2024-07-11 06:58:18
The Government claims that there is room for efficiency in public procurement and has committed to reducing this expenditure within the agreement with the IMF. What is it planning to do?
Las public procurement In Ecuador, they move around $6 billion per year, between goods, services and works. Cutting up to $300 million of that spending per year is one of the commitments with the International Monetary Fund (IMF).
Roberto Rosero, economist and researcher in public procurement issues, explained that this is a sector of the public spending where there is room to implement efficiency measures and save money, but a clear plan and political will are needed to do so.
“During the previous government (of Guillermo Lasso) it was even said that due to inefficiencies and fraudulent processes the country lost $1.5 billion a year in public purchases ($25 of every $100 contracted). But, in the end, no fundamental changes were made and the inertia of years continued,” he pointed out.
Public procurement a priority in the new agreement with the IMF?
In the financing agreement with the FMI A substantial reduction of between $200 million and $300 million per year is proposed in purchases of goods and services.
This should be done, according to the Vice Minister of Economy, Ana Cristina Avilés, through a process to make more efficient how goods and services are acquired in the public sector.
“In the short term, spending restrictions are quite high, including due to legal and constitutional issues. On the goods and services side, there is room for greater efficiency. Categorizing products so that prices are more competitive for State purchases, among other issues,” Avilés stressed.
Specifically, the IMF technical team’s report points to measures such as: centralized purchase orders (limit discretion and dispersion) and efficiency processes focused on the public companies of the sectors oil y electric.
In 2023, the public companies of the Executive Branch (12) registered public purchases of $1,451 million.
Of that total, Petroecuador spent more than $400 million; while the National Electricity Corporation (CNEL)which is the electricity distributor most criticized for its inefficiency and costly collective contract, spent more than $235 million.
While the Electric Corporation of Ecuador (CELEC) spent more than $450 million on public purchases during 2023.
On January 3, 2024, Economy Minister Juan Carlos Vega Malo said that the government was willing to take “very drastic measures” to turn Petroecuador into a world-class company; but to date, nothing is known about this plan while oil production continues to plummet.
The audits of Petroecuador’s balance sheets for the years 2019 and 2020 must be completed by March 2025, after many delays.
Within the agreement with the IMF, with a deadline of December 2024, the Noboa administration must also present the operating plan of a National Control Subsystem (NCS) to increase the transparency of public procurement.
During his last appearance before the Assembly, Vega Malo assured that this subsystem will be made up of all the control entities of the public sector.
He also said, without giving further details, that “detailed analyses of administrative structures, process reengineering and the use of economies of scale” will be carried out.
Rosero stressed that the contracting system is cumbersome, impractical and leaves multiple loopholes for corruption.
“The government, unfortunately, gives few clues as to how it intends to change the situation. Poor management in purchases not only means losing money, but also losing lives, in the case of the lack of supply of medicines in hospitals,” Rosero said. (JS)
In 2023, total spending on public purchases amounted to $6,951.9 million.
Public purchases fell by almost $300 million in 2024
According to the portal of the National Public Procurement Service (Sercop), Between January and May 2024, $2,086 million were spent on purchases of goods and services, both from Central government, local governments, public companies y social Security.
This represents a 12% decrease (-$279.7 million) compared to the $2,365.7 million spent between January and May 2023.
Local governments spent $68.1 million less; social security spent $40 million less; purchases by local government public companies were reduced by $4 million; and the entire state administration was reduced by $111.7 million.
Spending did increase in public companies in the Executive Branch, with $81.9 million more.
However, economist Carla Morales pointed out that this decline is due not so much to efficiency as to the lack of resources in the treasury and the high level of arrears.
The Deputy Minister of Economy, Ana Cristina Avilés, has acknowledged that the level of arrears The budget of more than $5 billion with which 2023 closed has made it impossible to allocate a larger budget to issues such as public works and purchases.
“The level of arrears will gradually decrease over the course of two to three years. A substantial reduction in the balance of arrears is expected from 2025 onwards. The first year of the agreement (2024) involves paying arrears, but also accumulating more,” concluded Avilés.
Success stories of improving the public procurement system
South Korea
South Korea is known for its public procurement system, Koneps (Korea Online E-Procurement System).
Measures Taken:
Integrated Electronic Procurement System: Koneps is a unified system that handles all stages of the purchasing process, from tender publication to payment.
Interoperability and Connectivity: Koneps integration with other government systems, such as the Koneps Financial management and agency information systems.
Use of ICTs: Extensive use of information and communication technologies to facilitate purchasing processes and increase efficiency.
Real-Time Monitoring and Auditing: Capabilities of real time monitoring and electronic audits to prevent irregularities and improve transparency.
Chile
Chile has implemented a series of reforms to optimize its public procurement through its electronic purchasing system, ChileCompra.
In addition to an integrated system like in South Korea, a process of training and professionalization of public servants and reduction of the bureaucratic procedures and adoption of more agile and efficient processes.
By: LA HORA Newspaper