Ecuador aims to make its economy more competitive and the new commercial and investment policy is the proof of this. What major reforms is the government planning to achieve greater economic revitalization?
The government of President Lenín Moreno has established the Prosperity Plan. It has two components, namely employment and industrial reactivation. In this sense, we have adopted several actions to open Ecuador to the world and attract private-sector investment, the true engine of growth. We have left behind an economic model that hurt Ecuador by generating distrust between the public and private sectors. We received a sick economy, but we are healing it with orderly management of public finances, through which we have reduced the fiscal deficit from 8% of GDP to 3% of GDP as of end-2018, the lowest in the last six years. We have formed new international relations and strengthened old ones. Equally important, we have strengthened our democratic institutions, which is a fundamental factor when it comes to providing legal security to companies. We have introduced powerful, region-specific tax incentives, such as income tax exemptions for periods ranging from eight to 20 years. In this way, our private sector has begun its dynamic journey. 2018 closed with a historic increase of USD4 billion in private investment. Moreover, non-oil exports grew by 5% and total private sales rose 4%. We have made considerable progress and are aware that we must continue working to strengthen Ecuador's status as an investment destination. In this sense, we are proposing a package of structural reforms to further promote entrepreneurship, innovation, and job creation. Specifically, we intend to reduce the informality that exists at work, particularly of women and young people. Similarly, we are proposing another legal reform to facilitate PPPs for infrastructure projects. One of our focuses is to establish a robust stock market that allows the inclusion of SMEs. In regard to public companies, we are proposing a legal reform that gives them the management tools they need to be more efficient and transparent. The reform package also seeks to strengthen our monetary system and provide an order to manage the public budget.
What is Ecuador's position regarding cooperation with international financial institutions such as the IMF?
Ecuador could not live isolated from the international community. Therefore, we have established a policy of openness and rapprochement toward multilateral organizations and global economies. This has generated more confidence in Ecuador, opening the possibility of accessing cheaper financing, attracting more foreign investment, and exporting to more markets. In 2018, we attracted a record USD1.4 billion in FDI, a 127% increase YoY. Due to the current administration's efforts, the international community has committed USD10.2 billion to support the Prosperity Plan over the 2019-2021 period. The support of the international community shows that the government's program is on the right track. Our comprehensive economic program with international organizations also establishes an increase of around USD400 million in social spending in 2019, helping us maintain a social assistance expenditure floor of 1% of GDP.
What did the annual Meeting of the Boards of Governors of the IDB in Guayaquil in 2019 meant for the country?
The fact that Ecuador organized the 60th Annual Meeting of the Board of Governors of the IDB is a demonstration of international community's renewed interest and confidence in the country. After 47 years we returned to host the most important regional event of the IDB. The event focused on important economic and social issues of the region and the institutional development of the organization. Ideas and opinions were also exchanged between the governors of the IDB and the IDB Invest. In total, more than 5,400 participants attended the event. The IDB also ratified its support for Ecuador, approving USD927 in loans for projects related to Quito's energy, drinking water, and sewerage systems, the Casa para Todos program, and the improvement of fiscal management and production development. Moreover, the IDB approved USD50 million for a university and a financial institution.
What is Ecuador's vision regarding Latin American integration, not only with the Pacific Alliance, but also with other blocks such as Mercosur?
Ecuador's philosophy is to open up to the world, diversify its markets, and consolidate its commercial relations with all those countries or partners that share democratic values. In Latin America, our goal is to strengthen regional integration and base it on the true interests of the region and not on political ideologies, which was the case with Unasur and ALBA. Ecuador is in favor of generating an integration process that responds to the economic and social development of countries, the fight against corruption, security, environment, human rights, and cultural aspects, for example. We want to be part of the Pacific Alliance as it will significantly boost our foreign trade; the Alianza is the eighth-largest economy in the world, representing 35% of Latin America's population.
Ecuador is working hard to reduce its public deficit. To what extent can the greater involvement of the private sector accelerate this process and which sectors are best positioned to experience rapid development?
The participation of the private sector is always essential for the development of a country. Therefore, we are creating all the conditions to strengthen private investment and make Ecuadorian companies more competitive. This benefits us all because this is how the economy is energized and employment is created. Our interest is to develop the entire business sector, which is why we have generated benefits for large, medium, small, and micro enterprises. Moreover, we are going to promote a legal reform in the tax field for greater simplification and establish a solid and efficient tax scheme that further facilitates investments in the country.
What is your growth and deficit forecasts for 2020?
We are working to improve Ecuador's macroeconomic indicators. We are executing actions whose results will be seen in the medium and long terms. The goal is for 2020 to register positive growth and further reduce the deficit. The goal is to reduce our non-oil primary deficit (including fuel subsidies) to 5% of GDP in three years and reach a global surplus of this sector of 2.9% in 2021. Another objective is also to reduce the debt-to-GDP ratio to 40% of GDP by 2022.