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Ecuador Faces Worst Economic Crisis; but Plans for Recovery Underway

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Emmanuel Abara Benson
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Ecuador Faces Worst Economic Crisis; but Plans for Recovery Underway

On the brink of an economic catastrophe, Ecuador's President Daniel Noboa has declared the nation's economy to be in its worst state, highlighting a dire financial crisis that is gripping the country.

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The grim reality is reflected in the numbers—out of a population of 16.9 million, a meager 3.1 million are employed, while poverty, including extreme poverty, engulfs 38% of the populace.

A Grave Fiscal Situation

Adding to the president's concerns is the country's fiscal deficit, which is projected to exceed $5,000 million or 5% of GDP by the end of 2023. The treasury's single account holds a mere $184 million, a figure that barely scratches the surface of the country's mounting debts. Juan Carlos Vega, the newly appointed Minister of Economy, has underscored the severity of the situation, with the country's internal and external debt towering at $63,000 million.

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The Root Causes

Economists have identified the persistent increases in current spending and declining revenues, particularly from the oil sector, as the root causes of the crisis. The oil sector, a major contributor to the nation's economy, has been hit hard by reduced production and prices, exacerbating the economic troubles.

Plans for Recovery

In a bid to stimulate the economy and create jobs, President Noboa announced plans to introduce an urgent economic law. However, the specifics of these government measures remain under wraps. The president, who assumed office on November 23 following the early departure of his predecessor Guillermo Lasso, has called on Ecuadorians to make additional efforts to overcome the economic hardships.

Lasso's term was cut short due to the dissolution of Parliament in May, aimed at dodging impeachment over corruption allegations. This led to early elections and the subsequent rise of Noboa to the presidency. As the nation braces for challenging times ahead, all eyes are on President Noboa's next move to rescue the economy from its deepening crisis.

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