The National Assembly of Ecuador is debating a new law dictating how Decentralized Autonomous Governments (GAD) should allocate their budgets, aiming for 70% investment and 30% current expenses.
On February 20, 2023, the Ecuadorian National Assembly held its 72nd plenary session at the Ecotec University in Samborondón, with 150 legislators present. The session focused on two economic bills deemed urgent, including a significant reform of the Organic Code of Territorial Organization, Autonomy and Decentralization (Cootad). This law seeks to enhance the sustainability and efficiency of budgetary expenditure by Decentralized Autonomous Governments (GAD).
The proposed reform mandates that GADs allocate at least 70% of their budgets towards investment projects like public works, infrastructure, maintenance, and basic services, while the remaining 30% would be designated for current expenses. This bill was previously approved by the Economic Development Commission with six votes in favor. However, dissent came from the opposition bench, the Revolución Ciudadana (RC), which submitted a minority report raising concerns about potential constitutional violations within the proposed law.
The implications of this legislation could be significant for how local authorities manage their resources, aiming to prioritize long-term investment projects over immediate operational costs. As GADs face pressures to improve public services and infrastructure, emphasis on investment could lead to substantial changes in local governance and fiscal policy if enacted.
