Ecuador Plans Budget Cuts, New Debt as Oil Drop Saps Revenue
Last edited Thu Dec 11, 2014, 08:32 AM - Edit history (1)
Ecuador, which relies on crude for about a third of its budget, plans to cut spending next year by as much as $1.5 billion and will seek additional financing after prices for the OPEC member’s oil fell to five-year lows.
The South American nation will trim current and investment spending and use credit lines from multilateral lenders to offset lower oil prices, the Finance Ministry said yesterday in an e-mailed response to questions from Bloomberg News. Ecuador is also planning tax reforms to boost government revenue and accelerate private investment and may seek additional financing if crude doesn’t stabilize next year, the ministry said. Government bonds extended their declines today.
With prices for the nation’s Oriente crude down 23 percent since congress approved President Rafael Correa’s 2015 budget proposal on Nov. 20, the government has said it would reduce funds for new schools and police stations before sacrificing outlays on oilfields and so-called strategic projects needed to generate revenue. Correa, a 51-year-old former economics professor, is also planning a trip to China in January to seek new loans to help offset the drop in crude, the Finance Ministry said.
“The planned total of these measures is in the range of $1 billion to $1.5 billion, without additional financing,” the ministry said in the statement. The government “will search for additional funding in the event that the price of oil doesn’t stabilize during the execution of the 2015 budget.”
http://www.bloomberg.com/news/2014-12-10/ecuador-plans-budget-cuts-of-up-to-1-5-billion-ministry-says.html
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