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Ecuador’s president expects oil prices to cut its fiscal deficit -Breaking


© Reuters. Ecuadorean President Guillermo Lasso participates in an interview at Carondelet Palace, in Quito, Ecuador April 26, 2022. REUTERS/Santiago Arcos

By Alexandra Valencia

QUITO, Reuters – Ecuador’s fiscal deficit could be reduced more this year than predicted if the price of crude oil remains high. President Guillermo Lasso stated Tuesday that Ecuador is able sell a bank owned by its state, but added that it still needs significant private investments to create new jobs.

According to the government, 2022 will end with a deficit equal to 2% of GDP. This is down from $3.7 billion in 2021 and $7.1 billion in 2020.

Lasso stated that it is highly probable that the deficit would be lower if oil prices remain high. This was during a live interview that Lasso gave on radio and social media. We have the option of selling (state-owned bank Banco del Pacifico), which could also reduce the fiscal deficit.

Although government balances have been improving, Lasso admitted that many Ecuadoreans are facing financial problems and said that he will continue to make efforts to attract investments.

Lasso promised to create 2,000,000 jobs in his term which will end in 2025. But Congress rejected Lasso’s investment bill last month. The lawmakers condemned what they considered attempts to privatize the public service.

He stated that there is no interest to privatize public services such as electricity or water. Instead, it’s about public/private partnerships in which the private sector contributes its money, but the asset stays the property of the government.

Lasso stated that Ecuador is currently working to negotiate contracts with oil company, shifting away from service agreements, where the state pay them a fee, towards profit-sharing agreements, which he claimed would boost production.

Petroecuador is the state-owned oil company and plans to drill 36 oil wells at Ishpingo’s oil field until the end. This in spite of opposition to the project which lies near Yasuni National Park. It began producing 3,600 barrels per hour when it opened.

Ecuador still awaits the $700 million International Monetary Fund disbursement originally planned for December 2013.