QUITO, Ecuador -- In an effort to stem Ecuador's worst financial crisis in decades, the president announced tax hikes and other tough measures and ordered banks shut until next week to give the government time to implement the program.
The announcement Thursday came as a two-day nationwide strike to protest the government's economic programs wound down and just hours after the Central Bank's board of directors, including its president, Luis Jacome, resigned.The government's political opponents had accused Jacome of mismanaging Ecuador's fiscal policy and had criticized President Jamil Mahuad of acting too slowly to right the economy.
In response, Mahuad is imposing strict measures to ensure the wealthy pay their taxes, to raise revenues with new taxes, and to prevent a run on banks as economic reforms take effect.
Ecuador is locked in its worst economic crisis in recent decades, battered by low prices for its main export, oil, and $2.6 billion in damage from El Nino-powered floods last year.
Inflation is near 50 percent, the highest in Latin America, and the national currency lost a quarter of its value last week.
In a nationwide television address late Thursday, Mahuad detailed plans to jail tax evaders, eliminate sales tax exemptions except on food and medicine and impose new taxes on the rich.
Mahuad also announced that banks, which have been closed for four days, would remain shut until Monday.
Mahuad said the country's rich have to learn they have a duty to pay taxes. "They should give thanks to God that they have the money to do it," he said.
Among other points of his plan to end the $1.2 billion budget deficit:
Restrict the amount of money that can be withdrawn from checking and savings accounts.
Increase the sales tax from 10 percent to 15 percent, and introduce a luxury tax of 4 percent on cars worth more than $1550.
Increase the price of a gallon of gasoline from $1 to $1.90.
Mahuad said the increase in gasoline prices was an emergency measure until Congress approved the increase in the sales tax. He said gasoline prices would be gradually reduced after the sales tax increase went into effect.