“These and other social assistance programs show considerable progress as a tool for poverty reduction as they successful target spending on the needy.”
Interestingly, the IMF found that Chile spends more on these kinds of programs (1.5% of GDP for “Chile Solidaro”) than Brazil (which spends about 1% of its GDP). And that spending on these kinds of programs generally pales relative to the 6.5% of GDP implicit fuel subsidy in Ecuador, where domestic fuel prices are frozen at 2003 levels.
No wonder Ecuador seems to be about the only oil exporter than doesn't have a significant current account surplus with oil close to $60.
While SUVs may be a big part of the middle-class lifestyle in the US, I suspect cheap gas benefits the upper-income brackets in Ecuador rather more than Ecuador’s middle class.
Another interesting tidbit in the IMF report: The productivity of Mexico’s VAT is only ½ that of Chile’s. Even Argentina does better. Who would have thunk.
Indeed, I thought the IMF’s regional outlook did a nice job with a range of cross-national comparisons – and did a good job of putting the “Changing oil and natural gas fiscal regime in the Andean countries” in a broad global context, one where all commodity-rich countries are looking “to secure a greater share of the windfall profits” from high commodity prices.
UPDATE: the implicit subsidy required to keep petrol at 12 cents a gallon in Venezuela must be large. Venezuela still has -- I think -- a current account surplus, but I think it is also running a fiscal deficit. That takes a bit of effort with oil at $60 ...