IMF Reaches Staff Level Agreement on the First Review of Ecuador’s Economic Program under the Extended Fund Facility

May 30, 2019

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.     

An International Monetary Fund (IMF) team led by Anna Ivanova met with Ecuadorian officials to further discuss the implementation of Ecuador’s economic program, supported by the IMF under the Extended Fund Facility (EFF). Ms. Anna Ivanova issued the following statement today:

“Following productive discussions, the IMF team and the Ecuadorian authorities reached a staff-level agreement on the completion of the first review under the EFF arrangement. Subject to the approval by the IMF Executive Board, which is expected to consider the review in June, US$250.57 million would be made available to Ecuador.

“Ecuador has made considerable progress in implementing its program aligned with the Prosperity Plan, which seeks to boost competitiveness and job creation, achieve the prosperity of all Ecuadorians, protect the most vulnerable, strengthen the institutional bases of dollarization, and strengthen the fight against corruption. Steadfast implementation of the program will help Ecuador better prepare for handling external shocks such as a potential fall in oil prices, tightening of external financing conditions, weaker global growth, as well as spillovers from the crisis in Venezuela.

“Ecuador has taken significant steps in strengthening the fiscal position, which is a key priority to help solidify the institutional foundations of the dollarization system. The authorities share the view that steadfast commitment to fiscal sustainability remains paramount. Progress on public financial management reforms has been encouraging as well with the recent publication of an action plan aimed at strengthening budget preparation, execution, and cash management practices.

“The authorities are committed to strengthening the institutional foundations of the Central Bank (BCE). This reform will help: (i) align the BCE’s objectives and functions with best practices, (ii) strengthen the autonomy of the central bank, and (iii) introduce strong internal and external audit function in the BCE. It will also help strengthen the international reserve position.

“The authorities reaffirmed their commitment to strengthen social programs for vulnerable households, including Plan Mis Mejores Años y la Mision Las Manuelas. In 2019, an additional US$400 million in social assistance spending is expected to benefit the poor, elderly, disabled, and the very young. Efforts to improve the Social Registry are well underway and are expected to help closing the remaining gaps in the coverage of the social safety net over the medium-term. 


“Progress has also been made in the design of the structural reforms that the country needs, in dialogue with the National Assembly.


“The team would like to thank the authorities and the technical team for
their openness and candid discussions.”



                    

                        
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