IMF Country Report No.

25/199

ECUADOR
SECOND REVIEW UNDER THE EXTENDED
July 2025 ARRANGEMENT UNDER THE EXTENDED FUND
FACILITY, REQUESTS FOR AUGMENTATION AND
REPHASING OF AVAILABILITY DATE FOR THE THIRD
REVIEW, AND FINANCING ASSURANCES REVIEW—
PRESS RELEASE; STAFF REPORT; STAFF SUPPLEMENT;
AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR
ECUADOR
In the context of the Second Review Under the Extended Arrangement Under the
Extended Fund Facility, Requests for Augmentation and Rephasing of Availability Date for
the Third Review, and Financing Assurances Review, the following documents have been
released and are included in this package:

• A Press Release including a statement by the Chair of the Executive Board.

• The Staff Report prepared by a staff team of the IMF for the Executive Board’s
consideration on July 18, 2025, following discussions that ended on June 10, 2025,
with the officials of Ecuador on economic developments and policies underpinning
the IMF arrangement under the Extended Fund Facility. Based on information available
at the time of these discussions, the staff report was completed on July 9, 2025.

• A Staff Supplement: Assessment of Financial Risks to the Fund.

• A Statement by the Executive Director for Ecuador.

The IMF’s transparency policy allows for the deletion of market-sensitive information and
premature disclosure of the authorities’ policy intentions in published staff reports and
other documents.

Copies of this report are available to the public from

International Monetary Fund • Publication Services

PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623-7430 • Fax: (202) 623-7201
E-mail: [email protected] Web: http://www.imf.org

International Monetary Fund

Washington, D.C.

© 2025 International Monetary Fund

 PR 25/256

IMF Executive Board Concludes Second Review of the

Extended Fund Facility Arrangement for Ecuador and
Approves the Request for Augmentation
FOR IMMEDIATE RELEASE

• The IMF Executive Board completed the second review of the 48-month arrangement
under the Extended Fund Facility (EFF) for Ecuador and approved an augmentation
of the program of about US$1 billion (SDR 750.4 million), raising total access under
the program from about US$4 billion to about US$5 billion and allowing for an
immediate disbursement of about US$600 million (SDR 438.4 million).

▪ Program performance has been strong. The authorities met all quantitative
performance criteria for end-December 2024 and end-April 2025, most with wide
margins, and advanced important structural reforms.

• The authorities are taking decisive actions to address challenges arising from the new
global landscape, further strengthen fiscal and external buffers, and promote job-rich
growth, while protecting vulnerable groups.

Washington, DC – [July 18, 2025]: The Executive Board of the International Monetary Fund
(IMF) completed today the second review of the EFF arrangement for Ecuador and approved
an augmentation of the program by SDR 750.4 million (about US$1 billion). The Board’s
approval of the review and augmentation enables the authorities to immediately draw an
amount of SDR 438.4 million (about US$600 million).

Ecuador’s 48-month EFF arrangement was approved by the Executive Board on May 31,
2024, providing access equivalent to SDR 3 billion (about US$4 billion) to support policies
aimed at strengthening fiscal and debt sustainability, protecting vulnerable groups, rebuilding
liquidity buffers, safeguarding macroeconomic and financial stability, and advancing the
structural reform agenda for sustainable, inclusive, and stronger growth benefiting all
Ecuadorians. The approved augmentation raises access under the program from about US$4
billion to about US$5 billion. The authorities’ revised program will also catalyze additional
financial support from multilateral partners.

Program performance has been strong. Despite difficult circumstances, caused in part by
security challenges and electricity blackouts due to a historic drought, the authorities
successfully mobilized nonoil revenue and strengthened fiscal and external buffers, while
continuing to enhance the protection of vulnerable groups. The authorities met all quantitative
performance criteria for end-December 2024 and end-April 2025, most with wide margins.
They also advanced their structural reform agenda, achieving progress on fiscal, governance,
and financial sector structural benchmarks.

In response to the new global landscape, characterized by tighter global financing conditions,
heightened global uncertainty, and volatile oil prices, the authorities are implementing swift
policy actions. These include the adoption of additional high-quality fiscal and structural
reforms aimed at further strengthening the fiscal position, enhancing resilience, and promoting
stronger and job-rich economic growth, while protecting vulnerable groups. The authorities will
 2

pursue new structural benchmarks to attract private investment into high potential sectors
such as mining, hydrocarbons, and energy, as well as to foster domestic capital market
development and financial deepening. Decisively advancing the economic reform agenda is
expected to realize significant growth dividends over the medium term.

Economic growth is projected to recover alongside low inflation, with incipient signs that the
economy has rebounded following last year’s contraction. The current account balance is
projected to continue to record sizable surpluses, bolstered by strong non-oil export
performance, facilitating a continued improvement in international reserve buffers. The
updated fiscal plan under the EFF and revamped structural reform agenda are projected to
maintain public debt on a firm downward trend, supporting the authorities’ objective of further
lowering sovereign spreads and regaining access to capital markets next year.

Following the Executive Board’s discussion today, Mr. Nigel Clarke, Deputy Managing Director
and Acting Chair, issued the following statement:

“The Ecuadorian authorities have made significant progress in implementing their economic
program supported by the Extended Fund Facility (EFF) arrangement. Despite challenging
circumstances, they have successfully mobilized non-oil revenues, strengthened fiscal and
external buffers, and cleared domestic arrears while protecting vulnerable groups. The
implementation of structural reforms is also progressing well.

“The authorities are taking bold policy actions to advance fiscal reforms and address
challenges arising from the new global landscape. Building on an already ambitious fiscal
plan, they will boost the fiscal consolidation effort during the program period by 1.1 percent of
GDP to strengthen the fiscal position and build buffers, alongside a more ambitious structural
reform agenda to foster economic growth. The revised fiscal plan will maintain public debt on
a downward path and support the authorities’ objectives of further lowering sovereign debt
spreads and regaining access to capital markets.

“The authorities continue working to ensure the protection of vulnerable groups by enhancing
the coverage of the social registry and expanding targeted cash transfers. These efforts will
help mitigate any adverse impact from fiscal adjustment.

