QUITO -- President Rafael Correa told lawmakers Thursday that Ecuador's economy will grow by 5.3 percent this year despite the global recession.
"We have faced powerful enemies who said we were leading the country to the caves, however, the economy has grown, the wealth has been redistributed and the banks have had the biggest profits in their history," the left-leaning president said in his annual state of the nation address.
Correa, a U.S.-trained economist, said his government's "conservative and provisional" forecast calls for Ecuador's gross domestic product to expand by 5.3 percent in 2009.
"There is no business sector that has not grown" in 2008, he said, noting that Ecuador's banks earned $445 million in profit last year, their best showing since the country's economy was dollarized in 2000.
He pointed out that the banks thrived even though his government imposed limits on interest rates and abolished commissions on loans.
Appealing for a serious debate on economic policy, "for the good of everyone," Correa said that most of what passes for econonic analysis of Ecuador's vital oil sector leaves out key facts.
He said that while analysts cite a figure of $20 billion a year in goverment revenues from exports of crude, the net receipts are less than $10 billion, due partly to Ecuador's need to import gasoline and diesel because previous goverments failed to invest in refining capacity.
Ecuador produces nearly 600,000 barrels of crude per day and depends on foreign oil sales to fund 35 percent of public spending.
The president likewise blasted predecessors for using the bulk of oil revenues to repay foreign debt rather than investing the money in infrastructure and improved social services in the poor Andean nation.
"Only a fool could deny the road reconstruction, the equipping of hospitals, the assistance for housing," Correa said, referring to his first two years in office. "There are those $10 billion, invested in the Ecuadorian people."
"We are going to reach 13 percent of GDP in public sector investment, something that has not been seen in Ecuador in at least the last three decades," the president said, describing such a policy as "the best way to attract foreign investment."
"If a country has as its priority paying the foreign debt, it's because that country is in the hands of the financial and speculative power. If a country has as its priority education and health, it's because power rests with the people," said Correa, highly favored to win an extended mandate in upcoming early elections under the new constitution he promoted.
"The government of the citizens' revolution is not only leaving infrastructure for the next generations, but less debt as well," he said.
Two months ago, a commission appointed by the president to review the roughly $10 billion in foreign debt Ecuador has incurred over the past 30 years concluded that some of Quito's past bond issues had been "illegal and illegtimate."
Correa promptly said he would resort to international courts and arbitration panels to disavow that portion of the foreign debt
the commission deemed illegal, while continuing to service "legitimate" obligations.
In accord with that policy, Quito last month withheld a $30 million interest payment due to holders of 2012 Global Bonds, but this week handed over millions of dollars to holders of 2015 Global Bonds.