

Currently released so far... 12646 / 251,287
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
2011/02/12
2011/02/13
2011/02/14
2011/02/15
2011/02/16
2011/02/17
2011/02/18
2011/02/19
2011/02/20
2011/02/21
2011/02/22
2011/02/23
2011/02/24
2011/02/25
2011/02/26
2011/02/27
2011/02/28
2011/03/01
2011/03/02
2011/03/03
2011/03/04
2011/03/05
2011/03/06
2011/03/07
2011/03/08
2011/03/09
2011/03/10
2011/03/11
2011/03/13
2011/03/14
2011/03/15
2011/03/16
2011/03/17
2011/03/18
2011/03/19
2011/03/20
2011/03/21
2011/03/22
2011/03/23
2011/03/24
2011/03/25
2011/03/26
2011/03/27
2011/03/28
2011/03/29
2011/03/30
2011/03/31
2011/04/01
2011/04/02
2011/04/03
2011/04/04
2011/04/05
2011/04/06
2011/04/07
2011/04/08
2011/04/09
2011/04/10
2011/04/11
2011/04/12
2011/04/13
2011/04/14
2011/04/15
2011/04/16
2011/04/17
2011/04/18
2011/04/19
2011/04/20
2011/04/21
2011/04/22
2011/04/23
2011/04/24
2011/04/25
2011/04/26
2011/04/27
2011/04/28
2011/04/29
2011/04/30
2011/05/01
2011/05/02
2011/05/03
2011/05/04
2011/05/05
2011/05/06
2011/05/07
2011/05/08
2011/05/09
2011/05/10
2011/05/11
2011/05/12
2011/05/13
2011/05/14
2011/05/15
2011/05/16
2011/05/17
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Apia
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Auckland
Consulate Amsterdam
Consulate Adana
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belmopan
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Ciudad Juarez
Consulate Chennai
Consulate Casablanca
Consulate Cape Town
Consulate Calgary
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dili
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Helsinki
Embassy Harare
Embassy Hanoi
Consulate Ho Chi Minh City
Consulate Hermosillo
Consulate Hamilton
Consulate Hamburg
Consulate Halifax
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kingston
Embassy Kigali
Embassy Khartoum
Embassy Kathmandu
Embassy Kampala
Embassy Kabul
Consulate Kolkata
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Ljubljana
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lahore
Consulate Lagos
Mission USOSCE
Mission USNATO
Mission UNESCO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Mbabane
Embassy Maputo
Embassy Manila
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Mumbai
Consulate Montreal
Consulate Monterrey
Consulate Milan
Consulate Melbourne
Embassy Nicosia
Embassy Niamey
Embassy New Delhi
Embassy Ndjamena
Embassy Nassau
Embassy Nairobi
Consulate Naples
Consulate Naha
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Of Spain
Embassy Port Louis
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Suva
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate St Petersburg
Consulate Shenyang
Consulate Shanghai
Consulate Sapporo
