QUITO, Sept 10: The International Monetary Fund should support Ecuador’s new economic policies which are geared toward ending political tensions and understand greater spending is not necessarily a threat to stability, Economy Minister Magdalena Barreiro said on Friday.

Barreiro said a 12.4 per cent rise in Ecuador’s proposed 2006 budget was geared toward partially easing social problems which have led to the fall of three presidents in the past decade.

The proposed budget, which should be approved by Nov. 30, has reached $8.56 billion and envisions a 14.2 per cent spending increase for the Education, Health, and Social Welfare ministries.

What Ecuador is proving is that it is economically viable, but not politically, Barreiro told Reuters in an interview.

But the policy of higher spending funded by taxes and soaring oil export revenues, has not been well received by Wall Street or the IMF. The IMF has informally expressed concern about the sustainability of Ecuador’s spending if the price of oil falls.

Barreiro was confident Ecuador would obtain the Fund’s approval, easing the way for the Andean nation to get the credit it needs from other organizations including the World Bank.

Barreiro wants to hold talks with the IMF and other lending organizations on issues beyond key indicators to explain that an orthodox economic policy could increase social and political tensions and that the government’s plan did not imply an attack on economic security.

Ecuador, one of the countries with the lowest level of social investment in South America where poverty affects six out of 10 inhabitants, does not want IMF loans but needs the Fund to review its economy on a quarterly basis to receive loans of $360 million from other organizations.

A terrible social discontent has exploded, which is difficult to manage. So now there would have to be a dictator to hold power securely in this environment, said Barreiro.

Last month protests in two Amazon provinces paralyzed the oil industry of Ecuador, the second largest supplier of crude to the United States in South America after Venezuela.

The economic program, which Ecuador will present at its annual meeting with the IMF, foresees a global and primary surplus of 2.3 and 5.1 per cent of its gross domestic production (GDP) in its non-financial public sector for 2006. Barrerio said the goals would be hard to reach due to the spending pressure which will be unleashed as elections approach to elect a successor to President Alfredo Palacio, who took office in April after President Lucio Guterriez was fired by Congress.—Reuters