In the next three years (2024 to 2026), the country must make heavy public debt payments. This includes debt payments on bonds acquired from Correat, Chinese debt, as well as recently acquired debt (on more favorable terms) from the IMF.

Thus, the total payment of amortization and interest of internal and external public debt, will be $7.542 million in 2024; $8.374 million, 2025 and $9.619 million, 2026. Interest on restructured bonds must also be paid: $1.025 million through 2026.

Additionally only the payments to the IMF, in the years 2024, 2025 and 2026, for amortization and interest, will be $1,036 million, $1,602 million and $1,417 million, respectively. This was explained by the Executive Secretary of the Observatory for Fiscal Policy (OPF), Jaime Carrera.

The expert who published the report on the country’s obligations in the coming years explained that in the period 2007-2017 “Rafael Correa’s government issued so-called “Garbage Bonds” worth billions of dollars, for which it was necessary to pay high interest rates. Millions of loans were also contracted with China with guarantees for oil and high rates that went to projects with overestimated prices,” he reminded.

For Carrera, the 2020 pandemic exposed and deepened Ecuador’s economic, fiscal and social tragedy, he said. At that time, the inability to pay Junk Bonds led to their restructuring in terms of terms and interest rates. Also, in some loans with China, the capital payment deadlines have been extended.

As the country was on the verge of collapse, the government of Mr Lenín Moreno went to the IMF to avoid shipwreck, with abundant loans, supplemented by others from the IDB and the World Bank. “As time continues its inexorable march, the time has come to pay the debts,” says Carrera.

It should be remembered that the rescue of multilateral organizations (IDB, WB, CAF, IMF) raised the amount of their loans to 23,916 million dollars in January 2023. On the other hand, the use of central bank reserves between 2007-2017. it has its price, in 2025 it will be necessary to pay that bank 1,176 million dollars, and in 2026, 1,210 million dollars.

This year, says Carrera, the fiscal deficit will be over 4,000 million dollars, which, added to the payment of depreciation and other obligations, will raise the financing needs to over 10,000 million dollars, which must be covered by new loans and renewal of internal debt.

Carrera felt that, faced with the current political and economic reality, in the coming years uncertainties about the economy, investment and fiscal sustainability will continue. As a result, “questions about the country’s ability to pay its debts become almost certain.”

According to Santiago Mosquera, economic analyst and dean from business school UDLA, It is true that the burden of payment is starting to get stronger. In 2023, $4,500 of depreciation must be paid. Of that, 2.7 billion dollars with internal debt and 1.8 billion dollars with external debt.

For an expert, the domestic part would not be so problematic, because the state can renew these debts. Meanwhile, the external debt, which is a combination of several creditors, has bilateral and multilateral debt repayments in 2023, with the largest amounts coming from 2024 to 2026.

Explain that it is 2026 is the worst year in terms of debt repayment, since it would reach an amount greater than 7000 million dollars. Of that amount, 4,000 million dollars would correspond to external debt. The key is that “external debt must be paid, it cannot be renewed like domestic debt”, he says.

In this sense, he comments, aware that the debt profile is becoming increasingly demanding in the coming years, the governments of Lenín Moreno and Lasso sought fiscal consolidation. This means reducing the deficit and even achieving a primary surplus to avoid accumulating debt, and in the ideal scenario, have savings to cover liabilities.

However, there is currently a latent market concern that, seen with the recall and arrival a possible new administration can become a potential new one default (non-payment of debt).

Explain that at this time Ecuador should not fall into default, because the country has the ability to pay, and there is also the will of the Government to pay its obligations. He believes that the ability and willingness to pay would continue if there was a replacement process and Alfredo Borrero, the current vice president, became president.

On the other hand, says Mosquera, if the cross of death comes and the administration changes according to the correista trend, in 2024 or 2025, their behavior towards debt will depend on whether they have learned from their past mistakes. It cannot be forgotten that in 2008 they decided not to pay, hiding behind an illegitimate debt report, despite their ability to pay. He commented that by 2025 the solvency scenario will be more threatened.

All this scenario worries the market and leads to high country risk. This April 20, the country’s risk was set at 1878 points. Much more than the 714 points with which Guillermo Lasso began his tenure.