Ecuador taking on debt to grow economy

elpais.com reported oil has propped up Ecuador’s economy since the 1970s. For every $100 earned in exports, $60 come from oil sales. During Rafael Correa’s seven years as president, the price of oil has been between $80 and $100 a barrel. Still, the country has had to take on loans in order to fund public investment, which today stands at 12-13% of Gross Domestic Product (GDP). In Latin America, average public spending is 5% of GDP. In 2013, Ecuador’s deficit reached $5 billion, five times more than the previous year. And now, the government needs $4.9 billion to shore up its 2014 budget. “The government’s great dream of investing is the cause of this fiscal deficit,” explains former minister of finance Fausto Ortiz. “The country spends because it is able to get financing and it grows because that funding is spent on public works.” Read Article

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