Country risk falls to 1,695 points, linked to tax proposals and an agreement with the United States

Country risk does not stop its downward trend. This Sunday, January 28, it was 1695 points. In other words, it is increasingly moving away from the high levels reached at the beginning of January, when the Government declared an internal armed conflict against drug gangs. Thus, since January 9, when it reached 2,039 points, this indicator, which measures the ability to settle debt obligations, has fallen by 344 points.

Likewise, the indicator is the lowest for nine months, since on May 12, 2023, just before the death on the cross, it was at 1,692 points.

Thus, in the last days of last week, the country’s risk amounted to:

Since the announcement of the internal war, and after several announcements by the Ministry of Economy and Finance and the President of the Republic, Daniel Noboa, about the intention to increase the value added tax (VAT) by 3 points, the country’s risk has been decreasing. It also contributed to last week’s approach to multilateral organizations (IMF, IDB, WB and CAF) to see the possibility of accessing credit, but with the obligation to adjust spending.

According to Ramiro Crespo, president of Analytica Securities, the reduction in country risk is positive news that will eventually allow the country to regain access to credit, if it reaches normal or even better limits. Country risk also favors the private sector that chooses to invest in Ecuador.

For Crespa, the factor that also influenced the decline of the indicator is the Security Agreement with the USA. He explains that the insecurity caused by the mafias created a terrible environment, but now with the agreement it is seen that the USA will be able to fulfill several goals, even without the need to exist Manta bases. He also believes that President Daniel Noboa had good presentations before the international community. He had a good reception in Europe, and a recent media interview in perfect English.

Regarding the possibility that the initiative to increase the VAT by 3 points will not be realized, he said that, although it is not exactly that initiative, measures will be taken to try to cover the problems of the country’s public finances.

The country risk of Ecuador remains high for access to loans from the financial market. In any case, it is lower than that of Venezuela, Bolivia (2,247) and Argentina (1,872). However, neighboring countries that can easily access credit have much lower levels of country risk.