“The authorities are advancing their financial sector policy agenda, implementing reforms in
line with the recommendations of the 2023 Financial System Stability Assessment. They have
intensified supervision and implemented capital restoration plans for some institutions. They
are also working toward better aligning the interest rate cap system with market conditions.
Efforts are also underway to strengthen financial regulation and oversight, enhance the
resolution toolkit, and develop the domestic capital market.

“Finally, the authorities have announced a more ambitious structural reform agenda aimed at
unlocking Ecuador’s growth potential. It focuses on improving the security situation,
strengthening energy resilience, and promoting inclusive growth and job creation. The
authorities will pursue new measures to diversify the economy; attract private investment in
high-potential sectors such as mining, hydrocarbons, and energy; and strengthen governance
and the Anti-Money Laundering/Combatting the Financing of Terrorism frameworks.”
 3

Table 1. Ecuador: Selected Economic Indicators

Projection
2024 2025 2026

Output
Real GDP growth (%) -2.0 1.7 2.1

Employment
Unemployment (%) 3.4 4.0 3.8

Prices
Inflation, average (%) 1.5 1.3 1.5
Inflation, end of period (%) 0.5 3.4 1.5

Public sector
Revenue (% GDP) 36.8 36.3 36.1
Expenditure (% GDP) 38.1 37.2 36.2
Overall fiscal balance (% GDP) -1.3 -0.9 -0.1
Primary balance (% GDP) -0.2 0.2 1.0
Non-oil primary balance (incl. fuel
subsidies) (% GDP) -2.9 -2.6 -1.7
Public sector debt (% GDP) 53.8 53.2 52.1

Money and credit

Broad money (% change) 1/ 4.8 3.6 3.3
Credit to the private sector (% change) 6.2 4.5 3.1

Balance of payments
Current account (% GDP) 5.7 4.7 3.4
Foreign direct investment, net (% GDP) 0.2 0.5 0.8
Gross international reserves (US$ billion) 6.9 9.7 11.7
External debt (% GDP) 48.0 51.3 50.8

Exchange rate
REER (% change, depreciation-) -0.1 ... ...

Sources: Central Bank of Ecuador, Ministry of Economy and Finance, National

Statistical Institute (INEC), and IMF staff calculations.
1/ M2.
 ECUADOR
SECOND REVIEW UNDER THE EXTENDED ARRANGEMENT
July 9, 2025
UNDER THE EXTENDED FUND FACILITY, REQUESTS FOR
AUGMENTATION AND REPHASING OF AVAILABILITY DATE
FOR THE THIRD REVIEW, AND FINANCING ASSURANCES
REVIEW

EXECUTIVE SUMMARY
Context. The Ecuadorian authorities made significant progress in the implementation of
their economic program, supported by the 48-month Extended Fund Facility (EFF)
arrangement approved by the Executive Board in May 2024 of SDR 3 billion
(430 percent of quota, about US$4 billion). The new global landscape presents
additional challenges for Ecuador due to volatile oil prices and tighter global financing
conditions. Amid a more challenging external environment, the authorities have
requested an augmentation of the original arrangement from US$4 billion to
US$5 billion. The authorities have affirmed their commitment to implement an
ambitious reform agenda to address the external shocks and further strengthen fiscal
sustainability and buffers and boost private investment and job-rich growth. The
authorities’ revised program will also catalyze additional financial support from
multilateral partners which will help advance their ambitious structural reform agenda.

Outlook. Real GDP contracted by 2 percent in 2024 amid severe security and electricity
shortages caused by a historic drought. Economic activity is showing signs of an
incipient recovery. Real GDP is projected to recover by about 1.7 percent in 2025, amid
continued low inflation, which would remain below that of trading partners, helping to
strengthen competitiveness. The current account (CA) balance would continue
recording sizable surpluses, supporting a continued improvement in reserve buffers.
Overall risks to the outlook remain high and tilted to the downside but are mitigated
thanks to decisive policy steps.

Program Issues. All end-December 2024 and April 2025 quantitative performance
criteria (QPC) and most indicative targets (ITs) for the second review have been met,
some with significant margins. The authorities have made substantial progress in the
implementation of structural benchmarks (SBs), notably on fiscal, governance, and
financial sector reforms. The authorities are committed to implementing new SBs to
unlock the economy’s growth potential. Staff assess that the exceptional access criteria
continue to be met.
ECUADOR

Approved By Discussions were held remotely on May 15-16, 2025 from

Ana Corbacho (WHD) Washington DC, continued in Quito during May 19-24, 2025 and
and Bergljot Barkbu concluded remotely during May 27-June 10, 2025 with the staff level
(SPR) agreement (SLA). The team led by Patrizia Tumbarello (Head), and
comprising Pablo Morra (Deputy Head), Mauricio Amaya (remotely),
Vu Chau, Niels-Jakob Hansen, Giovanni Ugazio (all WHD), Juan
Carlos Benitez (FAD), Francisco Vazquez (MCM, remotely), Giulio Lisi
(SPR), Jorge Salas (Resident Representative), Juan Pablo Erraez, and
Paola Hidalgo (Resident Representative Office) met with Minister of
Economy and Finance Sariha Moya, Minister of Energy and Mining
Inés Manzano, Minister of Production, Foreign Trade, Investments,
and Fisheries Luis Jaramillo, Vice Minister of Economy Patricia Idrobo
Oleas, Vice Minister of Finance Gary Coronel Ávila, President of the
Monetary Board Tatiana Rodriguez, and General Manager of the
Central Bank of Ecuador Guillermo Avellán Solines. Mr. Bernardo
Acosta (Alternate Executive Director) participated in the meetings.
Kristine Laluces, Nomuun Tuvaan (all WHD) and Dulce Maria Garcia
(Resident Representative Office) supported the team.

