This was the significant news release of the day IMO.

I find it quite encouraging that it was completed by the deadline laid out by the government. That shows they are serious about getting these deals done instead of what government is usually concerned with - ie new fabrics for their ottomans and whats on the gourment lunch menu.

That the deals were done with a desire to keep foreign capital in the country shows they are starting to 'get it' and the final product being softer than recent rhetoric I also find encouraging.

Part of their motivation could be that tax receipts are off in a big way, thanks to the new tax code. In the case of Sinopec, Agip and Halliburton, $196,000 this January vs. $840,000 last January. Investment is also down, as you'd expect.

Automotive, telecommunications and tobacco also generated less revenue. Some categories of imports generated higher revenue, but this is not sustainable IMO. I'm still looking for recent export data, but I expect it is also down. Add to this the cost of flood assistance and remediation, plus the decline in economic activity due to same and you have the potential for a fiscal crisis in the not too distant future.

My data comes from an article in last week's El Comercio. Unfortunately, they seem to be having trouble keeping their site up, in fact I've barely been able to access it for almost two weeks. Anyone else having this problem? I'd write to them for an explanation, but I need to get on the site to do that, unless someone has their email address handy. Seems kind of odd that the website for one of the most important papers in Ecuador would be having this sort of trouble, but there you have it.

I'll just add that you could have seen this revenue decline coming from a mile away. I went over the tax code in detail when it first appeared, in fact it was that code as it applied to mining that made me sit up and take notice (and start posting here). It was a politically motivated code that placed a heavy burden on primary production. I don't know if Correa supported it, or just went along out of expedience, but the results are now in, so we'll soon see how pragmatic this govt. really is.

ebear