Questions and Answers on Ecuador

March 23, 2020

Ecuador, like most other countries, is faced with the difficult task of grappling with a new economic environment. Ecuador’s economic challenges have been compounded by the negative effects of the Covid-19 outbreak and the sharp fall in oil prices, since it is one the largest oil exporters in Latin America. In light of the rapidly evolving global situation, the authorities have rightly requested financial assistance under the Fund’s Rapid Financing Instrument (RFI) that will allow the government to address urgent balance of payments needs and will support policies allowing to direct funds swiftly to Ecuador’s most affected sectors, including the healthcare system and social protection.

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What is the amount of money that Ecuador can get under the RFI?

Subject to the Executive Board approval, Ecuador could receive financing of up to US$ 500 million (50 percent of its quota).

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How quickly can the IMF make the disbursement?

After a country has requested support, staff will assess qualification requirements, work with the authorities to prepare a letter of intent, and prepare a staff report for the IMF Executive Board. Usually, the time between a request for an RFI and disbursement of financing is around 4-8 weeks.

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Are the authorities obliged to use this financing exclusively on the health sector?

Financing under an RFI is aimed at helping member countries address urgent balance of payments needs. Such financing can be used to implement policies to address emergencies, such as Covid-19 and the sharp decline in oil prices. Countries are not obliged to use this financing exclusively on the health sector, but it is generally understood that countries will need to boost spending on health and social protection to combat the virus and protect vulnerable groups of the population.

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What interest does the RFI carry? What are the repayment terms?

Financial assistance provided under the RFI is subject to similar interest terms as the Extended Fund Facility Arrangement (the cost of Fund credit is about 1.5 percent), and except should be repaid within 3¼ to 5 years.

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What are the conditions of this financial assistance?

An RFI comes with no ex-post conditionality. Countries would receive the full amount for which they are eligible under the RFI at the time of the Board approval, provided they meet all other applicable IMF policies.