CONTENTS

CONTEXT_________________________________________________________________________________________ 4

RECENT MACROECONOMIC DEVELOPMENTS _________________________________________________ 5

OUTLOOK AND RISKS ___________________________________________________________________________ 7

POLICY DISCUSSIONS ___________________________________________________________________________ 8

A. Strengthening Fiscal Sustainability _____________________________________________________________ 8
B. Enhancing the Social Safety Net _______________________________________________________________ 11
C. Safeguarding Financial Stability _______________________________________________________________ 11
D. Advancing Structural Reforms, Enhancing Governance, and Boosting Competitiveness and
Growth___________________________________________________________________________________________ 14

PROGRAM MODALITIES_______________________________________________________________________ 18

STAFF APPRAISAL _____________________________________________________________________________ 23

BOXES
1. Developing the Domestic Public Bond Market ________________________________________________ 13
2. Structural Reforms to Lift Potential Growth____________________________________________________ 15
3. Assessment of Exceptional Access Criteria_____________________________________________________ 21

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FIGURES
1. Recent Economic Developments ______________________________________________________________ 25
2. Fiscal Developments___________________________________________________________________________ 26
3. External Sector Developments _________________________________________________________________ 27
4. Financial System Developments _______________________________________________________________ 28
5. Deposit and Credit Market Dynamics__________________________________________________________ 29
6. Labor Market and Socio-Economic Developments ____________________________________________ 30

TABLES
1. Selected Economic and Financial Indicators, 2023-30 _________________________________________ 31
2. Real and Oil Sector, 2023-30 __________________________________________________________________ 32
3a. Statement of Nonfinancial Public Sector Operations, 2023-30 (In US$ million) _______________ 33
3b. Statement of Nonfinancial Public Sector Operations, 2023-30 (In percent of GDP) __________ 34
4. Nonfinancial Public Sector Financing, 2023-30 ________________________________________________ 35
5a. Balance of Payments, 2023-30 (In US$ million) _______________________________________________ 36
5b. Balance of Payments, 2023-30 (In percent of GDP)___________________________________________ 37
6. External Financing, 2023-30 ___________________________________________________________________ 38
7. Monetary and Financial Statistics, 2023-30 ____________________________________________________ 39
8. Financial Soundness Indicators, 2019-25 ______________________________________________________ 40
9. Indicators of Fund Credit, 2023-34 ____________________________________________________________ 41
10a. Schedule of Reviews and Purchases_________________________________________________________ 42
10b. Proposed Schedule of Reviews and Purchases ______________________________________________ 42
11. Quantitative Performance Criteria and Indicative Targets, 2024-26 __________________________ 43
12. Structural Benchmarks _______________________________________________________________________ 44

ANNEXES
I. Risk Assessment Matrix ________________________________________________________________________ 49
II. Sovereign Risk and Debt Sustainability Framework ____________________________________________ 54

APPENDIX
I. Letter of Intent _________________________________________________________________________________ 64
Attachment I. Memorandum of Economic and Financial Policies _____________________________ 66
Attachment II. Technical Memorandum of Understanding ___________________________________ 88

INTERNATIONAL MONETARY FUND 3

ECUADOR

CONTEXT
1. Following President Noboa’s reelection in April 2025, the authorities reaffirmed their
strong commitment to the economic program supported by the Extended Fund Facility (EFF)
arrangement. President Noboa won the presidential runoff election on April 13 with 56 percent of
the vote and began a four-year term on May 24. In addition, the administration significantly
increased its representation at the National Assembly and built a working legislative majority. The
authorities reaffirmed their plans to strengthen fiscal sustainability, regain market access, and
enhance liquidity buffers to increase resilience to shocks, while protecting priority social and
investment spending. Sovereign bond spreads declined sharply by over 1000 basis points after the
election to about 800 basis points as of early July 2025. However, they remain elevated in part due
to the heightened global policy uncertainty.

Distribution of Seats at the National Assembly

2. The authorities have made significant progress in the implementation of their

economic program under very difficult circumstances. In 2024, the country faced a deep
recession, with economic activity contracting by 2 percent partly due to severe security and energy
crises. Despite the challenging circumstances, the authorities were able to mobilize nonoil revenue
and implement significant reforms, including a landmark three-percentage-point increase in the VAT
rate and the alignment of domestic gasoline prices with international prices. The overall deficit of
the nonfinancial public sector (NFPS) declined to 1.3 percent of GDP in 2024, from 3.5 percent of
GDP in 2023, with public debt declining faster than expected to 53.8 percent of GDP, helped by the
stronger fiscal stance and a successful debt-for-nature swap. The CA balance posted a record
surplus and reserve buffers improved. The authorities met all QPCs for end-December 2024 and
April 2025, most with wide margins, and advanced their structural reform agenda, achieving
progress on fiscal, governance, and financial sector SBs.

3. Ecuador is facing renewed challenges due to the deterioration of the global landscape,
but the president’s new mandate offers the opportunity to decisively advance the fiscal
consolidation and economic reform agenda. The volatility in oil prices and the tightening of
global financing conditions are expected to hinder prospects for re-accessing international capital

4 INTERNATIONAL MONETARY FUND

 ECUADOR

markets in the near term. Against this backdrop, an augmentation and recalibration of the EFF
program is proposed to smooth the impact of the external shocks, while strengthening the fiscal
position, buffers, and reform efforts. The revised plan envisages additional efforts to strengthen the
fiscal balance, while protecting essential social and investment spending. President Noboa has also
announced a strengthened structural reform agenda to improve the security situation, strengthen
energy resilience, and boost inclusive growth and job creation, including through continued
economic diversification, private sector investment, and strengthening of governance and Anti-
Money Laundering/Combatting the Financing of Terrorism (AML/CFT) frameworks.

RECENT MACROECONOMIC DEVELOPMENTS

4. After nationwide power blackouts at end 2024 caused by a historic drought, the
energy supply has normalized. Ecuador faced a
severe electricity crisis in late 2024 with nationwide
blackouts, caused by a historic drought that
adversely affected hydroelectric energy generation.
In December 2024, the supply of energy started to
recover, helped by improved hydroelectric
production due to increased rainfalls, the
resumption of imports from Colombia (also
affected by the drought in 2024), and new power
generation capacity. As of April 2025, the energy
supply situation has normalized. However, recent
increased rainfalls have led to flooding, destroying farmland and causing localized emergencies.

