The issue is on the agenda as President Daniel Noboa has gone to the United States to raise two issues. First, in front of the IMF: we need a bridging loan to push through 2024… (semi)explicit message: I will seek re-election, for that we need a good government that does not have too many financial difficulties, otherwise the alternative is to have in 2025 someone who is less inclined to good international relations. Second, the financial situation is such that there is a risk of debt default in 2026. These messages, added to the sharp drop in oil prices (-$12 per barrel), brought the country’s risk back to 2000 points (almost everyone on the continent is around 400 points). Let us recall that this risk is related to the international perception that the country cannot fulfill its external obligations.

Consider the current state of the national debt. The external debt is of the order of 47 billion dollars, and the internal debt itself is 12 billion dollars, but to the latter we have to add other types of obligations that add up to 15 billion dollars, or a total of 27 billion dollars. (This is the exact value, because you have to include arrears, outstanding debts owed to government suppliers, and thousands of other things… just as you have to include what you owe the corner store or relatives in your debts). There is 74 billion dollars, which if we put it for a term of 15 years and with an interest rate of 6% gives a huge annual payment of 7 billion dollars… fortunately the government does not pay interest on some of its internal obligations such as arrears or similar, and other payments that it renegotiates or continues to push into the future. But it is huge.

Sometimes we need a real operation from the state, because these are meaningless amounts…

Namely, the external debt is the most complex because it cannot be canceled by internal “tricks”. At the moment, the payouts are not too high because they have been renegotiated with the international financial markets in 2020 (about 18 billion USD) and then in 2022 with China (about 4 billion USD) and the support of international organizations that we have received in recent years is only in the initial phase . In 2024, liabilities will be on the order of $2 billion, and in 2025, toward $3,000… but then in 2026 and 2027, we’re already growing toward $4 billion, double the current level. Noboa was right that we might need another renegotiation in 2026, which would be at least the fifth in the last 40 years… although each had its own specifics and some were more justified than others, and at least in 2009 .with RC when “criolla liveliness” imposed a large reduction in payments to creditors when it was possible to pay, every renegotiation is another stain on the tiger! Noboa was also right that we need international support because in 2024 we will have a deficit of 4 or 5 billion dollars, to which we must add the payment of previous debts, reaching a need of at least 8 or 9 billion dollars, which, say, about half would correspond to international sources : about $4 billion. Pretty big bridging credits!

Sometimes we need a real state intervention, because these are meaningless amounts and cover too many useless state expenses… Who will do it? (OR)