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Although the Ecuadorian GDP has shown a surplus of $181.1 million in the first quarter of the 2004 fiscal year, the overall GDP is actually a declination from the first quarter of the 2003 fiscal year of $239.4 million. However, much of this was due to increased expendtures outweighing growth, 13.8% growth. But the startling nature of this is not simply the growth in expidentures, it is the fact that the revenue is growing at a slower trend than the expedentures. This trend is likely to continue although the price per barrel of oil is expected to increase $6.50 per barrel from the year 2003 to 2004. However, by 2005 it is projected to fall nearly $5 and fall another 3 by 2006. However, the Ecuadorian government is expected to increse the oil output of crude oil to a new high in the coming months. In fact the Ecuadorian government is expected to fall into a $467 million deficit. The current policy of the government of Ecuador involves taking money from the debt buy-back fund, known as FEIREP. However the Ecuadorian government insists that they have secured $200 million loans from both the World Bank and the Inter-American Bank.
Figures and estimates in the above were predicted by EIU
Regardless, these figures are startling. Even if they can apply the necessary reforms to their tax collection in order to become more efficient and collect more money, they are still likely project some deficit. With regards to the current Ecuadorian government, it would be a windfall for their current situation. They would be able to drop the funds tied up in their own beauracracy of managing the parks, as well as defer the salary of the park rangers and personel to the fund that would be provided by the international aforementioned in the pretense provided in the scenario of our mission. By transfering the stewardship of the Galapagos islands, the Ecuadorian government would save millions in the future. Of course this might hurt the Ecuadorian toursim industry. However, if there is a clause within the organization's charter that allows the Ecuadorian government to still impose taxes and tariffs on the tourism industry as they do now, that should not be a reason for the government to turn down the offer.
Currently the government of Ecuacdrian government is 16.9 billion dollars in debt. This rose from only 12.5 billion dollars in 1991 (Ecuador). In 1991, the exchange rate was 1046 Su to the dollar. In February of 1996, this jumped to 2950 Su to the dollar (Economic Structure).
Oil exports account for over one third of their total exports. With 42.2 percent of their exports going to the United States (Economic structure).
Ecuador has the resources to build a strong and diverse economy due to the fertility of their soil, except for the preoccupation of using oil as their main source of income. As the market diversifies, it is doubtless that the economy will thrive, but until then, the economy will suffer. Ecuador needs fiscal aid in order to make the radical changes it needs to add strength to its economy.
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