5. The security situation remains

precarious, concentrated in the coastal region.
After a sharp surge in recent years, especially in the
coastal region, homicide rates declined in early
2024 as the authorities enacted emergency
measures. However, homicide rates have picked up
again, concentrated in the coastal region, and
remain above their historical levels, highlighting
continued challenges.

6. Real GDP contracted sharply in 2024, but

an incipient recovery is underway (Figure 1). Real GDP in 2024 fell by 2 percent, compared with a
decline of 0.4 percent projected at the first EFF review. The contraction was led by investment and
domestic consumption. On the supply side, the contraction was primarily driven by mining and
quarrying; construction; and technical professional activities. High frequency data point to an
incipient recovery in 2025Q1 on the back of a normalized electricity situation.

INTERNATIONAL MONETARY FUND 5

ECUADOR

7. Inflation eased in 2024 and has remained significantly below that of trading partners.
After hovering at around 1.5 percent (y/y) through November 2024, inflation has fallen to
0.5 percent (y/y) as of May 2025. While the inflation easing was broad-based reflecting a weak
economy, it was mainly due to large temporary reductions in electricity prices to support consumers
affected by the power blackouts.

8. Despite the significant downturn, the authorities strengthened the fiscal position and
improved deposit buffers in 2024, meeting program targets with wide margins (Figure 2). The
overall deficit of the budgetary central government (PGE) including the oil derivatives clearing
account (CFDD) declined to US$3.1 billion (2.5 percent of GDP) in 2024, from US$6.4 billion
(5.3 percent of GDP) in 2023. The overall deficit of the NFPS also narrowed, to US$1.6 billion
(1.3 percent of GDP) from US$4.2 billion (3.5 percent of GDP) in 2023. The fiscal outturns for the
NFPS and the PGE including the CFDD were about US$0.6-1 billion (0.5-0.9 percent of GDP),
respectively, better than projected at the time of the first review, mainly on account of lower nonoil
capital expenditure, while tax revenue was broadly in line with projections. The strong fiscal
performance supported an accumulation of NFPS deposits at the Central Bank of Ecuador (BCE) of
US$850 million during 2024, exceeding the first review forecast by US$488 million despite lower-
than-expected external financing flows. The stronger fiscal outcome also allowed the authorities to
clear a net amount of US$350 million in arrears to the private sector, compared with an envelope of
US$200 million envisaged in the 2024 fiscal plan. Data through April 2025 shows that fiscal
performance remained in line with the EFF-supported program in the first months of 2025, while
liquidity conditions for the government have tightened owing to delays in disbursements from
international financial institutions (IFIs) due to the elections and the shift in the global landscape.

9. A record high CA surplus and multilateral loans led to a substantial increase of gross
international reserves (GIR) (Figure 3). In 2024, the
goods trade balance posted a record high surplus
of US$6.8 billion (5.5 percent of GDP), driven by a
9.5 percent (y/y) increase in exports (including a
strong rise in nonoil exports) and a 6.4 percent (y/y)
contraction in imports. The robust trade flows,
together with strong remittances, led to a record
high CA surplus of around 5.7 percent of GDP in
2024, up from 1.8 percent of GDP in 2023. The real
effective exchange rate depreciated by 1.1 percent.
The rise in the CA surplus and the US$4.2 billion
disbursements from IFIs contributed to a recovery
in GIR to US$6.9 billion as of end-2024, from US$4.5 billion at end-2023. GIR increased to 26 (43)
percent of the Fund’s reserve adequacy metric excluding (including) the Liquidity Fund as of end-
2024, from 17 (30) percent at end-2023. GIR increased further to US$8.3 billion as of end-May 2025,
mainly driven by continued strong trade performance. While significantly improving, GIR remain
below adequacy metrics.

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 ECUADOR

10. Stronger liquidity conditions in the financial system facilitated an incipient rise in
credit and a reduction in borrowing costs (Figures 4 and 5). Deposit growth rebounded strongly,
reaching 16.7 percent (y/y) in April 2025, supported by external flows and the clearance of some
government arrears. Credit growth picked up and reached 7.8 percent (y/y) in April 2025, led by
commercial credit from private banks. Credit growth by public banks turned positive for the first
time since the pandemic, and the restructured and refinanced share of total credits declined
considerably. Cooperatives continued to show a differential performance with lower asset quality
compared to banks. Credit by cooperatives (26 percent of financial system assets) in the consumer
and small and medium-sized enterprise segments remained weak but with signs of stabilizing.
Although still weaker than before the pandemic, most financial soundness indicators have improved
for both banks and cooperatives in recent months, including higher capital ratios, lower
nonperforming loans, and improved provisioning (Table 8).

OUTLOOK AND RISKS

11. Economic activity is recovering in 2025, but the new global landscape presents
significant challenges for Ecuador. Economic activity is picking up with energy conditions
stabilizing and election-related uncertainties dissipating, alongside low inflation and a high BoP
surplus. However, the recovery will be slowed by headwinds from weaker external demand, higher
risk aversion, and extremely high levels of global policy uncertainty. The more adverse global
backdrop is expected to negatively impact exports, remittances, and fiscal revenues. In addition, the
weaker global economic outlook and higher global policy uncertainty have reduced investor risk
appetite and increased sovereign debt spreads for all emerging markets, particularly those with
weaker credit profiles. Under the new global backdrop, staff assesses that re-accessing international
capital markets at conditions compatible with debt sustainability is no longer viable in 2025 as
originally planned in the EFF program.

12. The authorities’ revamped fiscal and reform strategy is expected to support a recovery
in growth to 1.7 percent in 2025, improving to 3 percent over the medium term. Against the
deterioration of the global backdrop, the authorities have affirmed their commitment to steadfast
policy implementation, a stronger fiscal package, higher buffers, and a deeper structural reform
effort under the program. Growth for 2025 is projected at 1.7 percent, a less-than-full recovery from
the 2024 downturn due to the deterioration of the global outlook, including lower oil prices. Growth
is expected to gradually improve to 3 percent over the medium term as the economy overcomes the
cyclical slowdown amid an ambitious fiscal consolidation effort and structural reforms boost job-rich
potential growth (including through financial sector reforms and reforms to foster increased private
investment in hydrocarbons, mining, energy, and resilience to natural disasters, see Box 2).

