Ecuador’s country risk shoots up every day and already exceeds 1,500 points

The country risk of Ecuador it surpassed the barrier of 1,500 points by placing itself at 1,514 this February 7, as reported by the Central Bank of Ecuador, based on data from the investment bank JP Morgan.

This indicator has already shot from the 1,120 points that had been registered on February 3 -before the elections- to 1,415 points on February 6, 2023, now every day it went up again until it reached 1,514 points. That is to say a difference of 394 points in total.

“It is paradoxical, Ecuador currently has beneficial macroeconomic conditions, to take advantage it needs minimal stability”

The anti-government results in the February 5 elections where, in addition to the sectional authorities, Citizen Participation councilors were elected and the consultation proposed by the Government was voted on, are the origin of this increase in country risk. Above all because, although no official results have been given, the No seems to have prevailed in all the questions. This, as a kind of rejection by the population of the Guillermo Lasso regime.

It is that the country risk measures the perception of the markets on whether or not the country will honor its debts. In the case of Ecuador, with these electoral results, analysts anticipate that a greater lack of governability could mean that the Government does not finish its mandate, and that a subsequent government does not honor its debts. Also a possible scenario is that political instability scares away investment even more, making the economy contract and making it impossible for the country to pay its debts.

Assembly members resume face-to-face sessions and suggest to the Government to apply cross death and advance elections

Ecuador’s country risk has been subject to political problems in recent years. For example, before the last presidential elections, in February 2021, when there was a lack of certainty about who could win the elections and there were possibilities that correísmo would win, with Andrés Arauz at the helm, the country risk skyrocketed.

On the other hand, when Guillermo Lasso’s victory became known, this indicator dropped significantly. Between April 8 and 9, 2021, it went from 1,169 to 824 points. Thus it remained oscillating, even registering indicators of 714 points.

However, June 2022 arrived and with the indigenous protests, due to the issue of fuel subsidies, the risk skyrocketed again. at that moment it happened from 796 points on June 1 to 1,352 points on July 5. It continued to rise when the dialogue tables with the indigenous people were taking place. Since then she has been slow to recover or return to normal. However, she was in the 1,100s until now when she rose again with the election results. (YO)