He Ecuador’s country risk recorded an increase on May 15 to 1759 points, before the political trial of President Guillermo Lasso and just after the elections for the bodies of the National Assembly, where there were 96 votes for the election of a new government. Country risk is high, but lower than the others recorded in the past months, which exceeded 1,960 points.

The score for this indicator remained high due to a series of political and economic events. starting in June 2022 due to the mobilization of the Confederation of Indigenous Nationalities of Ecuador (Conaie), and then – already in February 2023 – after the election results, which were unfavorable to the Government.

Last May 14, the day when parliamentary bodies were elected, this indicator was 1,692 points, and the next day at 1,759 points, i.e. an increase of 67 points.

For Jaime Carrera, secretary of the Observatory for Fiscal Policy (OPF), the increase in country risk has to do with the political uncertainty that exists. However, he insists that there are also deep fiscal structural problems in Ecuador. These are: high fiscal deficit, high debt servicing and market doubts that the country will not be able to pay its debt in the future.

The expert explains that by 2025, the fiscal situation will further deteriorate and in this sense the next government will face this reality. Depending on which government is in charge, it will look for reforms to find solutions or if a government like Rafael Correa comes in, it could decide not to pay the debt. This is obviously harmful for the state, which loses the possibility of financing, in a deficit economy.

Carrera comments that with this high indicator, external financing is unfeasible. The interest rate at which a loan can be obtained depends on this indicator. For example, with an indicator of 1,700 points, the rate would be 17%, but to that should be added that of the United States Department of Finance (4.2%), so the interest can be above 20%.

Ecuador’s problems are also related to the need to pay important debts in the coming years. Among them are the loans given by the International Monetary Fund (IMF) and which were used to get out of the pit of the pandemic.

He Country risk could continue to rise, Carrera says, depending on the outcome of the impeachment trial. If President Lasso is removed or the cross death occurs, the risk will increase. It is possible that the indicators will drop if the president continues to lead the country, he believes.

This Tuesday, May 16, a political trial will be held in the Parliament. In the afternoon, President Lasso exercised his right to defend himself in the plenary session, and then the president of the legislature, Virgilio Saquicela, adjourned the session to resume it at 15:00 and continue with the legislative debate on the impeachment.