President Rafael Correa announced that VAT will rise two percentage points from 12% to 14%, while a “one-off 3% additional contribution on profits” will also be levied.
The estimated $2 billion-plus in damage done by the 7.8 magnitude earthquake that struck on Saturday April 16, followed by a second earthquake on Wednesday April 20, adds to the country’s financial woes; the Ecuadorean economy had already been suffering from a reduction in oil revenues off the back of price volatility. But with 600 lives lost, thousands injured and much rebuilding to be done, it was clear that Correa needed to make temporary fiscal policy changes.
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