## IMF Executive Board Approves 27-month US$6.5 billion Extended Fund Facility for Ecuador

_IMF News, October 1, 2020_

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## Bibliographic details
- Published: October 1, 2020

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### Program approval and financing
- The IMF Executive Board approved a 27-month arrangement under the Extended Fund Facility (EFF) for Ecuador.
- Access equivalent to SDR 4.615 billion (661 percent of quota, equivalent of US$6.5 billion).
- Immediate disbursement equivalent to US$2 billion, available to the budget.
- The EFF arrangement follows prior Fund emergency support in May this year of 67.3 percent of quota (equivalent of US$643 million) and a previous EFF arrangement approved in March 2019 that was canceled in May 2020.

### Program objectives
- Two main objectives of the IMF-supported program under the EFF:
  - Mitigate the crisis by protecting lives and livelihoods, and restore macroeconomic stability.
  - Ensure the sustainability of public finances and strengthen domestic institutions to lay the foundations for strong, job-rich, and long-lasting growth that benefits all Ecuadorians.
- Immediate priorities include expanding social assistance programs and protecting vulnerable groups.

### Fiscal framework and debt sustainability
- Fiscal sustainability anchored on the debt ceiling under the homegrown organic budget code (COPLAFIP) of 57 percent of GDP by end-2025.
- Policy mix to underpin sustainability:
  - A progressive tax reform over the medium-term.
  - Expenditure measures aimed at aligning Ecuador with regional peers.
- Operationalization of COPLAFIP expected to:
  - Enforce timely and accurate provision of fiscal data by non-financial public sector entities.
  - Improve fiscal monitoring and enhance public financial management.
- Recommendation to formulate a debt management strategy early on to improve the maturity and cost structure of amortization payments in 2022.

### Governance, transparency, and anti-corruption
- Strengthening fiscal transparency and promoting governance are key planks of the reform agenda, including:
  - Adopting robust cash management practices.
  - Improving transparency in public procurement.
  - Promoting debt transparency.
- Enforcing the rule of law, including through the adoption of landmark anti-corruption legislation by end-year, cited as essential to protect the public purse, catalyze private investment, promote job creation, and boost growth potential.

### Monetary and financial sector policies
- Timely implementation of reforms to promote the autonomy of the central bank and strengthen its institutional framework to back the commitment to Ecuador’s dollarization regime.
- Authorities committed to continue monitoring credit risk developments and to closely supervise financial institutions in the post-pandemic period.
- Recommendation to establish a Financial Coordination Committee to facilitate strong coordination among oversight bodies.

### Risks, implementation, and conditionality
- High uncertainty about the depth and duration of the pandemic globally.
- Domestic mitigation of implementation risks requires:
  - Close coordination among government agencies.
  - Broad-based social dialogue and buy-in across the political spectrum for program objectives and policies.
  - Timely implementation of the program’s prior actions to strengthen institutions and policy frameworks.
  - Efforts to secure broad public support for the program.
- The statement notes that these efforts helped meet the criteria for the IMF to provide financing exceeding normal access.

*Source: IMF press release, September 30, 2020.*

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## References

- [https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)
- [Ecuador and the IMF](http://www.imf.org/external/country/ECU/index.htm)
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- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2020/10/01/pr20302-ecuador-imf-executive-board-approves-27-month-extended-fund-facility_