The country risk for Ecuador was located at 1950 points this March 19, according to the report of the Central Bank of Ecuador. It is the worst result this year in this indicator and since the government of Guillermo Lasso. A similar indicator was recorded in this Government on October 13, 2022, and it was then 1,945 points.

Country risk, as measured by investment bank JP Morgan, measures the market’s perception of whether a country will default on its foreign debts. In the case of Ecuador, it is growing “unstoppably,” says Jaime Carrera, executive secretary of the Observatory for Fiscal Policy (OPF). On January 1, 2023, it was at 1,250 points, that is, it has increased by 700 points to date. The government started its period with 827 points.

For Carrera, this latest decline is, among other things, a consequence of the political instability caused by the intention of members of the assembly to depose President Lasso through a political trial. In addition, the drop in crude oil prices, which goes hand in hand with the international financial crisis. All this together with the fiscal fragility of the country. Carrera said what is happening now in Ecuador is reminiscent of similar events in the country’s history that have brought unfortunate consequences for the nation. He reminded that in the 1980s and 1999 there were similar problems, such as political crises, economic problems, and even natural disasters such as the El Niño phenomenon. In addition, there were external problems in international banking. Today there are a number of converging problems. But at least political irrationality could be reduced if there was reflection. Citizens must not forget what happened before.

Carrera also commented that soon in 2024 the repayment of the IMF loan will have to begin, while this year already about 200 million dollars in interest must be paid. It would be important for Ecuador to meet these deadlines and not to repeat the history of the past 40 years of non-payment of debts.

Santiago Mosquera, political analyst and dean of the UDLA Business School, on the other hand, believes that this high level of country risk at the moment is explained by a combination of factors. Among them is political uncertainty, since a possible political trial is underway, because CAL will make its analysis, and later the Constitutional Court must give its opinion. He believes that the Court could reject the impeachment, but mobilization announcements were also made in order to exert pressure on the Court’s verdict. If the trial continues, it will have to be considered whether the president will appear at the trial or seek a place of crucifixion. The prospects are still unclear, but they look delicate. For Mosquera, it is the political noise that creates the most nervousness in the market.

Meanwhile, the drop in the price of crude oil is also affecting the country, but this is due to international issues, so it is not under Ecuador’s control.

Mosquera believes that the country’s risk will certainly continue to grow, especially if the trial continues or if there are new mobilizations of indigenous people seeking a result in favor of the trial before the Court. The expert also says that the movement of debt bonds in the markets continues downward. There is a large supply and low demand for these papers.

Ecuador remains in third place among the worst country risk indicators. It was only surpassed by Venezuela with 36,197 and Argentina with 2,388. Both indicators were measured from March 17.