Press Release No. 05/34

Press Release: IMF Managing Director Rodrigo de Rato's Statement at the Conclusion of his Visit to Ecuador

February 17, 2005

Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), made the following statement today in Quito:

"During my visit to Ecuador, which is part of my travel to a group of Andean countries, I have had the privilege to meet His Excellency President Lucio Gutiérrez. I also met President of Congress Omar Quintana, Minister of Economy and Finance Mauricio Yépez, President of the Central Bank Angel Polibio Córdova, and other government officials, and had a fruitful meeting with the leaders of party blocs in Congress. I was pleased to spend some moments with the children of Centro Panita.

"I congratulated President Gutierrez and the authorities for Ecuador's strong macroeconomic performance in 2004, which combined high growth with reducing inflation to international levels, at the same time as strengthening the fiscal stance and continuing to reduce public debt. These results, if sustained, would help to further reduce poverty in Ecuador. I commended the authorities for their commitment to continue this performance in 2005 with a program that aims at maintaining solid real economic growth and low inflation, while preserving fiscal discipline and making progress toward fiscal sustainability. The authorities expressed confidence that they will be able to achieve the objectives of their macroeconomic program, while moving forward on their structural reform agenda and taking advantage of the current favorable economic environment.

"I am pleased that, through the intensified surveillance of the authorities' 2005 program, we will continue to have a close relationship with Ecuador. In my discussions with the authorities, we agreed on the importance of adhering to the fiscal responsibility law for achieving fiscal sustainability and supporting the dollarization regime, which are needed to lay the basis for greater stability and prosperity for the Ecuadoran people. We also agreed on the need to improve the quality of spending, so as to provide increased space for public investment and spending on social priorities.

"In addition to macroeconomic stability and a business-friendly environment, sustaining solid economic growth and supporting the dollarization regime in Ecuador would require economic diversification and increased competitiveness through the implementation of structural reforms in a number of areas. We also agreed that efficient management of the country's oil resources was crucial and that this would require important reforms to PetroEcuador and adherence to the rules regarding the use of the FEIREP. President Gutiérrez explained his plans for reform in the oil, electricity and financial sectors, and on social security and civil service. It is very important that the various political parties and social groups forge the consensus that will be necessary to move ahead with these reforms, so as to build a stronger economy for the benefit of all Ecuadorans.

"In our discussions, we emphasized that achieving a substantial reduction in the incidence of poverty and continued improvement in social indicators to meet the Millennium Development Goals (MDGs) was a major challenge. I was very encouraged by President Gutierrez's recent commitment to designing and implementing a Poverty Reduction Strategy to bring down poverty levels and to achieve the MDGs. I was also pleased to learn about the authorities' efforts to strengthen Ecuador's social safety net, particularly through improved targeting of existing social programs such as the bono de desarrollo humano. I wish the authorities success in all these efforts."