IMF Executive Board Concludes Second and Third Reviews of the Extended Fund Facility for Ecuador and 2021 Article IV Consultation

September 30, 2021

  • The IMF Executive Board concluded yesterday the combined second and third reviews of the 27-month Extended Fund Facility (EFF) for Ecuador, allowing for an immediate disbursement equivalent to about US$800 million. The Executive Board also concluded the 2021 Article IV consultation.
  • Ecuador’s EFF-supported economic program aims to support the economic recovery from the pandemic, restore fiscal sustainability with equity, and generate sustainable growth with high quality jobs.
  • Continued improvement in public financial management and advances in transparency and anti-corruption would strengthen confidence in public institutions and boost private sector activity going forward.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded yesterday the combined second and third reviews of the extended arrangement under the Extended Fund Facility (EFF) for Ecuador. The Board’s decision allows for an immediate disbursement of SDR 568 million (about US$800 million), bringing Ecuador’s total disbursements under the arrangement to about US$4.8 billion. The Ecuadorian authorities plan to use the disbursement for budget support.

Ecuador’s 27-month EFF arrangement was approved by the Executive Board on September 30, 2020 (see Press Release No. 20/302) for SDR 4.615 billion (about US$6.5 billion or around 661 percent of Ecuador’s quota). The program aims to support Ecuador’s policies with the economic recovery from the pandemic, to restore fiscal sustainability with equity by reducing public debt while expanding social safety nets, and generate environmentally friendly sustainable growth with high quality jobs that benefits all Ecuadorians.

The Executive Board granted a waiver of nonobservance of the end-April 2021 quantitative performance criterion on nonfinancial public sector deposits based on the minor nature of the nonobservance and corrective action taken by the authorities.

Following the Executive Board discussion on Ecuador, Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, issued the following statement:

The COVID-19 and oil price shocks severely hit the Ecuadorian economy in 2020. The recovery has been slow but the accelerated pace of vaccinations, the improving global economy, and funding from the IMF and other IFIs are supporting Ecuador’s recovery.

The authorities have significantly expanded social assistance programs. Over 440,000 low-income families have been added to the social safety net since July 2020. The continued expansion of social safety nets, reaching families in the lowest income groups and in generally underserved locations, will be crucial to mitigate the impact of the pandemic on the most vulnerable.

The ongoing pandemic and gradual economic recovery warrant continued support of the economy this year. Going forward, the authorities are committed to securing medium-term fiscal sustainability, reducing public debt, and building buffers through an expenditure-led consolidation strategy while protecting the most vulnerable, supplemented by progressive tax reform. Coordinating within the nonfinancial public sector, enforcing the timelines for data submission, and establishing budget ceilings in key spending categories in the near and medium term will be critical to achieve expenditure targets. Progressing with structural reforms to strengthen public financial management will also be essential.

The authorities have implemented key structural reforms to strengthen the anticorruption framework and the foundations of dollarization by enacting a new anticorruption law and a new organic monetary and financial code.

Improved transparency and governance in the management of public resources, including COVID-related spending, is crucial for bolstering trust in public institutions. Implementing fully and swiftly the regulation that was adopted last year to collect and publish ultimate beneficial ownership information in public procurement contracts is also critical. Further efforts are needed to improve asset declarations of politically exposed people, overhauling the AML/CFT framework, and conducting audits of taxes.

The banking system appears ready for the removal of the crisis measures at the end of the year, as currently envisaged by the authorities. Closing regulatory gaps over time across the financial system will level the playing field and enhance resilience.

The need to improve competitiveness and raise potential growth puts a premium on structural reforms, informed by national dialogue. In this regard, the authorities’ ongoing efforts to forge new international trade deals and reform the labor market can help foster private sector growth and foreign direct investment.

Executive Board Assessment

Executive Directors commended the authorities for the measures taken to mitigate the economic and social impact of the pandemic and for the progress made in implementing reforms. Directors welcomed the decision to continue with the EFF-supported program and its objectives of supporting the economic recovery from the pandemic, restoring fiscal sustainability, and generating green, inclusive growth with high quality jobs.

Directors supported a more gradual fiscal consolidation to accommodate urgent pandemic-related spending needs this year, to expand social assistance programs, and to support the economic recovery. They welcomed the authorities’ commitment to fiscal consolidation over the medium term, stressing the need for strong revenue efforts, including a progressive tax reform, to complement the expenditure-led consolidation strategy. Contingency planning in case of financial shortfalls was also encouraged. Directors recommended further efforts to strengthen public financial management, informed by the planned public expenditure review, fiscal transparency evaluation, and public investment management assessment.

Directors underscored the need to continue strengthening transparency and governance in the management of public resources to further improve trust in public institutions. They urged the full and swift implementation of the regulation for collecting and publishing ultimate beneficial ownership information in public procurement contracts. They also encouraged continued efforts to enhance the AML/CFT framework and conduct audits of taxes.

Directors welcomed the recent amendments to the central bank law to strengthen its independence and governance. They commended the authorities for the progress in improving the central bank balance sheet and the foundations of the dollarization regime.

Directors welcomed the authorities’ intention to unwind the crisis measures in the banking system to preserve its health and avoid creating distortions. The planned third-party asset quality review for public banks would help identify provisioning and capitalization needs. Directors encouraged the development of a plan to close regulatory gaps, level the playing field, and strengthen the overall financial system.

Directors underscored the need to make progress on structural reforms to improve competitiveness, enhance the business environment, and accelerate environmentally friendly growth led by the private sector. Directors welcomed the authorities’ ongoing efforts to forge new trade agreements and reform the labor market to set the course for higher and more inclusive growth. They noted that reducing the dependence on oil would help prepare Ecuador for the global transition to reduce carbon emissions while also promoting the development of other sectors.

Ecuador: Selected Economic Indicators






Real GDP growth





Unemployment (%)





Inflation, average (%)




Public sector

Revenue (% GDP)




Expenditure (% GDP)




Overall fiscal balance (% GDP)




Non-oil primary fiscal balance (excl. fuel subsidies) (% GDP)




Non-oil primary fiscal balance (incl. fuel subsidies) (% GDP)




Public sector debt (% GDP) 1/




Money and credit

Broad money (% change) 2/




Credit to the private sector (% change)




Balance of payments

Current account (% GDP)








GIR (in months of imports of goods and services)




External debt (% GDP)




Exchange rate

REER (% change, depreciation-)


REER (% change, depreciation-)

Sources: Central Bank, Ministry of Finance, National Statistical Institute (INEC), UNDP Human Development Indicators, World Bank WDI, and IMF staff calculations.

1/ Gross debt consolidated at the level of the NFPS. Includes the outstanding balance for advance oil sales, treasury certificates, central bank loans, other liabilities and the stock of domestic floating debt. The public debt estimates are preliminary and subject to revisions in accordance with the IMF’s Government Financial Statistics Manual.

2/ M2

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