The country risk for Ecuador reached 1996 points this November 29. This means that neither the change in the profile of the Minister of Economy nor the submission of the tax reform to the Parliament calmed the financial markets.
As soon as Daniel Noboa won the election, on October 15, the country risk dropped by more than 91 points, from 1,839 to 1,748. But after his first actions, even without taking possession, the markets became nervous. After some statements in the USA, about possible bankruptcy, and when the profile of possible minister Sariha Moya, who was considered an official without much experience, was known, the indicator rose to 1,993 points, and then, after an agreement in the Parliament, the rise continued until 2054 point (November 15).
However, once we learned the new name of the Minister of Economy, Juan Carlos Vega Malo, the risk seemed to be reduced. In the meantime, it rose again until it again approached 2000 points.
According to Jaime Carrera, executive secretary of the Observatory for Fiscal Policy (OPF), the problem with increasing indicators is because “markets don’t eat stories.” He assures that the country is insecure and that the tax reform does not solve the deficit problem and that there is no certainty that what is being thought about can be achieved. Apart from the amnesty that would bring one-time funds, structural problems are still present. And this means that by 2025 the deficit will be larger. “The government has not presented a fiscal plan that says how much it wants to advance, nor how it will cover financing needs. There is only loose data,” he said.
This makes Ecuador among the four countries with the biggest country risk problems.
On November 28, Argentina recorded (last data available) 2057 points, Bolivia 2040 points and Venezuela, a record 18312 points.
According to Carrera, although Argentina’s risk initially decreased after Milei’s election, the country has fiscal problems, rampant inflation, excessive public spending and $40,000 million in IMF debt. What happened in Argentina is the product of the entire Peronist, populist history that was sharpened in Kichtnerism.
Bolivia has a huge deficit and has eaten up reserves, has huge public spending and is also part of a populist government.
Venezuela is a lost cause, it is a failed state, he said.
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