GENERAL ANTECEDENTS OF THE COUNTRY

a. - Ecuador, a modern vision

The Ecuador is a country located in South America that owes its name to the equinoctial line that crosses it, and which territorial limit are: to the north with Colombia, to the south with Peru and to the west extends in two hundred miles of territorial sea to the Pacific Ocean

It has a surface of 276.840 km2 and a population of 12,4 million inhabitants. Ecuador possesses a democratic government form whose leaders exercise the power in a period of 4 years-old, corresponding presidential elections in the month of October of the present year 2002, owing the elect president to assume their functions in January of the 2003.

Their legislative system is compound for a national congress of single-chamber character, of proportional representation with territorial distribution.

Their judicial system is compound for a Supreme Court of Justice, Court of appeal and tribunals of each competition.

The Ecuadorian Legal Corp has been modernized in order to modernize their norms to scenarios of more international competitiveness. The political constitution of the Ecuador allows the participation deprived in the benefit of services public, low modern concepts as the competition, universality, efficiency and justness. Also, it consecrates the treatment without discrimination for the investment and mainly, the respect to the contracts between the public sector and the private one. To this constitutional mark, laws have been added that they promote and they activate the private investments as the law for the economic transformation of the Ecuador and the law for the promotion of the investment and the civic participation that open a wide range of possibilities for the private participation.

Also, the government to face the economic crisis, enters in an adjustment process applying the principles of the privatization and concession of public services, with the purpose of attenuating the economic loads that should support the General Budget of the State and to generate financial resources that allowed to assist the most urgent demands in the social but deferred sectors.

This process is guided to give an effective participation to the private sector in productive matters and of services and to look for the efficiency of the entities and public companies. To fulfill these objectives, in December of 1993 the law 50 is dictated on modernization of the state, privatizations and benefit of public services on the part of the private initiative, artificial norm that next to its regulation norms and to the incorporate adjustments by means of the denominated Trolley laws, they have allowed important advances in the modernization of the country in diverse areas of the national activity, among which stands out the port sector

With this new institutional mark from 1993, is eliminated the top of 49% for the foreign investment in the insurance companies and banks. Restrictions do not exist for the repatriation of the utilities of the international investors and the procedures of their registration have been simplified. The international investors receive the same treatment that the local investors.

Sectors like the electricity, the telecommunications and the hydrocarbons have specific laws that regulate the participation and the environments public and private, but always keeping the spirit of legal correspondence with the general laws and the constitution.

Ecuador is a country in full expansion that has adapted its political, legal, economic and social structures to a global objective: the growth and the well being of the society. To achieve that objective it has been necessary to generate a favorable atmosphere for the private, national and foreign investment, allowing them the link in areas with great potential of growth and of high profitability like the energy, the telecommunications, the hydrocarbons, the road infrastructure, port, airport.

With the adoption of the monetary outline of the dolarización that eliminated the exchange risks, and the incorporation of important laws for the modernization, the country has the necessary tools at the moment to generate a dynamic stage and attractiveness for the private capital. The Constitutional Government of President Dr. Gustavo Noboa Bejarano, has prepared all their actions and initiatives so that the country incorporates efficiently to the world economic dynamics with competitive advantages with the exterior and, at the same time, allow the conformation of a stable national market, with bigger consumption capacity that promotes a activation of the production, of the trade and of the services.

b.- MACROECONOMIC INDICATORS