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
Consulate Toronto
Consulate Tijuana
USUN New York
USEU Brussels
US Office Almaty
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Embassy Vilnius
Embassy Vienna
Embassy Vatican
Embassy Valletta
Consulate Vladivostok
Consulate Vancouver
Browse by tag
AORC
AF
AU
ASEC
AMGT
AS
APER
AR
AEMR
AG
ARF
AJ
AA
AINF
APECO
AODE
ABLD
AMG
ATPDEA
AE
AMED
AGAO
AFIN
AL
ASUP
ASECKFRDCVISKIRFPHUMSMIGEG
AID
ASCH
AM
AORL
ASEAN
APEC
ADM
AFSI
AFSN
ADCO
ABUD
AN
AY
AIT
ACOA
ASIG
AADP
AGR
ANET
ADPM
AMCHAMS
ATRN
ALOW
ACS
APCS
AFFAIRS
ADANA
AECL
ACAO
AORG
AROC
AO
ACABQ
AGMT
AX
AMEX
AFGHANISTAN
AZ
AND
ARM
AQ
ATFN
AMBASSADOR
ACBAQ
AC
AUC
ASEX
AER
AVERY
AGRICULTURE
AFU
BR
BTIO
BY
BO
BA
BU
BL
BN
BM
BF
BEXP
BK
BG
BB
BTIU
BBSR
BRUSSELS
BD
BIDEN
BE
BH
BILAT
BC
BT
BP
BX
BMGT
BWC
CS
CA
CH
CD
CO
CE
CU
CVIS
CASC
CJAN
CI
CPAS
CMGT
CDG
CIC
CAC
CBW
CWC
COUNTER
CW
CT
CR
CY
CNARC
CACM
CG
CB
CM
CV
CIDA
CLINTON
CHR
COE
CIS
CDC
CONS
CF
CFED
CODEL
CBSA
CEUDA
COM
CARSON
COPUOS
CIA
CL
CN
CROS
CAPC
CTR
CACS
CONDOLEEZZA
CICTE
COUNTRY
CBE
CKGR
CVR
COUNTERTERRORISM
CITEL
CLEARANCE
CARICOM
CSW
CITT
CDB
CJUS
CTM
CAN
CLMT
CBC
EAID
ECON
EFIS
ETRD
EC
ENRG
EINV
EFIN
EAGR
ETTC
ECPS
EINT
EPET
ES
EIND
EAIR
EU
EUN
EG
ELAB
EWWT
EMIN
ECIN
ESA
ER
ETRDEINVECINPGOVCS
EAIG
ET
ETRO
ELTN
EI
EN
EUR
EK
EUMEM
ENIV
EPA
ENGR
EXTERNAL
EUREM
ELN
EUC
ENERG
EZ
ERD
EFTA
ETRC
ETRN
EINVECONSENVCSJA
EEPET
EUNCH
ENVR
ESENV
ENNP
ERNG
ENVI
ETRDECONWTOCS
ECINECONCS
EFINECONCS
EXIM
ELECTIONS
ECA
EINVEFIN
ETC
EAP
ECONOMY
EINN
ECONOMIC
EXBS
ECUN
ENGY
ECONOMICS
EIAR
EINDETRD
ECONEFIN
EURN
EDU
ETRDEINVTINTCS
ECIP
EFIM
EAIDS
EREL
EINVETC
ECONCS
ETRA
IC
IV
IAEA
IR
IT
IO
IN
IS
IZ
IMO
IPR
IWC
ICAO
ILO
ID
ICTY
ICJ
INMARSAT
INDO
IL
IMF
IRS
IQ
IA
ICRC
IDA
IAHRC
IBRD
ISLAMISTS
IDP
IGAD
ILC
ITRA
ICTR
ITU
IBET
ITF
INRA
INRO
INTELSAT
IEFIN
IRC
IRAQI
ITALY
ISRAELI
IIP
ITPGOV
ITALIAN
INTERNAL
INTERPOL
IEA
INRB
INR
IZPREL
IRAJ
IF
ITPHUM
ISRAEL
IACI
KBTR
KPAO
KOMC
KCRM
KDEM
KHIV
KBIO
KTIA
KMDR
KNNP
KSCA
KTIP
KWMN
KIPR
KCOR
KRVC
KFRD
KPAL
KWBG
KE
KTDB
KUNR
KSPR
KJUS
KGHG
KAWC
KCFE
KGCC
KOLY
KSUM
KACT
KISL
KTFN
KFLU
KSTH
KMPI
KHDP
KS
KHLS
KSEP
KMRS
KID
KN
KU
KAWK
KSAC
KCOM
KAID
KIRC
KWMNCS
KMCA
KNEI
KCRS
KPKO
KICC
KIRF
KPOA
KV
KDRG
KSEO
KVPR
KTER
KBCT
KFIN
KGIC
KCIP
KZ
KG
KWAC
KRAD
KPRP
KTEX
KNAR
KPLS
KPAK
KSTC
KFLO
KSCI
KIDE
KO
KOMS
KHSA
KSAF
KPWR
KVRP
KENV
KNSD
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KCGC
KVIR
KFSC
KDDG
KPRV
KTBT
KWMM
KX
KMFO
KR
KMOC
KRIM
KCRCM
KBTS
KOCI
KGIT
KNUP
KPAONZ
KNUC
KNNPMNUC
KERG
KTLA
KCSY
KTRD
KNPP
KJUST
KCMR
KRCM
KCFC
KCHG
KREL
KFTFN
KLIG
KDEMAF
KPAI
KICA
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KHUM
KREC
KSEC
KPIN
KESS
KDEV
KWWMN
KOM
KWNM
KRFD
KMIG
KRGY
KIFR
MARR
MOPS
MASS
MX
MNUC
MCAP
