ECUADOR DIGESTVolcano continues to affect air routes; U.S. signals it wants better relations with Ecuador, trade discussions underway

Ecuador’s civil aviation authority continues to re-route flights between Quito, Cuenca and Guayaquil to avoid the Tungurahua volcano smoke plume. The plume of ash, smoke and steam, rises almost five kilometers above the 16,000 foot volanco.

Flight routes have been shifted to the west, adding five to 15 minutes to flight times between cities.

Although some in-country flights have been cancelled as a result of the volcano, most have continued on schedule.

Durng past eruptions, the country’s main airports in Quito, Guayaquil and Cuenca, have been closed due to dangers posed to aircraft by volcanic ash.

Jorge Bustillos, of Ecuador’s Geophysical Institute says that the volcano’s activity remains at a high to moderate level with a slight increase of activity on Wednesday.

The Institute is monitoring lava flows near the resort town of Baños and said it would issue warnings as needed. A number of resorts in Baños remain closed.

U.S. wants better relations with Ecuador

Signaling that it wants to improve bilateral relations with Ecuador, the U.S government says it hopes to begin a series of discussions later this year. Relations between the two countries were strained last month when Ecuador briefly considered granting asylum to U.S. intelligence leaker Edward Snowden.

“Ties between the two countries are evident and strong,” said Adam Namm, U.S. ambassador to Ecuador.  “We want to restart the bilateral dialogue before the end of this year and we are talking with the Ecuadorean government about that.”

U.S. – Ecuadorian relations have been troubled since 2009, when then U.S. ambassador Heather  Hodges was asked to leave the country by the Ecuadorian government. WikiLeaks published a leaked cable from Hodges in which she discussed corruption in Ecuador’s police force. She alleged that President Rafael Correa had knowledge of the corruption, a charge that he denied.

The U.S. is Ecuador’s top trade partner. Last year, the Andean country’s exports to the U.S. totaled about $10.62, or about 45% of the country’s total exports, according to official data. Imports from the U.S. totaled $6.8 billion.

Ecuador is currently the only country that benefits from the Andean Trade Promotion and Drug Eradication Act, which provides duty free treatment for products such as fresh-cut roses, broccoli, tuna and artichokes. The act expires on July 31 but both countries say they are working to preserve some trade preferences through the Generalized System of Preferences sytem.

Ecuador’s 2013 budget boosts spending by 24%

Ecuador’s National Assembly late Tuesday approved the $32.37 billion fiscal 2013 budget, a 24% increase from the 2012 spending plan.

The fiscal budget was approved with 100 votes in favor. The National Assembly, which has 137 members, didn’t provide the number of votes against.

Due to national elections held in February, the 2012 budget was extended through the first half of 2013.

The budget has a deficit of about $5 billion, which the government of President Rafael Correa plans to finance through bonds sold domestically and loans from China.

About $7.88 billion of the budget has been earmarked for salaries, $1.29 billion will go to servicing public debt, $7.69 billion will to public investment, and $6.61 billion for various subsidies.

The government plans to spend $5.89 billion to import oil derivatives in 2013, an increase of 20% compared with the 2012 budget. The increase is mostly due to a planned shutdown of the country’s main refinery, Refineria Esmeraldas, to improve its production capacity.

The 2013 budget aims for a 4.05% increase in gross domestic product, compared with a 5.0% rise in GDP in 2012. Inflation is expected to slow to 3.93% this year from 4.16% registered last year. (WSJ wire)

Photo caption: Volcan Tungurahua.