Ecuador to hike taxes to fund rebuilding

Ecuador will temporarily increase some taxes, sell assets, and may issue new bonds on the international market to fund a multibillion-dollar reconstruction after a devastating magnitude-7.


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The death toll from Ecuador’s weekend earthquake neared 600 and rescue missions ebbed as the traumatised Andean nation braced itself for long and costly rebuilding.

“It’s hard to imagine the magnitude of the tragedy. Every time we visit a place, there are more problems,” a sombre President Rafael Correa said on Wednesday, fresh from touring the disaster zone.

The leader estimated the disaster had inflicted $US2 billion ($A2.57 billion) to $US3 billion of damage and could knock 2 to 3 percentage points off growth, meaning the economy will almost certainly shrink this year.

Lower oil revenue had already left the poor nation of 16 million people facing near-zero growth and lower investment.

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In addition to $US600 million ($A769.97 million) in credit from multilateral lenders, Correa, an economist, announced a raft of measures to help repair homes, roads and bridges along the devastated Pacific Coast.

In a nationally televised address later on Wednesday, Correa also announced the OPEC nation was poised to shed assets.

“The country has many assets thanks to investment over all these years and we will seek to sell some of them to overcome these difficult moments,” he said.

He also unveiled several short-term tax changes, including a 2-point increase in the Valued Added Tax for a year, as well as a “one-off 3 per cent additional contribution on profits” although the fine print was not immediately clear.

The VAT tax is currently 12 per cent.

Additionally, a one-off tax of 0.9 per cent will be imposed on people with wealth of more than $US1 million. Ecuadorians will also be asked to contribute one day of salary, calculated on a sliding scale based on income.

Briefly pausing talk of reconstruction and hindering rescuers, another quake of magnitude 6.2 shook the coast before dawn on Wednesday, terrifying survivors.

“You can’t imagine what a fright it was. ‘Not again!’ I thought,” said Maria Quinones in Pedernales town, which bore the brunt of Saturday’s disaster.

That quake, the worst in decades, killed 570 people, injured 7000 others, damaged nearly 2000 buildings, and forced more than 24,000 survivors to seek refuge in shelters, according to government tallies.

Four days on, some isolated communities struggled without water, power or transport, as torn-up roads stymied deliveries.

Along the coast, stadiums served as morgues and aid distribution centres.

“I’m waiting for medicines, diapers for my grandson, we’re lacking everything,” said Ruth Quiroz, 49, as she waited in an hour-long line in front of a makeshift pharmacy set up at the Pedernales stadium.

On a highway outside the town, some children sat holding placards saying: “Food, please.”

When a truck arrived to deliver water to the small town of San Jacinto, hungry residents surrounded the vehicle and hit it as they yelled: “We want food!”

Scores of foreign aid workers and experts have arrived in the aftermath of Saturday’s disaster and about 14,000 security personnel have kept order, with only sporadic looting reported.

But rescuers were losing hope of finding anyone alive even as relatives of the missing begged them to keep looking.

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