MO
MR
MEPP
MTCRE
MAPP
MEPN
MZ
MT
ML
MA
MY
MIL
MD
MASSMNUC
MU
MK
MTCR
MUCN
MAS
MEDIA
MAR
MC
MI
MQADHAFI
MPOS
MARAD
MG
MTRE
MASC
MW
MRCRE
MP
MOPPS
MTS
MLS
MILI
MEPI
MEETINGS
MERCOSUR
MCC
MIK
MAPS
MV
MILITARY
MDC
NATO
NZ
NL
NO
NK
NU
NPT
NI
NG
NEW
NSF
NA
NPG
NSG
NE
NSSP
NS
NDP
NSC
NAFTA
NH
NV
NP
NPA
NSFO
NT
NW
NASA
NORAD
NGO
NR
NATIONAL
NIPP
NZUS
NC
NRR
NAR
NATOPREL
OEXC
OTRA
OPRC
OVIP
OAS
OECD
OIIP
OSCE
OREP
OPIC
OFDP
OMIG
ODIP
OVP
OSCI
OIC
OIE
OPDC
ON
OCII
OPAD
OBSP
OFFICIALS
OPCW
OHUM
OES
OCS
OTR
OSAC
OFDA
PGOV
PREL
PM
PHUM
PTER
PINR
PINS
PREF
PARM
PL
PK
PU
PBTS
PBIO
PHSA
PE
PO
PROP
PA
PNAT
POL
PLN
POLITICAL
PARTIES
PCUL
PAK
PGGV
PAO
PSA
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
PAS
PGIV
PHUMPREL
PDOV
PHUMPGOV
PCI
PTBS
PEL
PG
POLITICS
POLICY
PINL
POGOV
POV
PRAM
PP
PREO
PAHO
PBT
PREFA
PSI
PAIGH
POSTS
PMIL
PALESTINIAN
PARMS
PROG
PTERE
PRGOV
PORG
PS
PGOF
PKFK
PSOE
PEPR
PPA
PINT
PMAR
PRELP
PINF
PNG
PFOR
PUNE
PGOVLO
PHUMBA
PSEPC
PNR
POLINT
PGOVE
PHALANAGE
PARTY
PDEM
PECON
PROV
PGOC
PY
PHUH
PF
PRL
PHUS
RU
RS
RO
RW
RP
RFE
REGION
REACTION
REPORT
RCMP
RM
RSO
ROBERT
RICE
RSP
RF
ROOD
RIGHTS
RIGHTSPOLMIL
RUPREL
RELATIONS
SENV
SU
SCUL
SOCI
SNAR
SL
SW
SMIG
SP
SY
SA
SHUM
SZ
SYRIA
SF
SR
SO
SPCE
SARS
SN
SC
SIPRS
SI
SYR
SEVN
SNARCS
SH
SAARC
STEINBERG
SG
SCRS
SENVKGHG
SAN
ST
SIPDIS
SNARIZ
SNARN
SSA
SK
SPCVIS
SOFA
SANC
SWE
SHI
SEN
TW
TU
TBIO
TSPL
TPHY
TRGY
TC
TT
TSPA
TINT
TERRORISM
TX
TR
TS
TN
TD
TH
TIP
TNGD
TI
TZ
TF
THPY
TP
TBID
TL
TV
TK
TO
TRSY
TURKEY
TFIN
TAGS
UN
UK
UNSC
UNGA
US
UNESCO
UP
UNHRC
UNAUS
USTR
UNDP
UNEP
UNMIK
UY
UNCHR
UNO
UG
UZ
UNPUOS
USEU
UNDC
UNICEF
UV
UNHCR
UNCND
UNCHC
UNCSD
USUN
USOAS
UNFCYP
USNC
UNIDROIT
USPS
USAID
UE
UNVIE
UAE
UNODC
UNCHS
UNFICYP
UNDESCO
UNC
Browse by classification
Community resources
courage is contagious
Viewing cable 09QUITO814, ECUADOR ECONOMIC NEWS: CORREA ANNOUNCES NEW ECONOMIC
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #09QUITO814.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
09QUITO814 | 2009-09-04 20:26 | 2011-05-02 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Quito |
VZCZCXYZ0019
RR RUEHWEB
DE RUEHQT #0814 2472027
ZNR UUUUU ZZH
R 042026Z SEP 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC0000
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHBO/AMEMBASSY BOGOTA
RUEHCV/AMEMBASSY CARACAS
RUEHGL/AMCONSUL GUAYAQUIL
RUEHLP/AMEMBASSY LA PAZ
RUEHPE/AMEMBASSY LIMA
RUEHQT/AMEMBASSY QUITO
UNCLAS QUITO 000814
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON ETRD EINV EFIN EC
SUBJECT: ECUADOR ECONOMIC NEWS: CORREA ANNOUNCES NEW ECONOMIC
MEASURES, CENTRAL BANK CUTS 2009 GDP GROWTH ESTIMATES, CAN RULES ON
ECUADORAN SAFEGUARDS ON COLOMBIAN IMPORTS
REF: QUITO 566
¶1. (U) The following is a periodic economic update for Ecuador that
