Government pays off debts to IESS, contractors and employees with funds from IMF loan

Nov 6, 2020 | 4 comments

The Ministry of Finance said Thursday it has caught up payments to government employees, contractors and the Social Security health system. The new disbursements came courtesy of a $2 billion in loan from the International Monetary Fund.

Finance Minister Mauricio Pozo

In addition, Finance Minister Mauricio Pozo says that hundreds of millions of dollars owed to municipal, provincial and parochial governments have been paid. “The coronavirus pandemic has imposed severe economic hardship on the government and we are pleased that we are able to catch up on much of our arrears,” he said. “We understand that the delay in these payments has created hardship for those who depend on the government.”

Pozo cautioned that even with IMF assistance the country will continue to face hard times. “Our liquidity problems will continue as a result of low tax revenues and we will be forced to adjust our financial expectations,” he said, adding that the country cannot rely on loans to balance the government budget.

Among the specific disbursements paid through November 3 are $355 million to the IESS, $285 to contractors and vendors, $430 million to local governments and $387 to current and former government employees. Pozo said that most of the remaining $1.6 billion debt will be paid by the end of the year.

In addition to seeking budget cuts, Pozo said he and President Lenin Moreno are pushing the National Assembly leaders to pass measures recommended by the IMF, including reduction of the fuel subsidy, increasing the IVA rate from 12 to 15 percent and strengthening anti-corruption laws. “The changes suggested by the IMF should be considered as soon as possible so that Ecuador remains in the good graces of international lenders.”

Ecuador is expecting IMF loan payments of $500 in November and $2 billion in December.

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