Press Release No. 19/257

IMF Executive Board Concludes First Review of the Extended Arrangement Under the Extended Fund Facility for Ecuador, Approves US$251.14 Million Disbursement

June 28, 2019

The Executive Board of the International Monetary Fund (IMF) today completed the first review of Ecuador’s performance under its economic program supported by the Extended Arrangement under the Extended Fund Facility (EFF) for Ecuador. The completion of the review allows the authorities to draw the equivalent of SDR 180.65 million (about US$251.14 million). The 36-month EFF with a total access of SDR 3.035 billion (about US$4.2 billion), equivalent of 435 percent of Ecuador’s quota in the IMF, was approved by the IMF’s Executive Board on March 11, 2019 (see Press Release 19/72).

Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Chair, summarized the Board’s findings:

“The authorities’ reform program supported by the Fund arrangement is yielding results. The underlying fiscal position is improving, international reserves are rising, and borrowing costs are declining. Notwithstanding downside risks, including spillovers from neighboring countries, the strengthening of the fiscal position and structural reforms should help boost growth and create jobs.

“The Ecuadorian government has demonstrated its resolve to restore fiscal discipline by rationalizing public spending. The planned tax reform will be instrumental in raising revenues and making the tax system more efficient, simple and equitable. These reforms will help put public debt on a sustainable path and strengthen Ecuador’s external competitiveness.

“Fiscal sustainability should be underpinned by reforms in public financial and debt management, and improvements in fiscal transparency. The authorities are taking steps towards strengthening budget formulation and execution, reducing discretion, strengthening oversight and controls, introducing robust fiscal rules, and improving public debt management.

“Fortifying the financial system is paramount to preserving financial stability, improving crisis preparedness, and boosting the efficiency of financial intermediation. The institutional reform of the central bank will be key in supporting the dollarization regime and boosting international reserves.

“Labor market reforms are essential in supporting job creation as well as boosting competitiveness and growth. Measures to facilitate hiring, reduce rigidities and informality, and increase female labor force participation are needed. Efforts to increase transparency and governance will also help safeguard public resources and promote a business environment supportive of growth and job creation.

“Protecting the poor and the most vulnerable remains a key priority. The authorities are taking steps to upgrade the social registry and expand the coverage of social assistance. The Ecuadorian government stands ready to step up efforts to ensure that the vulnerable remain protected.”