reports notable developments that are not reported by individual
cables. This document is sensitive but unclassified. It should
not be disseminated outside of USG channels and should not be
posted on the internet.
----------
Highlights
----------
-- President Correa Announces New Economic Measures
-- Central Bank cuts 2009 GDP growth estimate
-- GoE Fiscal Deficit in 2009
-- IMF allocation of SDRs to Ecuador to support GoE budget
-- Reorganization of Central Bank Board of Directors
-- CAN rules on GoE safeguards on Colombian imports
--------------------------------------------- ---
President Correa Announces New Economic Measures
--------------------------------------------- ---
¶2. (SBU) On August 26, President Correa announced that the GoE was
submitting that same day a tax reform package to the National
Assembly for its approval. He explained that these tax reforms
were part of broader GoE measures to "face the international
crisis," including reducing the current account deficit, using
international reserves to fund domestic investment, promoting
social justice, combating tax evasion, and boosting productive
sector and internal demand. During his August 26 comments, Correa
voiced his optimism about the economy, predicting GDP growth of 2%
and annual inflation lower than 4%.
¶3. (SBU) Within the tax reform package, a handful of measures have
received the most attention: 1) the increased tax on money
remittances from 1% to 2%, aimed at stemming capital outflows,
which totaled US$ 4.9 billion in 2008 and have already exceeded US$
5 billion so far in 2009; 2) the planned repatriation of US$ 1.6
billion in international reserves to support domestic investments
aimed at boosting economic activity; 3) the establishment of a
minimum corporate income tax and a 10% tax on shareholder dividends
of companies with high profit levels. (See septels for additional
details on the tax reform plan and the GoE's plan to use
international reserves to fund domestic investment.)
¶4. (SBU) Private analysts note that the overall goal of this tax
reform package and the broader measures taken by the GoE are to
generate revenues to cover the fiscal deficit, limit the current
account deficit, and redistribute income. Many observers are
critical of the August 26 announced measures, noting that
increasing the tax on capital flows is unlikely to reduce outflows,
which are high due to uncertainty about the economy and GoE
policies. There is also concern that the GoE's decision to close
positions in liquid short-term international assets and invest them
in medium-term illiquid domestic assets will undermine financial
stability and increase Ecuador's vulnerability to external shocks.
