12/10/2017 Politics

Ecuador's President Lenin Moreno Says New Economic Plan Is Not Austerity Package

In a televised speech to the nation, the head of state said, "exports have fallen, the price of oil remains low, the construction sector has contracted and public debt has very difficult conditions."

lenin moreno  Eduardo Flores  Presidencia de la República
lenin moreno Eduardo Flores Presidencia de la República
 
Eduardo Flores/Presidency of Ecuador/LANA (10/11/2017)
 
 

"It's not like an economy with 'the table served,' " Moreno said.

He then promised that the measures will not bring about a rise in VAT, oil or electricity prices in the form of a “paquetazo” or austerity package.

Moreno went on to outline the key measures which include tax reforms.

He said, "In order to guarantee work and employment, I will consult the people on the elimination of the so-called 'Law of surplus value', which, since its announcement, generated fear and affected construction."

While companies which register profits below US$300,000 a year will not have to pay the tax on their profits and micro-enterprises already established will stop paying income tax on their first US$11,000 of profit.

 
lenin moreno  Eduardo Flores  Presidencia de la República
lenin moreno Eduardo Flores Presidencia de la República
 
Eduardo Flores/Presidency of Ecuador/LANA (10/11/2017)
 
 

The plan will also eliminate the tax on rural lands in a bid to boost the agricultural sector.

And there will be a reduction in public spending of US$500 million for 2018 but there was no mention of any job cuts.

He announced new types of labor contracts to defend the rights of workers and encourge employment.

Moreno also told the nation, "To sustain and strengthen dollarization, I will present a law that encourages the repatriation of capital ... Those who bring their productive capital in the next 12 months will be exempt from income tax for up to 5 years."