The country risk of Ecuador continues to increase and it is Negative effects for citizens. On Tuesday, November 14, the indicator was reached 2,030 pointsthe day before it was 1,977 points, according to data from the Central Bank of Ecuador (BCE).

Every time this indicator rises, making it difficult to create more jobs, for example, from investments are decreasing because domestic and foreign investors believe that the country is not in the best economic conditions and does not predict an encouraging future.

Country risk is prepared by the American bank JP Morgan, measured investor perception and creditors on the country’s economy, its ability to pay its obligations, the debts it accumulates, the level of income and its sources, among other elements.

The higher the rating that JP Morgan sets, the more damaging it will be, because the economy is slowing down and not growing.

The country’s risk increases when the international price of oil falls, as it has in recent days, as Ecuador’s revenue from crude oil sales shrinks.

It can also be exacerbated by external factors that cause economic losses, as well as the actions or statements of authorities or political actors.

In the first week of November, during a tour of the United States, the President Daniel Noboa upset the markets when he said that Ecuador risks not being able to pay public debt in 2026 or 2027, if it does not increase income. The statements of the newly elected president increased the danger for the country.

Economist David Castellanos, professor at the Andean University Simón Bolívar (UASB), points out various effects which causes citizens, businesses and the Government to increase country risk.

Castellanos indicates that due to the delicate situation represented by Ecuador, next year will be complicated. Tax collection is unlikely to increase as no higher sales are expected.

In addition, oil production will decrease with the final shutdown of block 43-ITT, which will reduce the revenue from oil sales.

The impact of the El Niño phenomenon is expected in the first months of 2024, the effects of which are estimated at hundreds of millions of dollars, and the country does not have enough savings or funds to deal with the emergency.

“All this creates a state of high uncertainty, without savings, which will generate a situation in which the state will find it difficult to fulfill its obligations. It is not known what will happen. International organizations will be able to support (financially), but not to the extent that would be needed,” Castellanos commented.