Ecuador - Public finance





The central government, 20 provincial and some 100 municipal governments, and a large number of decentralized autonomous agencies constitute the public sector of the Ecuadoran economy. Central government budgets in the late 1970s and early 1980s grew expansively from one year to the next, with oil being the key source of income. Economic reforms instituted in 1992 rose domestic fuel prices and utility rates, eliminated subsidies, and brought the government budget into balance. These changes helped eliminate the budget deficit by 1994. The government was able to maintain budgetary control in 1995 when faced with increased military expenditures because of the boarder conflict with Peru, with a deficit of only 1.4% of GDP. However, the 1996 balance ran a deficit of 3% due to increased public spending. A growing fiscal deficit in the late 1990s due to declining oil prices, El Nino damage, and the inefficiencies of the public sector, caused the removal of several political leaders. The extreme financial crisis during 1999 and 2000 caused the total public debt to rise from 64% of GDP in 1997 to 116% of GDP in 1999.

The US Central Intelligence Agency (CIA) estimates that in 2001 Ecuador's central government took in revenues of approximately $5.6 billion and had expenditures of $5.6 billion. External debt totaled $14 billion.

The following table shows an itemized breakdown of government revenues and expenditures. The percentages were calculated from data reported by the International Monetary Fund. The dollar amounts (millions) are based on the CIA estimates provided above.

Ecuador

REVENUE AND GRANTS 100.0% 5,600
Tax revenue 88.3% 4,943
Non-tax revenue 11.7% 657
EXPENDITURES 100.0% 5,351
General public services 7.1% 400
Defense 13.1% 734
Public order and safety 4.3% 240
Education 18.4% 1,031
Health 11.2% 626
Social security 1.9% 108
Housing and community amenities 0.6% 33
Recreation, cultural, and religious affairs 0.4% 24
Economic affairs and services 11.9% 668
Other expenditures 3.4% 188
Interest payments 23.2% 1,299

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