Cuenca facing tough economic times, mayor says, blaming the federal government for slow delivery of funds

Cuenca’s Mayor Marcelo Cabrera acknowledged on Monday that the city faces serious economic challenges and could have difficulty meeting all of its 2009 budget obligations.

“We are faring better than most municipalities in Ecuador but we are not immune from the crisis facing this country and the rest of the world,” Cabrera said.

According to the mayor, most of the funding problems are due to the lack of transfers from Quito, not in a shortfall in tax collections locally. “We are still waiting for more than $2 million dollars owed to us by the federal government,” Cabrera said. “This is money collected from our citizens that is supposed to be returned to us.”

Although a deteriorating economy has taken its toll on many segments of the local economy, Cabrera says the local economy continues to show strength. In the first two quarters of 2009, Cuenca led all Ecuadorian municipalities with populations of more than 250,000 in growth in industrial production, construction and real estate sales.

During his weekly radio address on Saturday, President Rafael Correa acknowledged that tax dollars intended for local governments are not being delivered on time. "Tax collections are down in many parts of the country and, unfortunately, this affects areas where collections are strong,” he said.

Correa added that the good news is that the situation appears to be improving. He also noted that the increase in oil prices, which have doubled from their January lows, will help the federal government to meet its obligations in a more timely manner.

Photo caption: President Correa says the federal government will improve its delivery of funds to Cuenca and other local governments