

Currently released so far... 12404 / 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
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 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 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
ASEC
AE
AF
AM
AR
AJ
AU
AORC
AG
AEMR
AMGT
APER
AGMT
AL
AFIN
AO
AMED
ADCO
AS
ABUD
ABLD
ASUP
ASECKFRDCVISKIRFPHUMSMIGEG
APECO
AID
AND
AMBASSADOR
AN
ARM
AY
AODE
AMG
ASCH
AMCHAMS
ARF
APCS
APEC
ASEAN
AGAO
ANET
ADPM
ACOA
ACABQ
AORL
AFFAIRS
ATRN
ACS
AFSI
AFSN
ADANA
ASIG
AA
AX
AUC
AC
AECL
AADP
AGRICULTURE
AMEX
ACAO
ACBAQ
AQ
AORG
ADM
AINF
AIT
ASEX
AGR
AROC
ATFN
AFGHANISTAN
AFU
AER
ALOW
AZ
AVERY
BA
BY
BU
BR
BE
BL
BO
BK
BM
BILAT
BH
BEXP
BF
BTIO
BC
BBSR
BMGT
BTIU
BG
BWC
BB
BD
BX
BP
BRUSSELS
BN
BIDEN
BT
CW
CH
CF
CD
CV
CVIS
CM
CE
CA
CJAN
CLINTON
CIA
CU
CASC
CI
CO
CACM
CDB
CN
CMGT
CS
CG
CBW
CIS
CR
CONDOLEEZZA
CPAS
CAN
CWC
CY
COUNTER
CDG
CL
CT
CIC
CIDA
CSW
CHR
CB
CODEL
COUNTERTERRORISM
CTR
COM
CICTE
CFED
CJUS
CKGR
CBSA
CEUDA
CARSON
CONS
CITEL
CLMT
CROS
CITT
CAC
CVR
CDC
CAPC
COPUOS
CBC
CBE
CARICOM
COE
COUNTRY
CLEARANCE
CACS
CTM
CNARC
ECON
EFIN
ETRD
EUN
EFIS
EG
ETTC
EZ
EPET
EAID
EAGR
ENRG
ECUN
EU
ELAB
ECPS
EAIR
EINV
ELTN
EWWT
EIND
EMIN
EI
ECIN
ENVR
ELECTIONS
EINVEFIN
EN
ES
ER
EC
EUC
EINT
EINVETC
ENGR
ET
EK
ENIV
ETRDEINVECINPGOVCS
ECONOMY
EAP
EFTA
EUR
EUMEM
EXIM
ERD
ENERG
EUREM
ESA
ERNG
EXTERNAL
EPA
EINVECONSENVCSJA
ECONOMICS
ELN
EINN
EFINECONCS
ENNP
EEPET
ETRDEINVTINTCS
ENVI
ETRO
ESENV
ECINECONCS
ECONOMIC
EAIDS
EDU
ETRA
ETRN
EFIM
EIAR
ETRC
EAIG
EXBS
EURN
ECIP
EREL
ECA
ENGY
ECONCS
ECONEFIN
ETC
ETRDECONWTOCS
EUNCH
EINDETRD
IR
IZ
IS
IAEA
INRB
IRAJ
IQ
IN
IT
IMO
INTERPOL
ICAO
IO
IC
ITALY
ITALIAN
IRAQI
ICTY
ID
IPR
IWC
ILC
INTELSAT
IL
IBRD
IMF
IA
IRC
ICRC
ILO
ITU
ITRA
IV
IDA
IAHRC
ICJ
ISRAELI
IRS
INMARSAT
ISRAEL
ISLAMISTS
INDO
IZPREL
ITPHUM
ITPGOV
ITF
IBET
IEFIN
INR
IACI
INTERNAL
IDP
IGAD
IEA
ICTR
IIP
INRA
INRO
IF
KJUS
KSCA
KNNP
KU
KCOR
KCRM
KDEM
KTFN
KHLS
KPAL
KWBG
KACT
KGHG
KPAO
KTIA
KIRF
KWMN
KS
KG
KZ
KN
KMDR
KISL
KSPR
KHIV
KPRP
KAWK
KR
KUNR
KDRG
KCIP
KGCC
KTIP
KSUM
KPKO
KVIR
KAWC
KPIN
KGIC
KRAD
KIPR
KOLY
KCFE
KMCA
KE
KV
KICC
KNPP
KBCT
KSEP
KFRD
KFLU
KVPR
KOCI
KBIO
KSTH
KMPI
KCRS
KOMC
KTBT
KPLS
KIRC
KREL
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KFLO
KBTS
KSTC
KTDB
KFSC
