The FINANCIAL -- The IMF approved Ecuador's request for emergency financial assistance under the Rapid Financing Instrument (RFI) of about US$643 million.
The authorities have taken decisive actions to contain the spread of the virus and mitigate the socio-economic impact of the health crisis on households and firms, while prioritizing efforts to protect the poor and vulnerable.
This emergency financial assistance will support the country's balance of payment needs and its most affected sectors, including the healthcare system and social protection.
Washington, DC – May 2, 2020The Executive Board of the International Monetary Fund (IMF) approved yesterday Ecuador's request for emergency financial assistance under the Rapid Financing Instrument (RFI) equivalent to SDR 469.7 million (about US$643 million, or 67.3 percent of quota) to meet urgent balance of payment needs stemming from the outbreak of COVID-19 and to support the country's most affected sectors, including the healthcare and social protection systems.
The pandemic and the sharp fall in oil prices have posed a major challenge to the Ecuadorian economy and generated important financing constraints since Ecuador is one the largest oil exporters in Latin America. The authorities have taken decisive policy actions to contain the spread of the virus and mitigate the socio-economic impact of the health crisis on households and firms, while prioritizing efforts to protect the poor and vulnerable.The RFI will help Ecuador finance the much-needed health and social assistance spending and catalyze financing from other multilateral financial institutions.
Following the Executive Board's discussion of Ecuador, the Managing Director and Acting Chair Kristalina Georgieva issued the following statement:
"The COVID-19 pandemic has had a devastating impact in Ecuador, along with plummeting oil prices and a sharp drop in global demand. The authorities have taken bold policy steps to mitigate the socio-economic fallout from the crisis, notably proactive measures to contain the spread of the virus and to accommodate the needed health-related spending.
"Protecting the poor and strengthening the social safety net are central priorities of the government at the time of this healthcare crisis. Efforts are underway to increase social assistance to protect the most vulnerable, while continuing to strengthen the framework for such assistance.
"The authorities are committed to addressing risks to fiscal and debt sustainability. To this end, they have taken some substantive initial steps, including by engaging with private sector creditors on a debt operation. To ensure debt sustainability, the authorities aim to reach expeditiously a comprehensive debt restructuring agreement with private creditors, pursue a sustained and ambitious, yet realistic, fiscal consolidation over the medium-term, while securing additional medium-term debt relief and financing on favorable terms from official bilateral creditors and other stakeholders.
"Amendments to the Organic Planning and Public Finance Law have been submitted to the Assembly, which will help strengthen control, reporting, and transparency of public finances. Transparent disclosure and audit of COVID-related spending will help safeguard the resources committed to fight the pandemic.
"Additional support from other external partners will be required and critical to close the remaining financing gap and ease budget constraints."