Finally, many analysts disagree with Correa's optimistic growth
estimates, with some expecting annual growth below even the Central
Bank's 1% estimate.
------------------------------------------
Central Bank cuts 2009 GDP growth estimate
------------------------------------------
¶5. (U) On August 24, Karina Saenz, General Manager of Ecuador's
Central Bank (BCE), revised downward the BCE's estimate for 2009
annual real economic growth to 1%, from its previous estimate of
3.5%. Although Saenz mentioned that "Ecuador has overcome the
worst of the crisis" and would compare well this year against other
countries in the region, the downward revision reflects the BCE's
admission that the Ecuadoran economy has experienced a sharp
downturn since late 2008, after posting 6.5% real growth in 2008.
¶6. (SBU) According to available Ecuadoran Central Bank data on
quarterly GDP, the economy contracted 1.62% in the first quarter of
2009, compared to the fourth quarter of 2008. Many local
private-sector economists argue that Ecuador's recession began in
the fourth quarter of 2008, with GDP falling an estimated 0.25%
(quarter-over-quarter). However, Central Bank President Carlos
Vallejo has argued publicly that GDP at the end of the first
quarter of this year registered real growth of 1.19% year-over-year
(resulting from the statistical carryover of relatively strong
growth during the second and third quarters of 2008), and he
continues to predict positive real growth for full-year 2009 in the
range of 2%.
¶7. (SBU) According to Central Bank estimates of economic activity,
the country has experienced a sharp contraction in non-oil sectors
of the economy, compared to previous years. The BCE estimates that
during 2009 "construction and public works" will contract against
2008, from an annual increase of almost 14% to an estimated decline
of 1%. Similarly, the growth rate of "government services"
plummeted from almost 15% in 2008 to an estimated 2.5% in 2009.
These reflect the GoE's inability to copy what it did in 2008 and
drive economic growth through government expenditures. The BCE
also expects limited growth but substantially lower than in 2008 in
private investment, financial services, and manufacturing. The BCE
expects "oil and mining" to continue their recent trend of
declining year/year at a rate of 4-5%.
--------------------------
GoE Fiscal Deficit in 2009
--------------------------
¶8. (SBU) According to Ecuador's Constitution, the GoE must submit
the 2010 budget to the National Assembly within 90 days of
President Correa's August 10 inauguration. The GoE is also
obligated to provide the National Assembly with estimated fiscal
program plans for 2011-2013. Finance Minister Viteri confirmed
during a September 1 press conference that her Ministry is working
on 2009 and 2010 budgets, with the goal of submitting both of them
to the National Assembly in early November. Viteri commented that
the 2009 budget, which was never approved by the legislature, is
based on a US$ 35.5 per barrel price for Ecuadoran oil, whereas the
average to date in 2009 is significantly higher at US$ 45/bbl. She
noted that the 2010 budget will be based on a US$ 61/bbl oil price.
¶9. (SBU) There are varying estimates for the size of the GoE's
fiscal deficit in 2009, a calculation complicated by the lack of
the 2009 budget, the Finance Ministry's lengthy delay in publishing
budget data, and the increase in recent months in the price of
crude oil. The well-known local think tank "Fiscal Policy
Observatory" estimates the fiscal deficit through July 2009 at US$
420 million. However, this figure does not take into account GoE
arrears to the social security agency (IESS) and delayed transfers
to regional governments and to other public entities. The Fiscal
Policy Observatory, which has a reputation for being pessimistic,
estimates these arrears at about US$ 600 million, and estimates
that the full-year 2009 fiscal deficit could be as high as US$
2.5-3 billion.
