WHAT YOU SHOULD KNOW ABOUT THE BILL THAT TRANSFORMS THE BUDGET OF DECENTRALIZED AUTONOMOUS GOVERNMENTS
On January 27, 2026, President Daniel Noboa Azín submitted to the National Assembly the Organic Bill Reforming the Organic Code of Territorial Organization, Autonomy and Decentralization (COOTAD) for the Sustainability and Efficiency of Spending by Decentralized Autonomous Governments (GADs), classified as an economic priority under Article 140 of the Constitution.
Decentralized Autonomous Governments (GADs), recognized by the Constitution, are responsible for addressing specific territorial needs that the central government cannot manage effectively. In general, provincial GADs are responsible for maintaining the road network; municipal GADs provide basic services such as drinking water and sanitation; and rural parish GADs are responsible for maintaining local infrastructure. Therefore, it is essential that each level of government fulfills its purpose in order to avoid undermining citizens’ rights. However, statistics from recent years show that this objective is not being met.
The data show an increase in personnel expenses, which rose from 30.72% in 2021 to 34.57% in 2024 of the total budget, representing more than one-third of spending. It is also reported that in 2023 approximately USD 43.7 million was allocated to cultural and recreational events, including free concerts, raising questions about the prioritization of spending over structural needs such as infrastructure, drinking water, sanitation, roads, and others.
In this context, the main objective of the bill is to ensure that local government resources are prioritized for the exercise of their constitutional powers, public investment, and the proper provision of essential services according to the needs of each territory. The proposal also incorporates transparency mechanisms, such as the quarterly publication of indicators to verify compliance with the annual plan and the approved budget execution. These indicators must be included on institutional websites, in accordance with the principles of transparency and public management evaluation. Likewise, the Ministry of Finance will have 60 days to carry out monitoring and, in the event of non-compliance, the budget will be reduced as provided by the Constitution.
Furthermore, the reform seeks to strengthen the financial sustainability of local governments, prevent fiscal imbalances, and promote more efficient budget management aligned with the guidelines of the National Development Plan. It also aims to reinforce the coherence between the decentralization model and the principles of welfare, territorial equity, and responsible use of public resources, while respecting the autonomy of local governments and their decision-making capacity.
In conclusion, if approved, this law would generate tangible effects, as it seeks to ensure that the resources allocated to each local government are mainly directed toward investment and public works, as well as the strengthening of basic and essential services for citizens, preventing their allocation to non-strategic expenses.