The picture of the Ecuadorian economy in 1999 was the worst of the last century in almost all sectors. Today, three years after the dollarization scheme, the political and social economic status of Ecuador is completely different.

The economic picture of the country points to various important improvements in terms of stabilisation policies: inflation is reduced, speculation related to the exchange rate is eliminated, interest rates are now decreasing, economic growth is stable, wage earnings have improved, foreign direct investment has increased thanks to the oil pipeline project, and I would add that the social standard is better than before. To say that the situation is better does not necessarily mean that we are satisfied; it simply means that it is improving compared to previous years.

If you examine the development of our economic policies in the past years, you will note that the fiscal picture is completely different in terms of fiscal reforms. The reforms seek to reverse problems of liquidity, to apply structural reforms that could not be implemented in the past and to create a social environment that supports this new adjustment process. Three of our main challenges have already been addressed:

1. First of all, we are applying new policies and in the first three days of our mandate we announced an ambitious economic program. This unique program promotes sustainable economic growth for the next 5 years, focusing on long-term solutions instead of simply proposing short-term financing to fill in the gaps of past mistakes.

2. Then we sent a fiscal budget to Congress which reflects this change in economic policies, taking into account the situation last year and the projected growth for the coming years.

3. Our next goal was to sign an agreement with the IMF (International Monetary Fund), which we achieved on the 11th of February 2003. This is a very rigid program which sent a very important and positive signal to the international and domestic community.

Therefore, we have reached three important goals of our administration during the first five weeks of our government.

Would you say that the medicine that has been prescribed by the IMF will be a difficult pill to swallow for the Ecuadorian economy?

The announcement that we have made is for four years, so we are only starting to take our medicine. We are in the initial step of the process but we will need to approve these reforms. Customs reform has been passed, and more reforms are expected to be passed in April.

The Congress is divided between the right and left political spectrum. Will it pass these tough reforms?

Politics is difficult in any part of the world. We are in a democracy, and we have to play within that framework. In order to strengthen our position in Congress, the reforms we are proposing have been elevated to the level of national importance, which means that the final veto is in the hands of the President. Therefore, I hope that the main characteristics of the reforms will be approved, in order for us to have the tools to control inflation and fight against corruption.

In 2001 Ecuador experienced a 5.4% GDP growth, followed by over 3% growth in 2002. What is your prognosis of economic growth in the next few years, and how can you increase it?

This year we hope to reach a growth of 3.5% to 4%. In 2004 we hope to attract increased foreign investment in order to sustain an economic growth level of 5.5% to 6%. Then between 2005 and 2007 we plan to reach levels of 5% growth per year.

In terms of the oil sector, we will create conditions that should triple actual production in the coming nine years. The heavy crude oil pipeline will double actual production, and if we tap into the potential of our fields in the south-east of country, we may reach $1.2 Million per day of oil production in nine years. This means that Ecuador will be a different country in the next decade.

How can you make sure that liquidity and banking reforms restore the health of the financial sector?

This is a process - we are in a market scenario and thus we cannot force the repatriation of Ecuadorian resources that were deposited abroad. We need to create the right conditions in order to attract these resources. With the application of a rigid and orthodox economic program along with the participation of foreign investment, those resources will gradually come back into the Ecuadorian economy. In fact, liquidity is not the root of the problem, it is a result of the problem, so we expect to solve the situation by implementing strong reforms while working hard to attract capital back to the country.

What is the greatest success of the recent trip of President Guttierez to the United States?

In one word: confidence. We have gained the confidence of the international market and of our main commercial partner, the United States. We are also building on this momentum thanks to the work of international investors in the oil pipeline project.

The current government hinges on the support of the Pachakutik party, which is a left-leaning political party, yet you are a liberal-minded businessman from the financial sector. Is it a difficult balancing act to manage these two political visions of Ecuadorian society?

It is a problem, but it is also an opportunity. The Pachakutik is participating in the government and seeing for themselves the difficult situation that the country is in. They need to accept certain realities, and to achieve this I intend to include members of the Pachakutik party in order to help them better understand the dilemma we face: we have many financial requirements, yet we have very few resources. So it is important for them to be involved in order to open their eyes to this reality. The Pachakutik party is in the process of understanding that Ecuador is not a closed country and that we need to work within the framework set by international markets.

In light of your role in the economic development of the country, could you tell our readers a little bit about your background as an economist?

I graduated in economics at the Catholic University of Quito, then worked in the Central Bank of Ecuador for ten years, which was an excellent learning environment to work on macro-economic issues. Between 1985 and 1987 I studied at the University of Notre Dame in the United States, then I studied at the Economics Institute of the University of Colorado. I returned to the Central Bank in 1991, then worked in the private bank Produbanco. In 2000 I formed a private consultancy company in macro-economy and finance, while teaching at the University of Monterrey and writing for the Economist Intelligence Unit.