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Finance
Budget 2011 gives priority to the investment in
social development
Investing in health, education and strategic sectors
will be prioritized by the Ecuadorian government
throughout 2011 and will receive 76% of total invest-
ment. As a result, it is estimated that the health and
education sectors are expected to increase by 0.5%
of Gross Domestic Product (GDP), which means
USD$ 310 million, i.e. each sector will receive USD$
2,400 million in the next year.
There will also be a focus on the development of
hydroelectric and thermoelectric projects, such as
Multi-Baba Coca Codo Sinclair and Sopladora,
among others. .
2011 will also be a year of great investment in hous-
ing, transporation and infrastructure projects. Ecua-
dor has taken shrewd approach to their borrowing,
they plan to borrow money at 6% and if their calcula-
tions are correct, these projects will give a yield of
25-30%.
2010 Record on Public Investment
2010 was a year of extensive public investment.
USD$1,400 million more dollars were spent than in
2009 in real investment. It was estimated that at
the end of 2010 a total of USD$4.925 million dollars
would beinvested, whilst investment of public enter-
prises (including Petroecuador EP) would exceed
USD$1,300 million.
REVENUES
The Government seeks to increase the income tax
burden by minimizing the evasion and tax avoidance
and consolidating the structure of the income budget
that favors direct and indirect taxation.
It is established as a State policy that all public re-
sources from oil origins must enter the State Budget
as capital inflows and will be distributed solely for
investment purposes. It removes all that earmarking
that was generated by oil revenues with the excep-
tion of resources from Application of Law 10 for the
Ecodevelopment Fund of the Amazon Region and
the Law 47.
EXPENSES
The spending policy aims at expanding coverage of
basic social spending mainly in health and educa-
tion sectors, in order to correct social and gender
inequities. Decisions on allocation of operational
expenditure and public investment will underpin the
emphasis on compliance with the Constitution and
the National Plan of Good Living.
DEBT
Government policy aims to ensure that public fund-
ing is adequate and timely enough to meet the re-
quirements of public investment.
Borrowing policies will meet the provisions of the
Constitution, LOREYTF and LOAFYC laws in order
to:
1. Ensure the cash resources necessary to carry out
the Government Bonds.
2. Maintain a financing policy for development that
maintains ratio of debt to GDP below 40%.
3. Maintain the requirements for credit operations,
through selectivity in the recruitment of new loans
only in cases that are covered by the Annual Invest-
ment Plan approved and validated by SENPLADES
within the ceilings provided for in the Debt Reduction
Plan.
PUBLIC INVESTMENT
The country is in the process of change that requires
new challenges. The Constitution of the Republic,
the National Plan of Good Living and Public policies
have restored the importance of public investment
as an instrument to achieve structural changes that
allow Ecuador to have a more fair and equal society
and in which local citizens live in harmony with their
neighbors and with the nature.
Publicbankingisbecomingimportant for thecountry’sdevelopment