The day after the presidential elections in which Daniel Noboa Azín won, the country risk of Ecuador was assessed at 1,748 points, or 91 points less than on Sunday, October 15 (1,859 points). This decline shows relief in the markets considering country risk which has reached levels above 2000 points after cross death and election uncertainty.

According to Jaime Carrera, executive secretary of the Fiscal Policy Observatory, the decrease is due to the election of Daniel Noboa as the new president of Ecuador and the increase in the price of crude oil. However, he admits that it is a “lukewarm” reaction, because 1,748 points is very high, mainly due to two factors:

Meanwhile, an analysis published by investment bank Barclays suggests that Daniel Noboa’s new government may at least have a chance to contain the damage to economic fundamentals and restore political momentum.

However, he also notes that there are still doubts on the market about what could happen in the next presidential elections in 2025. Therefore, there is still nervousness.

“There is lingering concern in the market about the possible return of Koreanism to power due to the party’s populist policies and its possible unwillingness to pay its debt,” says Alejandro Arreaza of Barclays.

He believes that while the new administration could at least enjoy a honeymoon period that could keep political risks at bay in the near term, they predict it will take more time to dispel concerns about the economic outlook.

Arreaza explains that Noboa’s government is transitional because he will only be in power for 18 months. “Therefore, it seems likely that the country will remain on the campaign trail until 2025, when a new government will be elected for a four-year term.”

In turn, this suggests little incentive for adjustment measures that could be politically costly and could result in fiscal deterioration. In addition, fragmented legislation makes it difficult to adopt reforms, the analysis indicates.