The International Moneatry Fund (IMF) and the Ecuadorian authorities on August 28 announced they have reached a staff-level agreement to support Ecuador’s economic policies with a 27-month arrangement under the Extended Fund Facility (EFF) of about US$6.5 billion.
The country’s new IMF-supported program will be anchored on two main objectives: “protecting the lives and livelihoods of the population and restoring macro stability. It will aim at ensuring the sustainability of public finances and strengthening domestic institutions to lay the foundations for strong, durable and inclusive growth,” the Fund said in a statement.
Additional financing, according to the IMF, from Ecuador’s bilateral and multilateral partners is “critical to complement the successful and market-friendly debt exchange in providing liquidity relief to the current and forthcoming administrations to ensure debt sustainability.”
“Ecuador’s already fragile economy has been further hit by a confluence of shocks, including the COVID-19 pandemic and the sharp slump in oil prices, which is expected to lead to a record decline in economic activity,” Ceyda Oner, who led the mission for the IMF said. ”
The economy is expected to contract by 11 percent in 2020, and many Ecuadorians are being pushed into poverty. Against this backdrop, the Fund-supported program is aimed at first helping the Ecuadorian authorities stabilize the economy and protect the lives and livelihoods of the Ecuadorian people, and then preparing the ground for economic recovery and promoting sustainable and inclusive growth.”