemia.

Escribí los siguientes comentarios:

• Sobre el decrecimiento económico, solo los países de ingresos muy altos pueden darse ese lujo.

• De acuerdo con reducir/eliminar el consumo de combustibles fósiles. La minería es más discutible, algunos minerales son indispensables (incluyendo para fabricar el teléfono o la tableta donde leemos esto). 

• La renta básica universal es una buena idea, pero no a un nivel tal que desincentive el trabajo. En Ecuador ya hay el bono de $60, aunque es obviamente insuficiente.

• Un fuerte impuesto a la renta y las utilidades es necesario - más que fuerte, muy progresivo (que paguen más los que ganan más). En cuanto a la riqueza/patrimonio, un impuesto de 1-2 % sería conveniente (más alto conllevaría fuga de capitales). Mejor si es universal.

(Cabe anotar que los Asambleístas en Ecuador, y en especial del PSC, se oponen incluso a la contribución solidaria temporal para la crisis).

• Horario de trabajo podría bajarse a 36 horas (libre una tarde a la semana o un día cada dos semanas). En Francia y Alemania ya es así.

• Difícil eliminar el consumo de carne del consumo por decreto; se debe propender a menos consumo de carne.

• Difícil saber quién definiría cuál consumo y cuáles viajes son “básicos, necesarios, sustentables y satisfactorios”. Suena al modelo soviético. Cada persona lo define a su manera.

• ¿Quién compensa a las instituciones financieras e inversionistas por la cancelación de las deudas? Quebraría todo el sistema financiero, que en definitiva son los ahorros y depósitos de la gente.

• Si se podría reeditar la iniciativa de “Países Pobres Muy Endeudados” (PPME o HIPC), que fue compensado por los países ricos (excepto en el caso del BID, que lo financió con sus propias reservas). Pero convendría evitar que entren otros países (como China) a volver a endeudarlos.

• A nivel de individuos, establecer leyes de bancarrota que faciliten el proceso para reducir o eliminar deudas excesivas.

Cabe mencionar que la pandemia de COVID-19 ayudará en esta dirección, al reducir los viajes; el consumo de combustibles fósiles; facilitar el trabajo desde la casa; establecer en varios países un ingreso básico; y centrar el consumo en productos básicos como alimentos y medicina.

Escribí un artículo algo crítico sobre las propuestas de decrecimiento:

https://revistagestion.ec/sites/default/files/import/legacy_pdfs/243_003.pdf

https://www.elclarin.cl/2020/04/23/holandeses-avanzan-en-el-escenario-pospandemia-y-proponen-un-modelo-economico-basado-en-el-decrecimiento/