December 18, 2018 / 8:54 PM / 5 months ago

Ecuador announces $700 mln in budget cuts in austerity push

QUITO, Dec 18 (Reuters) - Ecuador will slash gasoline subsidies and cut government workers’ salaries in a bid to reduce the fiscal deficit by $700 million, officials said on Tuesday, as the cash-strapped OPEC nation seeks to reduce its debt load.

Ecuadorean President Lenin Moreno clinched a $900 million loan from top financier China last week and has not ruled out a possible funding deal with the International Monetary Fund. The South American country has struggled with low oil prices in recent years.

Moreno has sought to reduce the fiscal deficit since taking over from leftist Rafael Correa in 2017. Moreno earned Correa’s endorsement during the presidential campaign, but has since fallen out of the former populist leader’s favor while pursuing more market-friendly policies.

The measures announced Tuesday included a cut in gasoline subsidies that Finance Minister Richard Martinez said had cost the government more than $50 billion in the past 10 years.

Prices will rise from $1.48 per gallon to $1.85 per gallon, closer to prices in neighboring countries, but the hike will not apply to public transit, Martinez said.

“All Ecuadoreans have been paying for the fuel used by luxury vehicles, like Mercedes-Benz or 4x4s,” Martinez said at a news conference, adding that the subsidy cut will save $400 million a year.

The government will also save $300 million by reducing the salaries of state employees, Labor Minister Raul Ledesma said. (Reporting by Jose Llangari Writing by Luc Cohen; Editing by David Gregorio)

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