INSUBCONTINENT EXCLUSIVE:
finances amid economic challenges
The Value Added Tax (VAT) generated $1.108 billion, accounting for over half of the total revenue and marking a 26.6% year-on-year
increase.This surge followed a VAT rate hike from 12% to 15% in April 2024, which remains in effect
To balance this, the government temporarily reduced VAT to 8% during holidays to encourage domestic spending, boosting consumer
This growth resulted from a new self-withholding system for large taxpayers, introduced in February 2024.The system requires earlier
payments and improves government cash flow throughout the year
Tax Revenue Grows 23.7% in January 2025, Driven by Reforms
curbing capital outflows while raising additional revenue
These figures come as Ecuador faces fiscal pressures, including public debt at roughly 55% of GDP and heavy reliance on oil revenues, which
account for about 30% of government income.Efforts to diversify the economy and support sectors like tourism and agriculture remain critical
to reducing vulnerabilities
SRI also reported a more than 10% increase in domestic sales compared to January 2024, signaling stronger consumer confidence and economic
activity.While these gains reflect the success of recent reforms, sustaining growth will require continued fiscal discipline
Structural changes will also be necessary to ensure long-term stability for both investors and policymakers alike.