KX
KFTFN
KNEI
KIDE
KREC
KMRS
KICA
KPAONZ
KCGC
KSAF
KRGY
KCMR
KRVC
KVRP
KSEO
KCOM
KAID
KTEX
KNUC
KNAR
KNUP
KNNPMNUC
KLIG
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KCRCM
KHDP
KGIT
KNSD
KOMS
KWMM
KPAI
KHSA
KTLA
KO
KMFO
KRCM
KCSY
KSAC
KTRD
KPWR
KID
KWNM
KRIM
KPOA
KCHG
KOM
KSCI
KFIN
KMOC
KESS
KWAC
KMIG
KSEC
KIFR
KDEMAF
KPRV
KBTR
KERG
KTER
KDDG
KPAK
KRFD
KHUM
KDEV
KCFC
KWWMN
KWMNCS
KJUST
MARR
MOPS
MU
MTCRE
MNUC
MY
MASS
MCAP
MOPPS
MAR
MPOS
MO
ML
MR
MASC
MX
MD
MP
MA
MTRE
MIL
MCC
MZ
MK
MDC
MRCRE
MAPS
MV
MI
MEPN
MAPP
MEETINGS
MAS
MTS
MLS
MILI
MTCR
MG
MC
MARAD
MIK
MILITARY
MEDIA
MEPI
MUCN
MEPP
MT
MERCOSUR
MW
MASSMNUC
MQADHAFI
NZ
NATO
NG
NI
NO
NATIONAL
NU
NPT
NIPP
NL
NPG
NS
NA
NGO
NP
NSG
NDP
NAFTA
NR
NC
NH
NE
NSF
NPA
NK
NSSP
NRR
NATOPREL
NSC
NT
NW
NORAD
NEW
NV
NSFO
NAR
NASA
NZUS
OTRA
OVIP
OPRC
OPDC
OSCE
OAS
ODIP
OIIP
OFDP
OVP
OREP
OFFICIALS
OSAC
OEXC
OPCW
OIE
OIC
OFDA
OSCI
OPIC
OBSP
OECD
ON
OCII
OHUM
OES
OCS
OMIG
OPAD
OTR
PGOV
PREL
PHUM
PINR
PTER
PSOE
PINS
PARM
PK
PBTS
PEPR
PM
POLITICAL
PARTIES
PREF
PBIO
PROP
PA
PSI
PINT
PO
PKFK
PL
PAK
PE
POLITICS
PINL
POL
PHSA
PU
PF
POV
PFOR
PHALANAGE
PARTY
PARMS
PRGOV
PNAT
POLINT
PRAM
PMAR
PG
PAO
PROG
PRELP
PPA
PCUL
PSEPC
PSA
PREO
PAHO
PGIV
PREFA
PALESTINIAN
PAIGH
POSTS
PTBS
PGOVLO
PORG
PGOVE
PLN
PINF
PAS
PUNE
POLICY
PDEM
PDOV
PCI
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
PBT
PHUMPGOV
PMIL
PNG
PP
PS
PHUH
PECON
POGOV
PY
PHUMPREL
PHUS
PRL
PGOC
PNR
PGGV
PROV
PTERE
PGOF
PHUMBA
PEL
RS
RU
RW
REGION
RP
RICE
ROBERT
RSP
RUPREL
RM
RO
RCMP
RSO
RELATIONS
REACTION
REPORT
RIGHTS
ROOD
RF
RFE
RIGHTSPOLMIL
SP
SA
SY
SF
SYR
SENV
SCUL
SOCI
SNAR
SO
SU
SG
STEINBERG
SHUM
SW
SMIG
SR
SZ
SIPRS
SI
SAARC
SPCE
SARS
SN
SYRIA
SANC
SL
SCRS
SC
SENVKGHG
SAN
SNARCS
SHI
SWE
SNARIZ
SIPDIS
SEN
SNARN
SPCVIS
SEVN
SSA
SH
SOFA
SK
ST
TPHY
TU
TRGY
TI
TX
TS
TW
TC
TFIN
TD
TSPA
TH
TT
TIP
TBIO
TSPL
TZ
TERRORISM
TRSY
TN
THPY
TINT
TF
TL
TV
TK
TO
TP
TURKEY
TNGD
TBID
TAGS
TR
UP
US
UNSC
UK
UZ
UE
UNESCO
UV
UNGA
UN
UNMIK
UNO
UY
UAE
UNEP
UG
UNHCR
UNHRC
USUN
UNAUS
USTR
USNC
USOAS
UNCHR
UNCSD
UNDP
USEU
USPS
UNDC
UNDESCO
UNCHC
UNFICYP
UNC
UNODC
UNPUOS
UNCND
UNICEF
UNCHS
UNVIE
USAID
UNIDROIT
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 20:08 | 2011-05-02 00:12 | 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