Tracking trends
ECUADOR | Softening-up begins on subsidies. In what appears to be the onset of a softening-up campaign for a fiscal shakeup, the government has started publicising in great detail how much it spends on subsidies. All told, this year they will cost US$1.15bn. The costliest is the one on petrol, which takes up US$400m (or 1.4% of GDP). Next in line comes the pensions package (the social-security institute, police and armed forces), jointly taking up US$325m. The latest pension adjustment imposed by congress cost US$68m. The most socially and politically sensitive subsidy, on domestic gas canisters, (which multilateral lenders want slashed) amounts to US$237m. Another US$189m go to a 'human development' subsidy, distributed among the poorest women.
BOLIVIA | Preliminary gas deal with Peru. President Carlos Mesa and his Peruvian peer, Alejandro Toledo, last week signed a letter of intent committing them to studying the creation of a 'special economic zone' in the Peruvian port of Ilo, which would provide Bolivia with its outlet to the Pacific, for the export of natural gas (but not limited to that function). They also signed a treaty to create a common market.
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