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ECUADOR.

ECUADOR

 % Change (In millions US $)

 Interest Trade
Date CPI M1 Rate (%) Imports Exports Bal

 1990 48.5 52.2 50.5 1,715.0 2,724.0 1,009.0
 1991 48.7 46.5 56.8 2,208.0 2,851.0 643.0
 1992 54.6 44.5 47.2 2,084.0 3,102.0 1,018.0
 1993 45.0 49.4 26.7 2,474.0 3,066.0 592.0
 1994 27.3 35.7 40.2 3,282.0 3,843.0 561.0
 1995 22.9 12.7 49.2 4,057.0 4,381.0 324.0
 1996 24.4 35.4 31.6 3,680.0 4,873.0 1,193.0
 1997 30.7 29.7 34.6 4,666.0 5,264.0 598.0
 1998 43.4 34.8 48.2 5,198.0 4,203.0 -995.0
 1999 60.7 70.0 48.0 2,786.0 4,451.0 1,665.0
Jan 3.2 -9.3 66.7 352.0 312.0 -40.0
Feb 2.7 4.4 68.6 266.0 302.0 36.0
Mar 13.5 -0.9 52.3 258.0 387.0 129.0
Apr 5.5 10.3 59.7 192.0 371.0 179.0
May 0.9 6.3 52.9 188.0 382.0 194.0
Jun 1.8 6.0 59.1 183.0 364.0 181.0
Jul 3.1 8.7 60.1 222.0 385.0 163.0
Aug 0.5 -2.2 54.6 196.0 370.0 174.0
Sep 1.8 13.8 59.8 218.0 392.0 174.0
Oct 4.2 9.6 60.2 229.0 411.0 182.0
Nov 6.4 6.1 58.9 239.0 382.0 143.0
Dec 5.6 15.0 55.7 243.0 393.0 150.0
 2000 91.0 30.0 20.0 3,468.0 4,925.0 1,457.0
Jan 14.3 14.3 49.6 199.0 404.0 205.0
Feb 10.0 1.2 29.8 235.0 414.0 179.0
Mar 7.6 7.5 13.9 228.0 439.0 211.0
Apr 10.2 14.3 220.0 409.0 189.0
May 5.1 15.1 226.0 436.0 210.0
Jun 5.3 15.9 302.0 408.0 106.0
Jul 2.4 15.2 392.0 398.0 6.0
Aug 1.4 15.7 326.0 429.0 103.0
Sep 3.7 14.9 327.0 435.0 108.0
Oct 2.7 15.2 315.0 421.0 106.0
Nov 2.2 16.4 365.0 383.0 18.0
 2001 30.0 25.0 4,300.0 4,600.0 300.0
Jan 7.0 14.6 331.0 402.0 71.0
Feb 2.9 15.9 271.0 350.0 79.0
Mar 2.2 14.9 426.0 407.0 -19.0
Apr 1.7 15.2 396.0 374.0 -22.0
May 0.2
Jun
Column
Number 1 2 3 4 5 6

 (In millions US $)

