Noboa will face economic and security obstacles as president of Ecuador

The business heir Daniel Noboa will face significant challenges as it seeks to revive the battered economy of Ecuador and address rising crime during a short 17-month presidential term, after winning the presidency in Sunday’s runoff.

Noboa, 35, promised in his victory speech to rebuild the country, which has struggled economically since the coronavirus pandemic, prompting many thousands of Ecuadorians to emigrate.

Noboa’s victory eliminated some immediate market risks that could have arisen if his rival, leftist Luisa González, a protégé of former President Rafael Correa, had been elected instead, analysts said.

Ecuadorian bonds rallied after the vote, as Noboa’s business experience provided a boost to investors who had seen the country’s dollar debt fall by about a 17% this year.

“Overall, investors will likely take comfort from the election results as market participants viewed Noboa as a more pro-business candidate compared to his more statist rival,” Goldman Sachs analysts wrote in a Monday note.

“Risks of policies becoming more populist remain as the incoming administration’s attention will quickly focus on the upcoming general election in February 2025.”adds the note. “We do not anticipate that the Noboa administration will be in a position to carry out deep structural reforms.”

Noboa will take office in December and will complete the current administration’s term until May 2025.

JP Morgan said in a separate note that any fiscal consolidation during Noboa’s term is unlikely, especially if the El Niño climate phenomenon causes significant economic pressures, but a full debt restructuring is unlikely.

Noboa has pledged to attract foreign investment and create jobs for young people, but has also said he will balance meeting the country’s foreign debt obligations with the needs of the population.

Ecuador has repeatedly turned to multilateral financing since the pandemic.

Questions remain about whether Noboa will follow an orthodox economic path, JP Morgan added, because he has said he could draw on about $1.5 billion in international reserves if necessary.

Noboa’s campaign has said he will announce his cabinet selection next week.

Quick wins

Noboa promised to address the sharp rise in crime with a new intelligence unit, tactical weapons for security forces, prison ships to house the most dangerous convicts and a reinforced presence at ports and airports, hotspots for drug trafficking.

The rise in violence, which the outgoing government attributes to drug gangs, peaked during the campaign with the August murder of anti-corruption candidate Fernando Villavicencio as he left a campaign event in Quito.

Noboa will need to secure some quick security victories during his first 90 days in office to calm social and political pressures, JPMorgan added.

With almost all the ballot boxes counted, Noboa obtained the 52% of the votes against the 48% de González, according to official data.

Noboa’s victory fulfills a long-standing family ambition, as he grew up accompanying his father, banana magnate Álvaro Noboa, during his failed attempts to become president.

Noboa resigned from the family business to run for the National Assembly in 2021, where he served until outgoing President Guillermo Lasso dissolved him and called elections to avoid impeachment on charges that he ignored warnings of embezzlement at a state company. . He has denied the charges.

Lasso said on social media late Sunday that he will be delighted to see Noboa at the presidential palace on Tuesday.

Noboa, who will be the youngest president in Ecuador’s recent history, could run again in elections regularly scheduled for that year.

During his campaign, he placed special emphasis on courting young people, and some of his supporters touted his victory as a new beginning for the country’s politics.

Source: Reuters