--------------------------------------------- ---------
IMF allocation of SDR to Ecuador to support GoE budget
--------------------------------------------- ---------
¶10. (SBU) As with all other IMF members, on August 27-28 Ecuador
received its share of the IMF's general allocation of US$ 250
billion in Special Drawing Rights (SDRs, or Derechos Especiales de
Giro, DEGs, in Spanish). Ecuador's allocation totaled 224.1
million SDRs, or approximately US$ 350 million. Ecuador will
reportedly receive a second allocation of SDRs in September, valued
at close to US 50 million, stemming from the Fund's planned US$ 33
billion allocation of SDRs on September 9. The disbursement has
generated some controversy in Ecuador, given President Correa's
strong criticisms of the IMF, and there has been some debate over
whether Ecuador would accept the disbursement. Central Bank Karina
Saenz dismissed this controversy during a September 1 meeting with
EconOffs. She stated that not only has Ecuador accepted the SDRs,
the BCE has already requested IMF assistance with trading these
SDRs to another member country for hard currency. Interestingly,
Saenz noted that the resulting dollars will not be counted as
international reserves on the BCE's balance sheet, as are Ecuador's
existing stock of SDRs. Rather, the BCE will transfer the funds
directly to the GoE Treasury accounts at the BCE.
--------------------------------------------- ----
Reorganization of Central Bank Board of Directors
--------------------------------------------- ----
¶11. (U) On July 30, 2009, the National Assembly approved a law that
reorganizes the Board of Directors of the Central Bank of Ecuador
(CBE). Ecuadorian President Correa's administration originally
proposed the law, so it is assumed he will sign it and it will
enter into effect by end-September. The new law replaces the
current board of five officials nominated by the President and
confirmed by the National Assembly, with a fixed slate that does
not require National Assembly approval. The President will still
name his representative as the BCE President, but other board
members will be the Coordinating Minister for Production,
Coordinating Minister for Economic Policy, the Minister of Finance,
a representative of public financial entities, and the Secretary of
National Planning. President Correa has not yet announced whether
he will retain Carlos Vallejo, the current President of the CBE, as
his representative on the Board.
--------------------------------------------- ---
CAN rules on GoE safeguards on Colombian imports
--------------------------------------------- ---
¶12. (SBU) In January 2009, the GoE imposed WTO Balance of Payments
(BOP) safeguard provisions on certain imports, arguing they were
necessary to confront Ecuador's developing BOP crisis. In July the
GOE imposed further one-year emergency exchange safeguard measures,
taking the form of additional tariffs ranging from 5% to 86% and
targeting 1,346 Colombian products (Ref A). The GoE justified this
action as a necessary response to the 18.5% depreciation of the
Colombian peso, which the GoE attributed to Colombian Central Bank
measures. The GoE argued that the weak Colombian peso undermined
the competitiveness of Ecuador's dollarized economy, making
Colombian exports to Ecuador cheaper.
¶13. (SBU) On August 7, the Andean Community's (CAN) General
Secretary ruled that Ecuador must remove its exchange safeguards on
the 1,346 Colombian products within 15 days. However, the CAN
Secretariat appeared to take pains to avoid benefiting one country
over the other, and also acknowledged that the Colombian currency
devaluation between June 2008 and June 2009 had negatively affected
Ecuadorian products' competitiveness. It, therefore, authorized
Ecuador to apply corrective measures on 666 Colombian products,
subject to several rather vague conditions. These conditions
included the requirements that the corrective measures be
transitory and applied only so long as the currency mismatch
exists, and they cannot exceed the rate of devaluation in
magnitude.
¶14. (SBU) The GOE has complied with the CAN ruling and has
developed a new list of 666 safeguards on Colombian products.
Coordinating Minister for Production, Nathaly Cely, who traveled to
Lima in early August to negotiate the safeguards issue with the CAN
Secretariat, has stated publicly on several occasions that
Ecuador's safeguard measures accomplished their intended objectives
of reducing Ecuador's trade deficit. According to Central Bank
data, through June 2009, Ecuadoran imports are US$ 1.17 billion
below their level during the equivalent period in 2008.
HODGES