Cash-strapped government struggles to pay employees & contractors; Accepts Chinese loan

With teachers, military personnel, medical interns and contractors protesting in the streets, the government said Wednesday it is prioritizing its finances to pay salaries and bills, some of which date back to May. “We recognize our obligations and are organizing our limited resources to make more timely payments,” said Finance Minister Richard Martínez.

Unpaid government media workers block a street in Guayaquil to demand back pay. (El Universo)

On Tuesday, the government reported that revenues have dropped 28 percent in 2020, almost all of it the result of the coronavirus impact on businesses and workers. Martínez said the treasury will see the first payments from International Monetary Fund loans later this month, which will reduce budget pressure. In total, Ecuador expects to receive more than $10 billion in loans from the IMF and Latin American development banks. Martínez also announced that China has agreed to provide a $2 billion loan but offered no details.

“The health emergency has put a terrible strain on our budget and we are limited by the fact we use the U.S. dollar as our currency,” Martínez said. “Although the dollar has brought stability to our financial system, we are unable to make currency devaluations and print more money like other countries do.” He said that low oil prices have also reduced federal income.

In protests Wednesday, several hundred contractors marched in Quito, Guayaquil and Cuenca demanding payment. The government owes contractors, including private hospitals, more than $500 million and says it will begin making some payments on debts next week. President Lenin Moreno met briefly Tuesday with retired military personnel and assured them the delay of pension payments would end soon.

In Cuenca and Riobamba teachers threatened not to show up for online classes Tuesday, the first day of the school year, but delayed any action pending yesterday’s announcement by the government.