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Ecuador News

Ecuador’s new finance minister outlines his strategy for restoring the economy

In his first speech as finance minister, Richard Martinez said debt reduction was his primary concern but the measures he proposes will be applied gradually, without affecting programs aimed at Ecuador’s poorest and most vulnerable citizens.

Ecuador finance minister Richard Martinez

Martinez also said he is no longer the advocate of private companies. “I am now the economic representative for all Ecuadorians, for both the public and private sectors,” he said in remarks Thursday at a presidential cabinet meeting in Quito. “I agree with the priorities of President [Lenin] Moreno in promoting the general public welfare.”

Prior to his appointment, Martinez was chairman of the Ecuador Business Committee, representing dozens of the country’s largest corporations. In earlier meetings with the government, he had advocating reducing taxes and regulations on the private sector.

Martinez’s appointment has been criticized by some economists, including his predecessors, as representing a radical policy turn to the right.

“We must take immediate steps to reduce the budget deficit, which stands at more than 5.5 percent of GDP, and to reduce the national debt, which exceeds the 40 percent of GDP allowed by law,” he said, adding that he would initiate talks within weeks with holders of Ecuadorian debt to reduce interest rates. The eight to 10 percent rates paid on bonds and Chinese-held notes was “unsustainable,” he said.

Martinez said he aims, on average, to reduce debt interest to between five and seven percent.

Among other measures Martinez said he would pursue, is a reduction in public spending, a partial phase-out of government subsidies for LP gas and gasoline, and the establishment of a “transparent system” of government bookkeeping that the public will understand.

Martinez said he accepted the figures of the national comptroller’s office that the national debt exceeds 40 percent of GDP allowed by law. María Elsa Viteri, who was finance minister before Martinez’s appointment, refused to accept the comptroller’s numbers, instead sticking to a debt-ratio formula established during the presidency of Rafael Correa.