Ecuador continues with downward country risk. On January 23, the indicator was 1797 points. It’s about achieve the lowest since November 6, 2023, when it amounted to 1749 points. The unfortunate statements of the President of the Republic, Daniel Noboa, in the sense that he demanded multilateral loans in order not to fall into default, generated in those days a significant increase in country risk, which then continued to worsen due to insecurity. Thus, on January 9, the day the internal war was declared, it reached 2,039 points.

In this way, since that day (January 9), when it was one of the highest peaks of the country’s risk for the Government, that figure was reduced by 242 points. Country risk, as measured by investment bank JP Morgan, measures the market’s perception of whether a country is able and willing to meet its external debt obligations.

Thus, one of the reasons for the reduction would be the Government’s announcements on economic topics, such as sending to the Assembly a law on increasing the VAT from 12 to 15 percent in order to finance the internal war, and in addition to have constant income to stabilize the economy. Although the initiative has not been sufficiently accepted in the country, and parliamentarians have proposed a number of alternative measures such as increased pressure on banks, the international community views it favorably. The government also talked about targeted fuel subsidies. He also talked about cutting public spending by a billion dollars. In any case, it could be an option to settle the VAT issue by force of law if no agreement is reached in the end.

Fausto Ortiz, the former Minister of Finance, wrote on a social network that yesterday it was at 1,797 points, and today it could end up below 1,770. The mess of the VAT report in the relevant committee of the Assembly is taking a picture of me until it goes through the Ministry of Law after 30 days” (sic). The project entered the Assembly on January 11, and as it is an urgent initiative in economic matters, it must be approved or rejected by February 11; Otherwise, they will enter by force of law.

Ecuador has a deficit of $5.5 billion, maturing obligations of $4 billion and public debt payments due in 2024 of another $5 billion. That $14.5 billion must be covered, but it’s still not clear how it will be done.