IMF asks Ecuador to guarantee macroeconomic sustainability - 2024-04-10 18:47:25

Rocafuerte (Manabí), April 3, 2024.- The effective management of the Government of New Ecuador made it possible to accelerate the contractual processes that were blocked in previous administrations to begin work on the project to reconstruct the drinking water system for 21 rural communities in the canton. Rocafuerte, in Manabí. Today President Daniel Noboa announced that the beginning of this work is finally a reality. Photographs: Carlos Silva/Presidency of the Republic.

He International Monetary Fund (IMF) called on Ecuador this Thursday to guarantee macroeconomic and fiscal sustainability, a month after the president Daniel Noboa announced that it is negotiating a possible agreement with the institution

“In Ecuador, the authorities have requested a support program from the IMF and our staff is actively collaborating with the authorities to assess the economic situation and support their efforts to address the challenges facing the country,” said the spokesperson for the Fund, Julie Kozackin a press conference.

The macroeconomic and fiscal situation “are part of those challenges”, in the midst of “the current security crisis” that the country is going through, he added.

Since assuming the presidency in November 2023, Noboa has adopted “important policy measures to address the current liquidity crisis facing the country, as well as the fiscal situation” and security problems.

“In addition to efforts to improve public security, policies should focus on ensuring macroeconomic and fiscal sustainability and creating the conditions for stronger and more inclusive growth,” added Kozack, who did not provide further details about the possible agreement.

Agreement for financial stability

Just a month ago and within the framework of his participation in an economic event in Canada, Noboa announced that Ecuador is negotiating an agreement with the IMF to provide financial stability to the country, which could be closed in “the next two or three months”.

All of this after Ecuador concluded a program from this institution for the first time in two decades in 2022, amounting to 6.5 billion dollars.

Among the latest measures that have been carried out, Noboa decreed the increase in the value added tax to 15% from April 1as he had announced after managing to carry out the reform that allowed him to raise the rate to that level.

The reform that Noboa managed to carry out raised the VAT from 12% to 13%, but allowed the president to increase it to 15% following a favorable report from the Ministry of Economy and Finance, which he trusts increase collection by about 1.3 billion dollars.

With these measures, the Noboa Government has managed to reduce Ecuador’s risk premium from 2,141 points to 1,265 units, which once again opens up the country’s access to debt markets to meet its financing needs. EFE