19JAN24- "Investment bank believes that VAT increase opens the doors of the IMF for Ecuador Author: Evelyn Tapia Updated: Jan 19, 2024 - 5:40 Investment banks and rating agencies believe that with the increase in VAT, the IMF could be willing to give a new loan to Ecuador. The Minister of Finance, Juan Carlos Vega, in the National Assembly, December 4, 2023.

• Photo: Account X of the Ministry of Finance. Join WhatsApp The Government's proposal to increase the Value Added Tax (VAT) to 15% was well received by international markets . Noboa's plan will, they say, open the doors for Ecuador to obtain new multilateral credits, valuable in a year of low liquidity for Ecuador. Ecuador must seek new debt for about USD 10 billion in 2024, an important figure that is equivalent to 10% of Ecuador's Gross Domestic Product (GDP).

If the VAT is raised, that figure would be reduced by about USD 1.3 billion, according to the Ministry of Finance. President Daniel Noboa justified the three-point increase in VAT , because resources are urgently required to finance the war against drug trafficking in the midst of the declaration of internal armed conflict.

Government: "It is difficult to know how long salaries can be paid if VAT is not raised" But not only that. The Minister of Finance, Juan Carlos Vega, has also explained that it is necessary to raise income urgently and permanently , because the money in the fiscal coffers will not be enough to pay daily salaries and the state's millionaire arrears.

Such weak fiscal accounts even put at risk Ecuador receiving new freely available loans from multilateral organizations , which today are Ecuador's largest creditors, and even dollarization itself, the Minister also said."
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