13. The increase in overall risks to the outlook, which remain tilted to the downside,
relative to the first EFF review is mitigated by decisive policy steps (Annex I).

• Downside risks include (i) shortfalls in external financing, leading to lower capital expenditure
especially if official bilateral financing does not materialize (with negative implications for

INTERNATIONAL MONETARY FUND 7

ECUADOR

growth), a decline in government deposits, and potential payment arrears; (ii) a further
deterioration in the global economic backdrop due to higher trade barriers and deeper
geoeconomic fragmentation; (iii) further tightening in global financial conditions, lower investor
risk appetite, resulting in inability to regain market access according to the revised timeline
envisaged under the program; (iv) a further deterioration of the security situation; (v) a renewed
electricity crisis, especially if the planned additional capacity is not implemented; (vi) extreme
weather events, including floods and droughts, disrupting economic activity; (vii) a weakening in
the balance sheet of some financial institutions; and (viii) an increase in social discontent,
hampering and/or slowing reform efforts. The materialization of one or more of these risks
could adversely affect economic activity, sovereign debt spreads and the ability to regain market
access, the financial sector, the fiscal balance, and the balance of payments (BoP), triggering
negative feedback loops.

• There are also upside risks that could arise from stronger-than-expected global growth, an
increase in oil prices beyond program assumptions, and/or an improvement in the security
situation. In addition, lower domestic political fragmentation and renewed structural reform
efforts could boost growth and reduce risk premia more than estimated in the baseline scenario.
These occurrences would help improve Ecuador’s growth prospects, fiscal revenues, and
financing at more favorable terms.

POLICY DISCUSSIONS
A. Strengthening Fiscal Sustainability

14. The authorities will adopt additional

fiscal measures equivalent to 1.1 percent of GDP,
with the overall fiscal effort increasing to
6.6 percent of GDP over the program, to reduce
the fiscal gap and build buffers in a highly
uncertain global environment. Prior to the
external shocks, the authorities’ fiscal plan already
envisaged a large fiscal adjustment effort, with the
non-oil primary balance including fuel subsidies
(NOPBS) of the NFPS improving by 5.5 percent of
GDP over the program period. On top of this
ambitious agenda, the authorities will implement Fiscal Consolidation Plan
an extra fiscal effort of 1.1 percent of GDP to be (Change in the non-oil primary balance including fuel subsidies, in percent of GDP)
2024 2025 2026 2027 2028 2024-28
phased in over 2025-27 by further mobilizing Revenue 1.2 1.4 1.2 0.8 0.4 5.1
Tax revenue 1.2 0.8 0.4 0.3 0.1
nonoil revenue and prioritizing expenditure. This
2.7
Other 0.0 0.7 0.9 0.6 0.2 2.4

will increase the fiscal consolidation effort to Expenditure

Wages and salaries
0.9
0.2
-0.1
0.2
0.4
0.2
0.1
0.3
0.2
0.3
1.5
1.2

6.6 percent of GDP over the course of the Goods and services
Social and capital
0.6
0.3
-0.2
-0.1 -0.2
0.3 0.1
-0.3
0.1
-0.2
0.8
-0.5
program. The additional fiscal measures would Other -0.1 0.1 0.1 0.0 0.0 0.1
Total 2.2 1.4 1.7 0.9 0.6 6.6
Sources: Ministry of Economy and Finance and IMF staff calculations.

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 ECUADOR

help close the fiscal gap arising from weaker global conditions and exceptionally high policy
uncertainty, reduce dependency on volatile oil revenue, and boost fiscal buffers. The NOPBS is
projected to rise by 1.4 percent of GDP in 2025, 0.4 percent of GDP more than projected at the first
EFF review, to -4 percent of GDP, allowing the NFPS overall (primary) balance to improve to -0.9
(0.2) percent of GDP in 2025. The NFPS overall (primary) balance is projected to improve to a surplus
of 1.3 (2.4) percent of GDP by 2028, with the NOPBS reaching -0.9 percent of GDP. Fiscal policy will
remain anchored on maintaining public debt on a downward path. The larger fiscal adjustment
would allow achieving the debt target of 40 percent of GDP mandated by the Organic Budget Law
(COPLAFIP) by 2031, one year ahead of schedule, providing an additional buffer in case downside
risks materialize (Annex II). The revised fiscal consolidation plan will support a stronger rebuilding of
NFPS deposits, projected to reach US$9.2 billion by 2028 compared to US$8 billion at the first EFF
review, to further increase resilience to shocks.

15. The fiscal plan will entail both revenue and expenditure measures, building on the
reforms enacted in 2024.

• Nonoil revenue. The authorities’ reform efforts, supported by technical assistance (TA) provided
by the Fund and other IFIs, will continue to focus on boosting permanent nonoil revenue to
reduce dependence on volatile oil revenue. The authorities introduced in June 2025 new fees in
the e-commerce and mining sectors. Additional reforms will include, among others, streamlining
inefficient tax expenditures to generate significant gains in corporate income tax yields, and
revamping the fiscal framework of the mining sector to enhance its efficiency and revenue
potential (proposed SB for end-December 2025), supported by IMF TA.

• Other revenues. The authorities continue to work on improving the efficiency of the oil sector,
with a view to reduce the fiscal cost of oil derivatives production and distribution. In June 2025,
the authorities announced the elimination of the diesel subsidy for the industrial tuna sector.
Further improving the targeting of subsidies while protecting the most vulnerable and
enhancing the efficiency and capacity of the oil refinery system will be essential to support the
fiscal consolidation strategy going forward.

• Expenditure consolidation. The authorities’ strategy continues to rely on a gradual rationalization

of current expenditure by containing the public sector wage bill and enhancing the efficiency of
public procurement. To support these efforts, the authorities have established a timeline to
operationalize the National Control Subsystem (SNC) (end-December 2024 SB, met) and will
develop the conceptual and operational framework for an upgraded Official System of Public
Procurement (SOCE) (end-July 2025 SB).

