By The Rio Times | Created at 2025-03-12 20:03:05 | Updated at 2025-03-13 00:06:57
4 hours ago
The International Monetary Fund will review Ecuador’s compliance with agreed economic targets on March 15, potentially approving the third disbursement under their $4 billion agreement.
President Daniel Noboa’s administration awaits this crucial evaluation as the country navigates persistent economic challenges amid ambitious growth projections. Ecuador secured the 48-month Extended Fund Facility arrangement in April 2024.
The country received an immediate $1 billion disbursement following approval. The IMF completed its first review in December 2024, releasing approximately $500 million after confirming Ecuador met all performance criteria and indicative targets through August.
A team from Ecuador’s Finance Ministry traveled to Washington in late February for meetings with multilateral organizations. The government maintains continuous dialogue with the IMF ahead of the upcoming review.
This third payment forms part of ten scheduled disbursements structured throughout the four-year program. Ecuador faces significant economic headwinds despite Noboa’s optimistic forecast of 4% growth in 2025.
IMF Set to Evaluate Ecuador’s Economic Targets for Third $4 Billion Loan Disbursement. (Photo Internet reproduction)The IMF projects a more modest 1.2% expansion after the economy contracted by 1.5% in the third quarter of 2024. Rising crime rates and energy shortages continue to hinder economic activity.
Ecuador’s Fiscal Reforms and Economic Challenges
The Noboa administration implemented several fiscal reforms to address these challenges. These include raising the value-added tax from 12% to 15% to fund security measures against organized crime.
The government aims to reduce the fiscal deficit from 5% to 4% of GDP this year. Ecuador’s heavy reliance on oil exports, comprising 30% of total exports, remains a structural vulnerability.
Environmental decisions, including suspending oil drilling in Yasuní National Park, reduced production capacity by 12% in 2024. The IMF program supports Ecuador’s efforts to strengthen fiscal sustainability, protect vulnerable populations, and enhance financial sector stability.
Success depends on consistent implementation of reforms amid challenging conditions. The agreement also helps Ecuador manage substantial external debt obligations between 2024 and 2026, totaling approximately $9.3 million to various creditors.
