(Updates with plans for new taxes in sixth paragraph.)
Nov. 1 (Bloomberg) -- Ecuador’s government projects gross domestic product in South America’s seventh-biggest economy will expand 5.35 percent next year, the fastest since 2008.
Consumer prices are forecast to rise 5.14 percent, also the most since 2008, according to a document on the government’s 2012 budget proposal distributed by the Finance Ministry in Quito today.
The administration of President Rafael Correa is calling for a 2012 budget deficit of $4.23 billion.
The South American nation has had limited access to foreign credit since defaulting on $3.2 billion of international bonds in 2008 and 2009. Under Correa, the government has tapped China for $7.25 billion in loans, or 16 percent of the country’s total outstanding debt, and relied on new taxes and windfall oil profits to finance spending.
Ecuador, the Organization of Petroleum Exporting Countries’ smallest member, forecast oil prices will average $79.7 a barrel in 2012, according to the Finance Ministry document.
Correa last month announced plans to raise taxes for the ninth time since 2007, almost doubling beer prices and raising fees on cigarettes and capital exports. The new taxes would generate at least $905 million, according to government estimates compiled by Bloomberg.
Ecuador, which has defaulted on foreign debt twice since 1999, plans to sell international bonds this year or next to test the appetite for the country’s notes, Correa said in August. The government is also seeking additional bilateral loans from countries such as China and Russia to finance public spending, he said.
--Editors: Robert Jameson, Jonathan Roeder
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