VZCZCXYZ0001
RR RUEHWEB

DE RUEHQT #0232 0711047
ZNR UUUUU ZZH
R 111047Z MAR 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 8602
INFO RUEHBO/AMEMBASSY BOGOTA 7418
RUEHCV/AMEMBASSY CARACAS 2941
RUEHLP/AMEMBASSY LA PAZ MAR LIMA 2463
RUEHGL/AMCONSUL GUAYAQUIL 3385

UNCLAS QUITO 000232 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EEB/IFD/OMA ANDREW SNOW AND RICHARD FIGUEROA 
STATE FOR WHA/EPSC PETER MAIER 
TREASURY FOR MEWENS 
 
 
E.O. 12958: N/A 
TAGS: EAID EFIN ECON PREL EC
SUBJECT:  ECUADOR FISCAL TRANSPARENCY REPORT 2008 
 
REF: State 16737 
 
¶1.  The Government of Ecuador is recipient of U.S. assistance monies 
under the FY2008 Foreign Operations Appropriations Act.  The 
following is a narrative on fiscal transparency in Ecuador, as 
requested in reftel. 
 
The Government of Ecuador publishes budget data, which is reasonably 
transparent and reliable, as required by a 2002 law on fiscal 
responsibility and transparency.  After the annual budget is 
approved by the Congress, the Administration has considerable 
discretional authority over actual expenditures.  In recent years, 
tax revenues and petroleum income have exceeded that projected in 
the budget, as have expenditures.  The Government of Ecuador 
publishes both the approved budget and actual revenues and 
expenditures. 
 
The Ministry of Economy and Finances (MEF) publishes budget data on 
a regular basis on the internet.  Revenues and expenditures are 
included in the publicly-available information, although data are 
often aggregated at a fairly broad level.  Data at the sub-account 
and line item level are not published as regularly, but can be 
obtained upon request.  Off budget items, including the petroleum 
reserve funds, are reportedly separately.  Given these limitations 
to the published data, a non-governmental organization also 
publishes monthly reports to clarify budget numbers. 
 
The Correa Administration has submitted legislation to the 
Constituent Assembly to bring the petroleum reserve funds on budget, 
reduce earmarking, and establish a unified account for the federal 
budget.  The Administration is also seeking to bring under the 
budget a subsidy program for gasoline and other petroleum 
derivatives, which has been funded indirectly through the parastatal 
petroleum company.  These changes should simplify the currently 
complex budgetary process and facilitate increased transparency. 
 
Currently, Ecuador does not have a system to monitor the use of 
government monies once the Ministry of Economy and Finance transfers 
the funds to other ministries and agencies.  There is considerable 
discretion in the intergovernmental transfer process, and the 
state-owned sector is large and poorly regulated.  The changes being 
developed by the Correa Administration could facilitate the 
oversight that the Ministry of Economy and Finance has over the 
end-use of government funds. 
 
In 2002-2007, USAID provided the Ministry of Economy and Finance 
technical assistance to enhance fiscal transparency and improve 
reporting of fiscal revenues and expenditures.  The Ministry of 
Economy and Finance is implementing a new information system program 
provided by the World Bank, which should improve financial 
management effectiveness and transparency and contribute to better 
government financial reporting.  Because of complications from the 
implementation of the new system, fiscal data was not available on 
the internet from November 2007 to February 2008, but the Ministry 
has offered to provide the data by other means. 
 
In 2003, Ecuador volunteered for the IMF to report on the country's 
compliance with standards and codes covering fiscal transparency. 
Ecuador does not currently have a borrowing program with the IMF, 
but does participate in periodic IMF reviews. 
 
JEWELL