Ecuador - Economic memorandum

Report No. 1033-EC UIBED Ecuador: Economic Memorandum February 12, 1976 Latin America and the Caribbean Region FORI O(FFCAL USE ONLY Document of the WoAd SanEs This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY BXUIVALENTS Currency Unit = Sucre (S/.) SI. 1.00 = US$0.O Us$1.00 = S/.25.00 SI. 1 million = US$40,000 GOVERNMENT OF ECUADOR FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY This report is based on the findings of an economic mission which visited Ecuador in June-July 1975 and subse- quent staff visits and discussions with the Government authorities. The mission was composed of Messrs. Wolfgang Wipplinger (Chief of Mission), Alirio Parra (Petroleum Specialist- Consultant) and MIanuel Lasaga (Statis- tical Assistant). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   TABLE OF CONTENTS Page No. BASIC DATA MAP SUMMARY AND CONCIUJSIONS ...... ..................... i-ii I. INTRODJCTION ........................................... 1 II. RECENT ECONOMIC DEVELOPMENTS ..... ................. 5 Overall Developments ........................... 5 Public Finance and Balance of Payments ......... 7 Short-term Prospects ........................... 12 III. DEVELOPMENT POLICIES AND PROSPECTS . ............... 13 Oil Sector Prospects . .......................... 13 Prospects of Industrial Development .... ........ 14 Prospects for Agriculture ..... ................. 16 Conclusions ........ ............................ 17 STATISTICAL APPEN DIX   Page 1 of 2 pages COUNTRY DATA - 3CAD0R AREA 21 POPULATION DENSITY 271,000 krsi 6.9#million (mid-1974) 26 per km'-- Rate of Growth: 3.4% (from 1960 to 1974) 444 per k ;2/of arable land POPULATION CHARACTERISTICS Cl?70)1/ HEALTH (;.I0 & Crude Birth Rate (per 1,000) 48 Population per physician 2,930 Crude Death Rate (per 1,000) 14 Population per hospital bed 520 Infant Mortality (per 1,000 live births) 87 INCOME DISTRIBUTION C1970A/ DISTRIBUTION OF LAND OWNERSHIP 19684/ % of national income, higbest quintile 2.7 % owned by top 107 of owners 65 lowest quintile 73.2 % owned by smallest 27% of owners ACCESS TO PIPED WATER (J91' ACCESS TO ELECTRICITY (1962# % of population - urban 92 % of dwellings 32 - rural 9 NUTRITION (1971)!] EDUCA;O9 (I Calorie intake as % of requirements 79 Adult literacy rate % 68 Per capita protein intake a49 Primary school enrollment % 78!v 1/ GNP PER CAPITA in 1973 US $380 GROSS NATIONAL PRODUCT IN 1973 ANNUAL RATE OF GROWTH (7., constant prices) US $ Mln. % 1960-65 1965-70 1970-73 GNP at Market Prices 2,570 1W0.0 4.3 5.2 9.6 Gross Domestic Investment 592 23.0 14.3 Gross National Saving 623 24.2 31.3 Current Account Balance 83 3.2 Exports of Goods, NFS 614 23.9 33.6 Imports of Goods, NFS 515 20.0 13.6 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1973 2/ Value Added Labor Force- V. A. Per Worker US $ Mln. % Mln. % US$ 7% Agriculture 602 26.2 1.2 57.0 502 46.0 Industry 787 34.3 0.4 19.0 1,967 180.1 Services v 905 39.5 0.5 24.0 1,810 165.7 Unallocatea - . Total/Average 2,29 100.0 2.1 100.0 1,092 100.0 GOVERNMENT FINANCE y General Government Central Covernment (3'. Mln.) 7% of GDP ( V i Mn.) 'I. of GDP 1974 7h 19fl-73 1974 197L 1971-71 Current Receipts 16,488 18.1 13.6 11,229 12.3 11.2 Current Expenditure 990 3.9 12.0 8.2 9.5 Current Surplus -753 1.64. Capital Expenditures 5,899 6.5 2.9 3,586 3.9 2.9 External Assistance (net) -1,096 -1.2 0.6 -1,096 -1.2 0.6 not awvilable not applcable  Page 2 of 2 pages COUNTRY DATA - ECUJAOR July MONEY, CREDIT and PRICES 197 1972 2 1973 1975 (mdllion meres at nd of period) Money and Quasi Money 8,890 11,020 12,529 17,438 17,602 Bank Credit to Public Sector (net) 2,106 1,523 -231 -1,393 -665 Bank Credit to Private Sector 8,322 9,307 11,458 16,449 20,415 (Percentage increase) Money and Quasi Money as % of GDP 22.2 23.2 19.3 19.1 General Price Index (1970 = 100) 2 112 123 1144 178 Annual percentage changes in: General Price Index Y 12.2 9.3 17.7 23.5 Bank credit to Public Sector (net) . -27.7. Bank credit to Private Sector . 11.8 23.1 43.6 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1969-73) 1972 1973 1974 US $ Mln % (Millions US $) Bananas 96 33 Coffee 45 16 Exports of Goods, NFS 365 614 1,082 Cocoa 24 8 Imports of Goods, NFS 443 515 1,047 Sugar 11 4 Resource Gap (deficit = -) 78 9 Petroleum 69 24 Interest Payments (net) -12 -12 -9 All other commodities 44 15 Workers' Remittances .. Total 289 loo.o Other Factor Payments (net) -75 -143 -59 Net Transfers 15 38 18 EXTERNAL DEBT, DECEMBER 31. 1974 Balance on Current Account -1 503 -1 US$[5 US $ Min Direct Foreign Investment 204 54 77 Net MLT Borrowing 83 26 -10 Public Debt, incl. guaranteed 296.6 Disbursements 112 59 0 Non-Guaranteed Private Debt Amortization 29 33 69 Total outstanding & Disbursed Subtotal -287 67 2/ Capital Grants 8/ 4 - - DEBT SERVICE RATIO for l91j Other Capital (net) _ % Other items n.e.i -39 64 61 Increase in Reserves (+) 102 98 113 Public Debt. incl. guaranteed 7.4 Non-Guaranteed Private Debt Gross Reserves (end year) 142 235 350 Total outstanding & Disbursed Net Reserves (end year) 128 226 339 RATE OF EXCHANGE IBRD/IDA LENDING, (Dec. 31,1975) (Million US $): Through - 1971 IBRD IDA US $ 1.00 = S/.25.on 3/.I.00 = us $o.o4 Outstanding & Disbursed 44.9 2e.4 Undisbursed 6.2 10.1 Since - 1971 Outstanding incl. Undisbursed 81: us $ 1.00 = s/.25.oo S/.i.0o = US $.0