Ecuador will allocate IMF credit for security, works and employment

The government of Ecuador plans to allocate to citizen securitypublic works and economic growth the around US$ 4,000 million that it hopes to obtain from the International Monetary Fund (IMF) after having reached a technical agreement with this institution for a new credit program.

After confirming this Thursday the agreement at a technical level with the IMF, the Ministry of Economy and Finance indicated in a statement that ““Ecuador seeks to access an Expanded Fund Facility (SAF) agreement for 48 months that represents financial support of around US$ 4,000 million.”

The Minister of Economy and Finance, Juan Carlos Vega, highlighted that the economic plan of the Government of Daniel Noboa “It is solid and is receiving the support of multilateral organizations.”

Vega indicated that, if approved by the IMF board, Ecuador will have access to fresh resources that will help sustain the “citizen security, promote public works, guarantee social protection and direct the country on the path of inclusive economic growth, which generates more employment opportunities for Ecuadorians.”

The technical agreement was reached after several work meetings between the Ecuadorian authorities and the IMF staff, in which Ecuador’s objectives were presented, related to a management “efficient and transparent use of public resources, the fight against insecurity and corruption, and the implementation of public policies that promote economic and social stability,” Indian.

A few weeks ago, the Ecuadorian president, Daniel Noboa, announced that Ecuador is negotiating an agreement with the IMF to provide financial stability to the country, which could be closed in “the next two or three months.”

All of this after in 2022 the Andean country concluded a program from this institution for the first time in two decades, amounting to US$6.5 billion.

In mid-April, Vega met in Washington with senior representatives of the IMF and the World Bank (WB) within the framework of the Spring Meetings of both organizations.

Neither the IMF nor the Ecuadorian Government have anticipated the possible economic measures that would condition the delivery of funds.

Of the previous US$6.5 billion credit program developed between 2020 and 2022, audits of the Ecuadorian state oil company Petroecuador, the largest company in the country, were pending.

Since his arrival to the presidential seat, Noboa managed to move forward in the middle of the declaration of “internal armed conflict” against organized crime gangs the most important tax reform in recent years in the country, by raising several taxes, including the value added tax (VAT) from 12% to 15%, which came into effect since April.

With this measure, the Ecuadorian Executive estimated that it would raise around an additional US$ 1.3 billion, with the aim of closing the gap in the state deficit, which in 2022 was around US$ 4.8 billion, approximately 5% of the country’s gross domestic product (GDP). country.

Noboa has also anticipated the possibility of reducing subsidies for the most consumed fuels in the country, which imply state spending of approximately 3,000 million dollars a year, and delaying the dismantling of Block 43-ITT, an important oil field that Ecuadorians They voted last year to close in a historic plebiscite.