 Current Exchange Rate
Date Acct Bal Reserves Off/Par

 1990 -360.0 603.0 775.5 826.6
 1991 -708.0 760.0 1,060.4 1,106.6
 1992 -122.0 782.0 1,576.9 1,598.0
 1993 -678.0 1,254.0 1,989.4 1,919.3
 1994 -681.0 1,712.0 2,192.7 2,197.2
 1995 -735.0 1,557.0 2,442.1 2,565.2
 1996 84.0 1,831.0 3,567.9 3,596.8
 1997 -714.0 2,093.0 4,373.4 4,394.1
 1998 -2,169.0 1,698.0 6,550.9 6,492.9
 1999 955.0 1,276.0 17,154.1 18,205.8
Jan -- 1,474.0 7,009.3 7,133.1
Feb -- 1,250.0 7,399.2 7,807.3
Mar -128.0 1,178.0 10,493.6 10,754.3
Apr -- 1,195.0 9,734.2 9,430.0
May -- 1,322.0 8,882.9 8,969.9
Jun 383.0 1,296.0 19,470.7 10,923.2
Jul -- 1,249.0 11,705.5 11,723.0
Aug -- 1,270.0 11,354.2 11,197.2
Sep 318.0 1,274.0 11,483.1 12,116.5
Oct -- 1,280.0 14,948.6 15,656.8
Nov -- 1,224.0 17,338.5 17,525.5
Dec 384.0 1,276.0 17,154.1 18,205.8
 2000 1,229.0 1,180.0 25,000.0 25,000.0
Jan 853.0 23,505.5 24,761.0
Feb 910.0 25,000.0 25,000.0
Mar 443.0 779.0 25,000.0 25,000.0
Apr 939.0 25,000.0 25,000.0
May 891.0 25,000.0 25,000.0
Jun 422.0 891.0 25,000.0 25,000.0
Jul 874.0 25,000.0 25,000.0
Aug 835.0 25,000.0 25,000.0
Sep 204.0 1,034.0 25,000.0 25,000.0
Oct 1,189.0 25,000.0 25,000.0
Nov 1,253.0 25,000.0 25,000.0
 2001 200.0 1,000.0 1.0 1.0
Jan 970.0 1.0 1.0
Feb 906.0 1.0 1.0
Mar 954.0 1.0 1.0
Apr 1,136.0 1.0 1.0
May 1.0 1.0
Jun 1.0 1.0
Column
Number 7 8 9 10

FOOTNOTES BY COLUMN: Annual figures for 2001 are projections. 1-2:
Annual figures represent January-December increase. 3: Maximum
commercial lending rate up to 360 days. Annual figures represent
average for year. 4-9: Annual figures represent year-end values. 9.
Figures for 2000 reflect fixed rate in preparation for dollarization. As
of 2001, figures reflect dollarization.

SOURCES BY COLUMN:1-9:Banco Central del Ecuador


FINANCIAL OUTLOOK

* Inflation surged above 100% after dollarization was implemented, but the overall trend is dropping, from 7% in January to 2.9% in February, 2.2% in March, 1.7% in April and just 0.2% in May. The 12-month figure through May was 39.6%, higher than the 2001 target but still going down. The government statistics bureau forecasts a 1.2% rise for June as the VAT hike hits, but predicts that the year-end figure will meet the official 25% target. The gap between inflation experienced by manufacturers and that experienced by consumers hit 210% before leveling off. Though the buying power of local salaries has been pummeled, most causes of inflation have disappeared. Ecuador can no longer print money, and local prices have risen to international levels faster than anticipated. Thus, inflationary pressure is down.

* Interest rates have continued to fall since the beginning of the year after their post-dollarization nose-dive. Borrowing rates remain far below inflation (predicted to end the year at 25%), which continues to depress motivation to keep savings in the country. They slipped from 6.92% to 5.82% at the end of June, while lending rates fell from 15.76% to 14.7%. The central bank's maximum authorized rate was 22.05% in June, which was 2.16% less than in May.

* The trade surplus is shrinking as economic recovery boosts imports, which almost doubled year-on-year from January through April ($1.424 billion, up from $882 million). The January-April surplus was only $109 million, an 86% plunge from $784 million during the same period in 2000. The trade balance went into the red during K/larch (-$19 million) and April (-$22 million). Also pulling exports down were lower oil prices, pushing January-April oil revenues from $772 million to $684 million year-on-year. Non-oil export revenues slumped from $895 million to $855 million during that period.

* International reserves recovered to $1.225.3 million in June from their low of $778.9 million in March 2000. At present, the movements up and down are basically normal, following debt payments and income from oil revenues.

ECONOMY MONITOR

* Growth Outlook: GDP grew 4.1% in the first quarter, according to the finance ministry. It is forecast to grow 4%-5% this year and also in 2002, nudged by construction of the OCP heavy crude pipeline. In another sign of reactivation, first-half foreign investment cliff, bed 51%, to $233 million.

* Political Factors: President Gustavo Noboa won a difficult battle in congress to pass a 12%-14% VAT hike, despite opposition from most political parties and coastal-area manufacturing sectors of the coast, already looking ahead to the 2002 general elections. The agreement helped pave the way for the IMF's second approval of Ecuador's economic plan and a third payment ($47.4 million), which led to new loans from the Inter-American Development Bank, Andean Development Corp. and the World Bank. Still, Ecuador is late in making the structural reforms needed to make dollarization a success. A new fiscal reform bill will be sent to a hostile congress this summer. The next challenge for President Noboa is to restructure the financial sector, whose privatization has been delayed while the government sold $300 million in bonds to aid to troubled Filanbanco. ING Barings will oversee the latter's privatization.

