Ecuador Extended Fund Facility (EFF) FAQs

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The new Extended Fund Facility (EFF) arrangement will aim to:
- strengthen fiscal sustainability, while protecting vulnerable groups;
- safeguard dollarization and macroeconomic stability;
- rebuild liquidity buffers;
- enhance financial stability and integrity; and
- further advance the structural reform agenda to promote sustainable and inclusive growth.
The program will preserve space for needed priority spending on security, social protection, and public investment.
The program will support reform efforts in the financial, governance, and structural areas, including climate transition.

Upon IMF Executive Board approval, the new IMF-supported program—called an “Extended Fund Facility” (EFF)—will provide access to SDR 3 billion (about US$4 billion) over a 4-year period.
In line with the Fund’s lending policies, these resources may be used to support the public budget.
The new EFF will help mobilize additional resources for Ecuador from other development partners.
The IMF-supported program will help:
- improve the liquidity and fiscal situation;
- safeguard dollarization and macroeconomic stability; and
- foster sustainable and inclusive growth.
Policies supported by the new EFF focus on protecting the most vulnerable and on enhancing governance and transparency, with the ultimate goal to promote a stable economy and better living standards for all Ecuadorians.

The new EFF program will prioritize social protection.
The program does not call for social spending cuts.
It will support the authorities’ economic policy plans to:
- strengthen the public finances;
- safeguard macroeconomic stability and dollarization; and
- foster sustainable and inclusive growth.
The program aims to support needed priority spending on security and public investment.
The previous EFF arrangement with Ecuador (which started in 2020 and concluded in 2022) also prioritized social protection by supporting greater coverage of social assistance programs; the new EFF will build on that work.

A staff-level agreement (SLA) denotes the agreement reached between IMF staff and the authorities on a package of policies that may be backed by an IMF-supported program to help the country address its balance of payments problems.
The SLA is subject to IMF Management and IMF Executive Board approval.
Once an SLA has been reached and all applicable IMF policies are complied with, the policy program underlying an arrangement is presented to the IMF’s Executive Board, including the authorities’ “Letter of Intent” and “Memorandum of Economic and Financial Policies.”
If approved by the Executive Board, the country may request financing under the IMF arrangement in tranches subject to the regular review of the member’s program performance and policy implementation.
The SLA with Ecuador followed routine engagement, including an IMF team visit to Quito in early April and meetings with public and private sector stakeholders.
An IMF report will be published shortly after the IMF Executive Board’s meeting to consider the new arrangement.

When a member country has more than 600 percent of its quota in outstanding credit to the Fund, it is subject to the IMF’s Exceptional Access Policy.
Before the approval of the new EFF lending arrangement, Ecuador’s total credit outstanding to the Fund was above 800 percent of its IMF quota, thus making the new EFF subject to the exceptional access policy.
To grant exceptional access, the Fund evaluates criteria including that the country has good prospects to regain access to international capital markets.
A detailed discussion of the exceptional access criteria is included in the IMF report that will be published shortly after the IMF Executive Board meets to consider the new arrangement for Ecuador.

2020–2022 EFF arrangement (approved in September 2020 and concluded in 2022) disbursed about US$6.5 billion since its approval in September 2020.
An EFF arrangement approved in 2019 but ended in 2020 received about US$1.4 billion.
An IMF Ex-Post Evaluation of the 2020-22 EFF arrangement, published in 2023, found that the program achieved its primary objective of restoring macroeconomic stability against the backdrop of a historic economic recession triggered by the COVID-19 pandemic.
Rapid Financing Instrument (RFI) emergency assistance:
- RFI for about US$364 million approved in 2016 after an earthquake;
- RFI for about US$643 million approved in 2020 during the COVID-19 pandemic to help support Ecuador’s healthcare and social protection systems.

When warranted, measures to strengthen governance may become part of an IMF lending program, potentially including:
- strengthening controls on public spending;
- reducing discretion in revenue administration;
- issuing audited accounts of government agencies, central banks, and state-owned enterprises.
Other potential measures include increasing transparency of natural resource management, enhancing bank supervision, and stepping up efforts to combat corruption and money laundering.
The IMF assesses governance and transparency frameworks of central banks as a means of safeguarding its resources.
Through capacity development, the IMF provides technical assistance and training to strengthen economic institutions on critical macroeconomic issues.