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Viewing cable 07QUITO2605, ECUADOR ECON WEEKLY: GOE'S 2008 BUDGET APPROVED; CORREA

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Reference ID Created Released Classification Origin
07QUITO2605 2007-12-05 18:53 2011-05-02 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Quito
VZCZCXYZ0009
OO RUEHWEB

DE RUEHQT #2605 3391853
ZNR UUUUU ZZH
O 051853Z DEC 07
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8151
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 7165
RUEHCV/AMEMBASSY CARACAS PRIORITY 2787
RUEHLP/AMEMBASSY LA PAZ DEC 0820
RUEHPE/AMEMBASSY LIMA PRIORITY 2201
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 3111
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
UNCLAS QUITO 002605 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR MEWENS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD EC
SUBJECT: ECUADOR ECON WEEKLY: GOE'S 2008 BUDGET APPROVED; CORREA 
SEEKS STRONGER TIES WITH ASIA; IDB EDUCATION LOAN 
 
 
1.  (U) The following is a weekly economic update for Ecuador that 
describes notable developments that are not reported by individual 
cables. 
 
Congress Approves 2008 Budget 
----------------------------- 
 
2. (U) On November 30, the Ecuadorian Congress approved the GOE's 
2008 budget, but moved $327 million planned for public debt payments 
to social projects in education, health, housing and welfare.  The 
Ministry of Economy and Finance submitted the $10.36 billion budget 
to Congress on September 1.  Passed by 52 of 80 lawmakers present in 
the session, the 2008 budget will allocate $1.7 billion or 16% of 
the budget to service the country's local and foreign debt. 
Congressmen also changed oil price estimates in the 2008 budget from 
$35 to $45 per barrel, saying the Administration's estimate was too 
conservative (note: Ecuadorian crude sells at a discount to 
international oil prices).  Additionally, lawmakers included 
approximately $578 million in additional petroleum revenues from 
private oil companies, due to a recent change in how Ecuador 
calculates these revenues and $60 million from recently raised 
import duties.  Congressman Jaime Estrada noted that these two 
changes will reduce the budget deficit to $217 million from the $855 
million originally estimated. 
 
3.  (SBU) Comment:  Lowering estimates for debt payment is a 
standard exercise in Congress, since it gives them room to increase 
spending in other areas, but has no practical affect on the 
government's ability to service its debt.  In general, actual GOE 
spending at the end of the year bears little resemblance the budget 
approved by Congress. 
 
Correa Seeks Stronger Commercial Relations with Asia 
--------------------------------------------- ------- 
 
4. (U) On November 28, President Correa announced Ecuador's intent 
to strengthen its commercial relationships with Asian countries, 
after returning from his visit to Saudi Arabia, China and Indonesia. 
 Correa stated that Ecuador is particularly interested in doing 
business with Asia in the petroleum and agricultural sectors.  He 
has said he wants to diversify markets for Ecuadorian products, 
focusing on Asia and Brazil. 
 
5. (U) During his visit, President Correa signed two agreements with 
Indonesian authorities. One is an agreement on cultural cooperation 
and the other one is a petroleum cooperation agreement between the 
two state-owned oil companies, Petroecuador and Pertamina, for gas 
and petroleum studies in the Gulf of Guayaquil and the Amazon region 
of Ecuador. 
 
IDB Approves Education Loan 
--------------------------- 
 
6. (U) On November 29, based on Ecuador's Ministry of Education and 
Culture (MEC)'s Education Plan for 2006-2015, the Inter-American 
Development Bank (IDB) approved a $295 million program to support 
the expansion of basic education in Ecuador.  The MEC requested the 
loan in December 2006.  The main objective of this program is to 
support the GOE's plan to provide universal basic education for 10 
years, with an emphasis on border, rural and poor urban areas.  The 
program, which includes reimbursement for eligible education plan 
expenses paid for with national budget resources, has two main 
components: expanding basic education coverage and improving 
education quality and management. 
 
BROWN