16. The re-access to international capital markets is now expected to take place one year
later, in 2026, and scaled down. The financing strategy under the EFF envisaged external bond
issuance of US$1.5 billion in 2025 and US$2 billion per year during 2026-28, more than covering
external gross amortizations coming due in 2026 onwards (about $800 million annually).1 Under the

1 The outstanding Eurobonds will amortize starting in January 2026, with a second payment in July.

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new global backdrop, the revised financing strategy would defer the market access by one year,
removing the market access assumption in 2025, and lower external bond issuance during the
program period to US$1 billion in the second half of 2026, and US$1.5 billion in 2027, and
US$2 billion in 2028. Effective policy implementation and reforms are expected to bolster market
confidence about the economic outlook, supporting a faster reduction in sovereign spreads, and
allowing Ecuador to regain market access at more favorable terms in the revised program scenario.
The financing plan envisages an increase in IFI financing (World Bank (WB), Inter-American
Development Bank (IDB), and Development Bank of Latin America and the Caribbean (CAF)) of
US$600 million over the program period. The authorities have made enough progress with bilateral
creditors that staff have included disbursements on official bilateral and commercial project loans in
amounts that cover or exceed amortizations due to these creditors through the remainder of the
program period. If the financing is not available, a greater fiscal effort may be needed to meet
program targets. A dedicated working group of the authorities will be tasked with monitoring
progress. Assumptions on domestic debt issuance are unchanged relative to the first review.

Estimated Gross Financing Needs and Sources

(US$ million)
2024 2025 2026 2027 2028
Gross Financing Needs 10,574 8,201 7,123 7,195 5,541
NFPS Deficit 1,590 1,147 149 -974 -1,842
Amortization 8,983 7,053 6,975 8,168 7,382
Domestic 5,757 3,638 3,033 3,622 3,098
External 3,226 3,415 3,942 4,546 4,285
Gross Financing Sources 10,574 8,201 7,123 7,195 5,541
Domestic 4,497 2,872 2,439 2,298 1,396
NFPS deposits at BCE (- = accumulation) -850 -557 -645 -1,523 -1,896
Loans 2,522 0 0 0 0
T-bills 1,887 1,887 1,887 1,887 1,887
Bonds 938 1,542 1,197 1,933 1,405
External 5,482 5,329 4,684 4,897 4,144
IMF 1,487 1,750 750 750 250
Multilateral (excl. IMF) 2,781 3,050 2,100 1,900 1,400
Bilateral 196 398 490 490 490
Commercial 1,004 131 344 257 4
Bonds 15 0 1,000 1,500 2,000
Other assets/liabilities, incl. statistical discrepancy 595 0 0 0 0
Memo: NFPS deposits stock (US$ million) 4,641 5,198 5,843 7,366 9,262
Sources: MEF and IMF staff calculations.

17. After the additional fiscal effort, higher IFI financing, and revised market access
assumptions, staff estimates a remaining financing gap of US$1 billion in 2025-27, which is
proposed to be covered by augmenting the EFF. The additional access of US$1 billion (about SDR
750 million) would be phased over 2025-27 in line with the impact of the external shocks and
enactment of fiscal and structural reforms. NFPS deposit buffers would strengthen over the course

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of the program, with a path that would be broadly in line with the first EFF review in 2025-26 and a
substantially larger accumulation in 2027-28 to reach US$9.2 billion by 2028.

18. The fiscal consolidation effort will continue to be supported by reforms to strengthen
public financial management (PFM), fiscal governance, and the social security system. The
authorities cleared a significant amount of arrears to the private sector in 2024, meeting the end-
December 2024 IT with a wide margin. To enhance budget management efficiency, they are working
to implement a system to automatize central government payments, with IMF TA support (end-
March 2025 SB, not met, proposed to be reset for end-July 2025). The new payment system was
briefly delayed due to staff turnover. Once implemented, it will improve financial planning and cash
flow management going forward. Reaching agreement between the Ministry of Finance (MEF) and
the social security agency (IESS) on the healthcare obligations settlement process has taken longer
than envisaged due to the complexity of the validation process on health claims and the lack of an
overarching legal framework. The authorities continue working to finalize the MEF-IESS agreement
on the settlement of healthcare obligations (end-March 2025 SB, not met, proposed to be reset
for end-August 2025). Once in place, the agreement will help strengthen the liquidity position and
sustainability of the IESS, while safeguarding public finances.

B. Enhancing the Social Safety Net

19. The coverage of cash transfers programs continues expanding, in line with the EFF-
supported program target. The authorities met
the IT set for the second review, with enrollment in
cash transfer programs in December 2024 reaching
1,214,638 families—1,654 families above the target.
They also met the end-April IT, with enrollment
rising to 1,248,805 families, surpassing the target by
20,145 families. The authorities remain committed
to continue gradually enhancing the coverage of
the social safety net to protect the most vulnerable
segments of the population across the country. As
part of these efforts, and with support from the WB,
the government recently announced the expansion of the 1,000 Days cash transfer program to
include 20,000 new beneficiaries by end-2025. The program combats child malnutrition and
supports eligible pregnant women and young mothers. Cash transfers programs are projected to
reach 1.1 percent of GDP in 2025.

C. Safeguarding Financial Stability

20. The easing of liquidity conditions in the financial sector lowered funding costs, but
some small financial institutions continue to face challenges. The financial system has remained
stable, and financial soundness indicators have improved since late 2024. However, some credit
cooperatives and small private banks remain vulnerable, with weak asset quality, slim capital buffers,

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and low or negative profits. Recent changes in global financial conditions have had little impact on
the domestic financial market due to limited reliance on cross-border funding.

21. The authorities have intensified supervision and implemented capital restoration plans
for a group of troubled institutions, while continuing to rely on forbearance measures. An
insolvent medium-sized credit cooperative and a small bank have been liquidated, and two troubled
small banks were recapitalized by new owners. The supervision of credit cooperatives has also been
tightened, with emphasis on improving provisioning, credit-granting methodologies, loan risk
classification, and governance.2 The regulatory forbearance measures introduced in November 2024
during the energy crisis were extended in April 2025 amid a weak recovery.3 Going forward, it is
important to phase out regulatory forbearance at an appropriate pace to strengthen the payment
culture, enhance transparency of credit risks, and support financial supervision.

