[Economics] Lasso expects IMF to finish economic review very soon

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The president of Ecuador, Guillermo Lasso, expressed his hope on Tuesday that the International Monetary Fund (IMF) will finish "very soon" its fourth review of the country's economy.

This was stated in his weekly program "Let's meet for citizenship", when asked by a journalist about the review carried out by the IMF since the beginning of last March.

«We are working with them, reviewing figures, a detail always appears here, another detail here. The issues are being resolved, ”says the head of state.

He recalled that the Minister of Economy and Finance, Simón Cueva, was at the IMF spring meeting last week: "There are very important advances and I hope that very soon the Monetary Fund can communicate that the fourth review of the Ecuadorian economy has been completed" .

The IMF has examined Ecuador for the fourth time since last March to continue its credit program, opened since September 2020 with loans worth 6.5 billion dollars, of which 1.7 billion are pending delivery throughout 2022.

Delay in disbursement
With 4.8 billion dollars already delivered to Ecuador within this 27-month program, this new review was scheduled for mid-December 2021, which has delayed a disbursement of 700 million dollars scheduled for the end of last year.

Weeks before the initial date for that review, the Lasso government froze the prices of diesel and extra gasoline at $1.90 (1.73 euros) and $2.55 (2.33 euros), respectively, for gallon (3.78 liters), in the face of protests by indigenous movements and carriers' unions.

 

At the beginning of the fourth review, the Minister of Economy stated that "the country has acted in a responsible, transparent and serious manner in its economic management" and recalled that the Government maintains "a good relationship with the IMF, based on permanent dialogue" .

Thanks to the program opened by the IMF, Ecuador has now accessed financing under beneficial conditions from other organizations such as the World Bank (WB) and the Inter-American Development Bank (IDB).

It has also been financed by the Development Bank of Latin America (CAF), the European Investment Bank, the Japan International Cooperation Agency (JICA) and the French Development Agency.

old relationship
Ecuador's relationship with the IMF dates back to the 1970s, although it was in the 1980s when an aggressive stage of indebtedness with the organization began.

The first Letter of Intent that Ecuador signed with the IMF dates from 1983 and up to 2003 it had signed 16 understandings with the agency, but the link was broken during the Government of Rafael Correa (2007-2017).

 

It was not until 2019, already in the Government of Lenín Moreno (2017-2021), that Ecuador returned to the IMF to sign an "Extended Facility" agreement for 4,200 million dollars, which failed due to the harsh social protests that shook the country in October of that year.

With difficulties to face the commitments of the external debt, Ecuador obtained from the IMF the current program of 6,500 million dollars.

deficit reduction
Lasso, who took office last May, recorded that in 2020 the deficit reached 7.8% of gross domestic product (GDP), and they managed to reduce it to 4 percentage points in 2021.

“Today we have adjusted projections, according to the current reality of the global economy, of a deficit that will not be greater than 2% or 2.2% of GDP,” he said, speculating that this deficit may be even lower if it is maintained. The current prices of a barrel of oil in the international market.

The official stressed that "the macroeconomy is fine", but pointed out that he is concerned about "the economy of the Ecuadorian family", so investments should be promoted to generate employment, since only three out of ten Ecuadorians who are part of the po[CENSORED]tion economically active «they have a formal job, they are affiliated with social security, they have the peace of mind of being paid fortnightly, at the end of the month». EFE

 

Link: https://www.larepublica.ec/blog/2022/04/26/lasso-espera-que-el-fmi-termine-muy-pronto-revision-a-economia-de-ecuador/