He Country risk rose again on February 27 and reached 1,709 points. This indicator, which measures the market’s perception of the risk of a country defaulting on its debts, rose by 963 points in a year. Exactly 12 months ago, on February 27, 2022, the risk was in 746 points.

Is this an indication measured by JP Morgan, It has been increasing for several months, among other things due to political instability, and even considering that there are possibilities that in the future the populist-colored government will decide not to pay its debts. And that after the bad election result for the Government on February 5. During the weekend, the situation became more complicated due to the interruption of production and pumping of crude oil, and strikes in the domestic sector were also threatened.

On Sunday, February 26, it was at 1,628 points, while on February 22, it was at 1,636.

Santiago Mosquera, economic analyst and dean of the UDLA business school, explained that the main reason for the constant increase in country risk is the fact that the market has experienced a change in the political spectrum of Ecuador, since the possibilities of the right have disappeared “and we have two movements before us consolidated as correísmo and Pachakutik and this reduces payment options or that an outsider can come in and can set good measures,” he says. In this way, the outlook for debt is bad for 2025,” he says.

For Mosquera, there is a greater possibility that a leftist government, when faced with a payment profile, will bet on default. In this sense, he explains that what is currently happening with debt bonds is that more and more investors want to sell, but there are no ones who want to buy, so the price of the bonds plummets. Currently, the 2030 bonds are at 49% of their value. At the height of Guillermo Lasso’s government, they reached 89% of their value.

Nor does he see an event that would spur price growth in the near future, something like a rapprochement with the International Monetary Fund (IMF) or a debt swap for blue bonds. Meanwhile, the Minister of Economy, Pablo Arosemena, said referring to to the high country risk that international markets fear will eventually occur “return of irresponsible governments”. Today, the economy is doing well, but it is not known what will happen in the coming period.

For a country that has fiscal deficits and requires external debt, it is not healthy to have high country risk. This is because financing is becoming more expensive. WITH country risk of 1700 points, the debt for Ecuador becomes unrealizable, Well, you should pay rates of 20% or 21%. Companies and banks are also affected by difficulties in accessing international credit, and this affects ordinary citizens in the sense that access to credit within the country becomes more difficult.