22. The authorities are working to strengthen the resolution framework. An inter-
institutional group to coordinate the resolution policy agenda was created within the Financial
Stability Committee (end-January 2025 SB, met). Other key recommendations of the recent IMF TA
on bank resolution include amending the regulations on purchase and assumption to facilitate the
resolution of unviable institutions and carrying out crisis simulations.

23. Implementation of the broader financial reform agenda remains important. In line with
the FSAP recommendations, macroprudential capital buffer regulations were enacted in November
2024 allowing for gradual implementation to avoid potentially adverse effects on credit supply. The
new regulations included minimum Tier 1 capital requirement and a capital conservation buffer in
line with Basel recommendations.4 Work should continue to revise the rules of access to the
resources of the two Liquidity Funds to improve their capacity to deal with systemic events and to
gradually increase the contribution rates from financial institutions. The authorities are also working
to improve their stress testing toolkit, which entails enhanced inter-agency coordination and data
sharing in the context of IMF TA. Work to improve the system of interest rate caps is advancing. The
authorities completed a study on the system of lending interest rate caps with recommendations for
designing a reform agenda (end-March 2025 SB, completed in May 2025). The Financial Stability
Committee reviewed the study’s recommendations, and the Financial Policy and Regulation Board
(JPRF) will work towards implementing a simpler, more flexible interest rate methodology aligned
with market conditions. In addition, the Superintendency of Banks and the Superintendency of
Credit Cooperatives have established a common identifier for the clients of banks and credit

2 TheSuperintendency of Popular Economy and Solidarity (SEPS), which supervises credit cooperatives, issued new
regulations in recent months related to improving governance—including requirements for registration, qualification,
and avoidance of conflict of interests for representatives and managers of credit cooperatives—and ensuring
accurate loan risk classification.
3 The first round of forbearance in November 2024 allowed for case-by-case refinancing and restructuring of
domestic loans that were past-due between August 2023 and October 2024, including a 90-day payment deferral for
loans that were current as of end-September 2024. The second, in April 2025, extended the payments’ deferral to 180
days and the applicable window to September 2025.
4 The capital surcharges on systemically important banks were broadly offset by the parallel alignment of capital
requirements on their investments in own subsidiaries in line with Basel recommendations.

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cooperatives, which will allow a more comprehensive assessment of credit risk and borrowers’
indebtedness going forward. The authorities are also reviewing technical improvements to speed up
the transmission of credit data to private credit bureaus from the current 45 days to a daily basis,
which would close information loopholes in credit origination.

24. Coordinated policies are needed to develop the domestic debt market (Box 1).
Developing the domestic public debt market is critical for mobilizing domestic public financing. It is
also necessary for the implementation of Basel III liquidity ratios and the gradual reduction of
financial repression, including interest rate controls. While recognizing that moving to a market-
based primary issuance of public securities may take time, it is important to advance key supporting
policies, such as the refinement of legal frameworks, consolidation of the existing domestic debt
stock, development of benchmark securities, publication of an issuance calendar, and
implementation of an auction mechanism for the issuance of domestic securities in the primary
market. In March 2025, the authorities hired a company to modernize the payments system and
overhaul the BCE’s central securities depository (DCV), including its compensation, liquidation, and
custody functions (end-January 2025 SB, implemented in March 2025). Strengthening the
institutional and market infrastructure is a fundamental condition for the development of the
domestic capital market. With that objective, the authorities plan to issue a regulation for domestic
market auctions for bonds and treasury notes, including procedures, auction format, and rules for
participation, bidding, and allocation (proposed SB for end-November 2025).

Box 1. Developing the Domestic Public Bond Market

The development of the domestic bond market necessitates a stable macroeconomic environment coupled
with a strong market infrastructure.
The 2023 FSAP and a recent TA on the development of the domestic bond market provided
recommendations to build the domestic market infrastructure.
• An important short-term objective is the implementation of competitive auctions for the primary
placement of bonds and Treasury bills (CETES), which would help establish a reliable yield curve and
promote transparency in pricing, while creating additional room for domestic financing. The authorities
are enhancing the financial market infrastructure, including by working to upgrade the Central Securities
Depository (DCV) and integrating it with a Real-Time Gross Settlement (RTGS) system, which is vital for
facilitating efficient trading and settlement processes.
• There is also a need to standardize bond features and implement reopenings to develop benchmark
bonds, and to use buybacks and/or exchanges to mitigate refinancing risks.
• Communication with market participants, together with the publication of a Medium-Term Debt
Management Strategy and issuance calendars, is important. Improving transparency in secondary
markets through collaboration with brokerage firms would ultimately enhance liquidity and attract a
broader range of investors.
• Legal and regulatory reform is another crucial aspect. This includes clarifying taxation in the primary and
secondary markets, implementing auctions of government securities, and strengthening the legal and
regulatory framework to protect investors and ensure fair market practices.

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D. Advancing Structural Reforms, Enhancing Governance, and Boosting

Competitiveness and Growth

25. The authorities are working to strengthen energy resilience, increase the electricity
supply, and diversify the energy matrix. Efforts to address challenges in the electricity sector are
under way. Key short-term measures include the installation of new land-based or floating thermal
generation plants. Work to permanently increase the capacity of an existing hydroelectric facility
(Toachi Pilatón) was completed in April 2025. Furthermore, in a significant step towards increasing
private investment and boosting non-conventional renewable energy, the construction of a long-
delayed wind project (Villonaco III) is set to begin. The authorities are also prioritizing other solar,
wind, and geothermal projects to boost energy supply over the longer term. To better ensure
appropriate price incentives for cost recovery, recent measures focused on reforming the electricity
prices paid by the industrial and mining sectors. To boost private investment and foster energy
security and economic growth, the authorities will adopt a transparent and cost-reflective pricing
mechanism, with regular reviews, for medium- and high-voltage electricity tariffs, in line with
gradually reducing energy subsidies and enhancing fiscal sustainability (proposed SB for end-
August 2025). They also plan to enact secondary regulations under existing electricity laws to allow
private entities to sell surplus electricity from self-generation to the national grid (proposed SB for
end-August 2025).