* Fiscal Situation: Thanks to the VAT hike, Ecuador's fiscal situation will be less dependent on oil roulette, in compliance with IMF wishes. Authorities predict the deficit will reach 1.25% of GDP, though the IMF wanted a lower figure. Average first-half oil export prices stayed at the government budget figure of $20/barrel, though they dropped slightly lower in the first quarter and edged up higher after that. The appointment of tax-collection agency SRI chief Elsa de Mena to head the customs service is expected to boost tax revenues to record levels.

* Major Sectors: The oil sector should be able to double its current 400,000 b/d production, thanks to the startup of construction on the [C]CP heavy crude pipeline. Scheduled investments total $2.6 billion, from government oil company Petroecuador, Occidental ($1 billion), Perez Companc ($900 million) and other's. Car sales are also rising: 18,691 vehicles were sold between January and May, almost as many as for the entire year 2000. Local production has quadrupled, and total annual sales are expected to reach the 1998 figure of 40,000 cars. New legislation that grants simultaneous permits for exploration and production (rather than keeping the two as separate permit processes) has helped the mining sector attract new companies. These include Canada's Noranda and the UK's Anglo American. Five other companies are already in place: Australia's BHP, Canada's Placer Dome and Cambior, Peru's Buenaventura and UK-based RTZ. Mining authorities expect second-half investments to run $50 million, compared to only $20 million in second-half 2000. However, shrimp, bananas, flowers and nontraditional exports in general are down in relation to last year.

* Employment: Unemployment is still at a 10% level, with more than 50% considered underemployed. Basically, only one Ecuadorian in four has a job whose salary provides adequate purchasing power. Figures continue to be helped by the massive migration of 243,000 people last year to the US, Spain and Italy. Underemployment is 13.6% in Guayaquil, 10% in Quito and only 3.3% in Cuenca. The latter is a region of strong emigration.

* Stock Market: The Quito and Guayaquil stock markets are still in infant stages, and shares still account for just 1% of total trading. However, financial observers point to the successful $9.5 million bond placement by MasterCard, Edesa and Cedal as the beginning of new signs of life.

COMPANY MONITOR

* Argentina's Techint should begin construction of the new OCP heavy crude pipeline in August or September. Company sources say the $1.1 billion project should generate 7,500 direct jobs and more than 25,000 indirectly by the time the 503 km pipeline is finished in 2003.

* Out of a total of six offers, three consortia prequalified to bid for the upcoming Esmeraldas port concession. They are Consortio Deposito y Contenedores and Maquiserv; Berge Maritima and New Milennium group; and Hidalgo & Hidalgo and the Portuario group. Esmeraldas will compete with the Manta and Guayaquil ports to handle the 250,000 tons of imports expected for construction of the OCP pipeline.

* As the first company expressing official interest, Canadian Commercial Corporation will make the initial bid for construction and administration of the new $300 million Quito airport. Other potential bidders, which include Sweden's ABB; Marshall Macklin and BFC of Canada; and Airport Development and Semaica will have two months to top Canadian Commercial's offer, after which the latter will get another opportunity to bid. The concession should be signed within six to seven months.

* Banco Financiero, part of the Ecuador's Banco del Pichincha group, paid at least $15 million for Peru's bankrupt NBK Bank.

* The electricity privatization will be delayed from July at least until September. By May 31, only US-based AES had applied for prequalification.

* France's Alcatel will spend $3.9 million to add 21,000 lines to the Etapa network in Cuenca.

* Telecommunications firm Impsat is the first company to confirm its presence in the new Ecuadorian Technological Park, a local university initiative designed to promote technological exchange between universities, the government and the private sector.

* US oil firms Schlumberger and Nabors will lead a $46 million project to drill 28 new rigs for government oil company Petroecuador over the next 18 months and boost production by 70%.
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Title Annotation:economic indicators
Publication:America's Insider
Article Type:Illustration
Geographic Code:3ECUD
Date:Aug 3, 2001
Words:2281
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