international reserves until February 24, 2023 came 7,825.7 million dollars. This is a smaller volume of reserves than the one recorded in January 2023, when they reached 9.3 billion dollars.

Although currently this amount 122% covers the system of foreign exchange and financial reserves, which includes, among other things, the money of depositors in banks and cooperatives, covers only 61% of all required obligations (obligations of the Central Bank of Ecuador to third parties) which reach 12.903 million dollars. Therefore, international reserves would need an additional $5.077 million to cover all liabilities.

However, these days the statement of the representative of Pachakutik caused an alarm because of the proposal to use the reserves. Darwin Pereira, who belonged to that bench and was also part of the rebel wing, said this week that he had a “coherent proposal for the country” and it would be “bring 50% reserve”. That would mean injecting about $4.5 billion: $1 billion for health, $1 billion for education, and another $1 billion for security. “What will we do with 9.3 billion dollars abroad”, he euphorically asked himself, considering that there is no money in the country, but “there is a lot out there”.

On this topic, the Minister of Finance, Pablo Arosemena sarcastically described the politician’s idea as “genius”. and clarified at least four points:

Also Alberto Acosta Burneo, editor weekly analysis, remember it is illegal to ask to “bring a reservation”. So, if a possible government with a populist tinge would like to use these funds again, it would first have to change the law, he says. If this were to happen, then this liquidity would be “injected into the economy”, public deposits would be consumed, and this would increase “systemic risk”. This means a possible exit from dollarization.

In this sense, for Acosta Burne, what this member of the assembly is proposing would not be a good idea, and what would happen is that we could return to a scenario similar to that of March 2020 when the manager of the Central at the time, Verónica Artola, he admitted that between March and April 2020, due to the pandemic, the Central Bank was sued for 1.5 billion dollars, and in those months the reserve amounted to 1.8 billion dollars. “It was a time of great stress, we even already had a plan for who we would stop paying.”

But what are reservations for?

Reserves according to the Central Bank are the economic resources that the country has and are used to meet payments abroad required by various economic entities that have a current account in the Central Bank of Ecuador (state, private financial sector, public, among others, national and solidarity economies). For example, with bookings you pay for:

Therefore, high international reserves are a signal to the world that the Ecuadorian economy is solid and that it has responsible business entities that fulfill their obligations, the Bank points out.

The reserve also includes gold that the Central Bank bought from artisanal miners. Part of IR is also the funds that the state receives from foreign transfers, from loans from multilateral organizations and special drawing rights (SDR) that the state has in its account with the International Monetary Fund (IMF).

The ECB reminded that according to the Law on the Reform of the Monetary and Financial Code from May 2021 international reserves must gradually accumulate “until they fully cover the accounts of all ECB depositors”.

These days the reserves have recovered, but this was not always the case, for example in August 2000. this amount fell to a historical minimum since the beginning of dollarization, with 603.72 million dollars. Other low points in IR amounts, to name examples, occurred in December 2002 ($714.71 million), February 2005 ($989.41 million), December 2012 ($1,079.97 million) and March 2020 ($1,217.73 million).