Economy & Business - August 2022

ECUADOR: Political turmoil drives up country risk

Between 1 June and 15 July, Ecuador’s country risk (used as an indicator for debt default risk) doubled, soaring from 796 to 1,600 points. The bulk of this increase owed to 18 days of national protests by the indigenous movement and an impeachment motion against President Guillermo Lasso, which was only narrowly defeated in congress. Nonetheless, even after a settlement was reached with protestors on 30 June, country risk kept climbing, owing to fears about changes in fiscal policy direction, and remains high. In the short to medium term, enduring governance problems make it unlikely that Ecuador’s country risk will fall back to the 800 points that were broadly maintained during Lasso’s first year in office. This, in turn, will impact both the public and private sectors’ access to financing.

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