* Ecuador’s President
Lenín Moreno has announced that his government has reached a provisional agreement with the International Monetary Fund (
IMF) to access some US$6.5bn in credit over the next 27 months, under the multilateral organisation’s Extended Fund Facility (EFF). After a similar agreement signed in 2019 (worth US$4.2bn) was cancelled in May in light of the coronavirus (Covid-19) pandemic, this new deal - if approved by the
IMF’s executive board - would provide funds “
to help the authorities stabilise the economy and protect the lives and livelihoods of the Ecuadorean people”, according to
Ceyda Oner, who led the
IMF negotiating team. However, this agreement also requires Ecuador to continue meeting
IMF structural adjustment requirements, via an austerity programme that has seen
Moreno’s popularity plummet; critics have already highlighted that Ecuador’s economy (forecast by the
IMF to contract by 11% in 2020) will struggle to recover while spending restrictions prevent investment, and claim that the terms of this EFF will make it impossible to pay off. Reaching a deal with the
IMF was a necessary condition for the completion of Ecuador’s
debt restructuring with private bondholders, a process that was completed through the exchange of bonds with 98.5% of eligible bondholders on 31 August.
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