IMF Executive Board Approves 27-month US$6.5 billion Extended Fund Facility for Ecuador
September 30, 2020
- The IMF Executive Board approved today a 27-month arrangement under the Extended Fund Facility (EFF) for Ecuador, with access equivalent of US$6.5 billion. The Board’s approval allows for an immediate disbursement equivalent of US$2 billion for budget support.
- The program aims to protect lives and livelihoods in the wake of the COVID-19 pandemic and continue to support efforts to stabilize the economy. This includes expanding social assistance programs, ensuring fiscal and debt sustainability, and laying the foundations for strong growth that benefits all Ecuadorians.
- Strengthening fiscal transparency and promoting governance are key planks of the authorities’ reform agenda. These include adopting robust cash management practices, improving transparency in public procurement, and promoting debt transparency.
Washington, DC – September 30, 2020
The Executive Board of the International Monetary Fund (IMF) approved today
a 27-month extended arrangement under the Extended Fund Facility (EFF) for
Ecuador, with access equivalent to SDR 4.615 billion (661 percent of quota,
equivalent of US$6.5 billion). The Board’s approval allows for an immediate
disbursement equivalent to US$2 billion, available to the budget. The EFF
arrangement follows Fund emergency support to Ecuador in May this year
(67.3 percent of quota, equivalent of US$643 million) and the previous EFF
arrangement approved by the IMF Executive Board in March 2019 that was
canceled in May 2020.
The new EFF arrangement will support Ecuador’s policies to stabilize the
economy and protect lives and livelihoods, expand the coverage of social
assistance programs, ensure fiscal and debt sustainability, and strengthen
domestic institutions to lay the foundations for strong, job-rich, and
long-lasting growth that benefits all Ecuadorians.
Following the Executive Board’s discussion on Ecuador, Ms. Kristalina
Georgieva, Managing Director and Chair, issued the following statement:
“The Ecuadorian authorities have undertaken bold actions to address the
deep economic and health crisis triggered by the COVID-19 pandemic. Early
containment measures were key to slowing and stabilizing the spread of the
virus. The authorities’ policy response appropriately combined short-term
measures to contain the adverse impact of the crisis, including significant
liquidity support and increased cash transfers, with decisive early steps
towards long-term sustainability of public finances.
“The successful debt exchange with external bondholders has provided
substantial liquidity relief to Ecuador. The authorities have also obtained
financing assurances from official creditors, commitments from
international financial institutions, and are committed to complementing
them with ambitious, yet realistic, fiscal consolidation as the recovery
takes hold. The ongoing and decisive expansion of social assistance
programs will strengthen social safety nets and allow the government to
extend relief to vulnerable groups in a timely manner.
“Against this backdrop, the IMF-supported program under the Extended Fund
Facility has two main objectives: first, mitigate the crisis by protecting
lives and livelihoods, and restore macroeconomic stability; and second,
ensure the sustainability of public finances and strengthen domestic
institutions to lay the foundations for strong, job-rich, and long-lasting
growth that benefits all Ecuadorians.
“The authorities have committed to unwind the crisis-related measures as
the economy starts to recover. Fiscal sustainability would be anchored on
the debt ceiling under the homegrown organic budget code (COPLAFIP) of 57
percent of GDP by end-2025. It would be underpinned by a combination of a
progressive tax reform over the medium-term and expenditure measures that
aim to align Ecuador with regional peers. The ongoing operationalization of
COPLAFIP will enforce timely and accurate provision of fiscal data by
non-financial public sector entities, improve fiscal monitoring and enhance
public financial management. Formulating a debt management strategy early
on of near-term obligations would help improve the maturity and cost
structure of amortization payments in 2022.
“Strengthening fiscal transparency and promoting governance are key planks
of the authorities’ reform agenda. These include adopting robust cash
management practices, improving transparency in public procurement, and
promoting debt transparency. In addition, enforcing the rule of law,
including through the adoption of landmark anti-corruption legislation by
end-year, would protect the public purse, catalyze private investment,
promote job creation and boost growth potential.
“Timely implementation of the envisaged reforms to promote the autonomy of
the central bank and strengthen its institutional framework more broadly
will be needed to back the commitment to Ecuador’s dollarization regime.
The authorities are committed to continue monitoring credit risk
developments and to closely supervise financial institutions in the
post-pandemic period. These efforts would require strong coordination among
oversight bodies, which would be facilitated by establishing a Financial
“Uncertainty about the depth and duration of the pandemic remains high
globally. Domestically, close coordination among government agencies,
broad-based social dialogue and buy-in across the political spectrum for
the program objectives and policies would mitigate significant
implementation risks. Timely implementation of the program’s prior actions
to strengthen institutions and policy frameworks and efforts to secure
broad public support for the program are steps in the right direction.
These efforts have helped meet the criteria for the IMF to provide
financing exceeding normal access.”
IMF Communications Department
PRESS OFFICER: Maria Candia Romano
Phone: +1 202 623-7100Email: MEDIA@IMF.org