The commission set to audit the external debt in Ecuador begins its work
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Source: IFIs Latin American Monitor
Mon Feb 06 2006

The Debt Audit Commission is a presidential initiative aimed at knowing “how much is owed and why is it that so much is owed”, as well as at making progress towards a state policy; however, the results of this investigation will not necessarily imply that the country stops paying.

President Alfredo Palacio appointed the public personalities that will make up the Debt Audit. Commission in charge of carrying out an audit of the country’s external debt in the last 30 years.

Said commission is made up of Monsignor Alberto Luna Tobar, Archbishop of Cuenca, and economic experts Leonardo Vicuña, Carlos Cortéz and Hugo Arias, general coordinator of the network of social organizations Jubilee 2000, Network Guayaquil.

The commission will be chaired by Luna who stated that “ours is neither a political nor a governmental position but an ethical, social and state one”.

According to government Minister Alfredo Castillo, the important thing is to know whether resources were granted or not, where they ended up and what became of them. “We want to know why it is that we have to allocate 45 per cent of the state budget to payment of the external debt”, estimated at 11.3 billion dollars. But the minister made it clear that the audit will not be carried out for the purpose of stop paying the debt.

However, one of the members of the audit board said that he was in favour of suspending payment of part of the debt in case irregularities were found.

The Commission was granted the support of national political parties, which considered it should be given full autonomy and independence from the government, its problems and currently appointed officials. The President, on the other hand, is willing to be granted IMF support in order to carry out this initiative.

To know but not to act accordingly...

According to the presidency of Ecuador, the aims of this Commission shall be:

- to put forward guidelines and instructions to favour a responsible economic indebtedness, in close relation to the demands of productive development;
- to prevent debt payment from falling on the poorest sectors of society;
- to analyze the economic and social effects of indebtedness;
- a result of the amount previously allocated to the annual payment of debt;
- ways to improve the credit and financial system.

But independently of whether the audit finds irregularities or not, Ecuador will continue to pay its debt, said Economy Minister Diego Borja, at a press conference before Wall Street investors in the United States.

Borja also said that he intended to implement fiscally responsible policies, thus reducing fiscal deficit in order to be able to re-purchase part of the country’s external debt. Congress approved a budget for 2006 that contemplates a deficit of 840 million dollars – the equivalent to 2.3 per cent of the Gross Domestic Product (GDP) - which Borja expects to reduce to some 286 million, that is to say, 1.23 per cent of GDP.

According to Borja, no major reforms are expected for 2006 since Congress would not be approving controversial initiatives in an election year (the President does not have a majority in Congress). However, he pointed out that changes will be promoted in the electric, oil and customs sectors since the Executive Power is empowered to do so without the need for legislative intervention.

It is worth highlighting that these reforms are part of the changes being constantly promoted by the IMF for the purpose of attracting private investments into the oil sector and consolidating the national treasury.

Source: Presidency of Ecuador, Diario El Universo (Ecuador) and Diario El Mercurio (Chile)

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