26. It is critical to continue working to boost competitiveness and growth. Along the lines
of recent staff analysis (see 2024 Article IV Consultation Selected Issues), reforms should aim to
address growth impediments and promote a more efficient, competitive, and productive economy.5
This could include actions to increase labor market flexibility, reduce informality (Figure 6), facilitate
female labor participation, enhance legal and regulatory certainty, improve business regulations,
foster competition, and develop the financial sector (Box 2). To boost investment and growth in a
sector with high potential such as mining, the authorities will implement regulations for the
reopening of the mining cadaster (proposed SB for end-June 2026), which has been closed since
2018. They will also develop a new fiscal regime for the mining sector, with support from IMF TA
(proposed SB for end-December 2025). The authorities’ focus on pursuing new free trade
agreements is also welcome to help expand and diversify exports together with continued efforts to
modernize customs to further facilitate trade. 6

27. Steps are being taken to enhance governance and boost capacity in the hydrocarbon
sector. The authorities have completed the audits of the 2019 and 2020 financial statements of
Petroecuador and Petroamazonas (end-March 2025 SB, met). The audit of the 2021 financial
statements of Petroecuador, the first year of operation after the merger of Petroecuador and

5 Fund research (see Chapter 3 in October World Economic Outlook, 2019) suggests that a significant reform package
for the labor market, product market, or financial market could lift growth in an emerging market like Ecuador by up
to 0.8, 1, and 2 percent, respectively.
6New trade agreements with China and Costa Rica have been ratified and entered into force in 2024. Discussions are
progressing on agreements with other trade partners, including Canada and South Korea.

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Petroamazonas, is expected to be completed this year (proposed SB for end-September 2025). The
authorities are committed to auditing the financial statements for the 2022-204 period and will
continue to build on this important transparency milestone to further enhance the efficiency of the
oil sector, guided by the insights garnered from the audits. It will also be important to implement
the authorities’ plans to hire top-tier firms to continue auditing Petroecuador as well as Celec
(Electrical Corporation of Ecuador) and CNEL (National Electricity Corporation). Furthermore, the
authorities have announced an ambitious multi-year initiative to mobilize investments in the
hydrocarbon sector, including significant private sector participation. The initiative envisages actions
to boost oil production, enhance the oil refinery system, and promote the gas sector. Handing back
the Heavy Crude Oil Pipeline (OCP) to a private operator would be another step in the right
direction.

Box 2. Structural Reforms to Lift Potential Growth

Ecuador’s economy can attain a higher level of potential growth over the medium term if it continues to
undertake structural reforms in the near future. In 2024, the country’s GDP per capita (adjusted for
purchasing power parity) was 44 percent below the average-emerging-market level, indicating ample scope
for reducing the income gap with peers and advanced economies by pursuing structural reforms.
Ecuador’s slow growth can be attributed to obstacles in all major drivers of potential growth, including
insufficient investment, sluggish employment growth, and stagnant total factor productivity growth (IMF,
2024), which add to macroeconomic challenges posed by increasing frequency of natural disasters. The
country’s growth has also been held back by underdeveloped financial markets, a rigid labor market, price
controls, and weaknesses in governance (WB, 2024).
The authorities are implementing important reforms to proactively address these impediments and unlock
growth potential, supported by IFIs, including the IMF:
• Financial Sector. Financial sector development in Ecuador, as measured by the financial sector
development index developed by Sahay and others
(2015), is well below the average of other emerging
market countries (Text Figure). The authorities are
planning to gradually move toward more flexible
interest rates in the financial sphere, supported by the
EFF. This would allow Ecuador to increase depth,
efficiency, and access to financial institutions. To
deepen domestic capital markets, a critical goal, the
authorities also plan to issue regulations for domestic
market auctions of bonds and treasury notes, which
will help develop a yield curve and improve the
allocation of capital.

• Private Investment in Resource and Energy Sectors. Ecuador’s mining sector holds significant
untapped potential. Currently, only two big mines are operating and only a small part of the country’s
mining potential has been tapped. Over the next five years, six additional mines are expected to come
online, significantly boosting minerals output. The authorities are taking actions to further boost activity in
this sector by reopening the mining cadaster (structural benchmark for end-June 2026) and developing,
with IMF TA, a new fiscal framework to enhance the sector’s efficiency and revenue potential (structural

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Box 2. Structural Reforms to Lift Potential Growth (concluded)

benchmark for end-December 2025). The authorities also plan to implement reforms to attract private
investment in the electricity sector (e.g., by enacting regulation under existing electricity laws to allow
private entities to sell surplus electricity from self-generation to the national grid; and to adopt a new
pricing mechanism for medium- and high-voltage electricity tariffs to gradually reduce energy subsidies.

• Governance and Efficiency. SOEs operate in many industries, including in several open to competition,
and are subject to favorable regulations. But they are also prone to conflicts of interest and political
intervention (WB, 2024). There is thus ample scope for reforms to foster efficiency, enhance corporate
governance, increase accountability, and create a more level playing field. To this end, the government is
working to complete financial audits of Petroecuador for the year 2021. The authorities are also preparing
a framework for an upgraded Official System of Public Procurement.

• Labor Market. Employment growth, especially among the youth and vulnerable groups, is being stifled
by rigid labor market structures, including one of the highest levels of minimum wages and dismissal
costs in the region (WB, 2024). Labor market contracts are also inflexible, with hourly contracts and fixed-
term contracts being forbidden. A significant labor market gap between women and men also remains
with women facing lower labor force participation rate, a high incidence of informality, unpaid work, and a
sizeable salary gap percent (IMF, 2024).
Assessing Potential Growth. Addressing the bottlenecks cited above, including through the full
implementation of reforms supported by the EFF, could add at least 0.5 percentage point to growth over the
medium term, according to Fund staff assessments, raising potential growth to 3 percent over the medium
term on a conservative basis. This would restore Ecuador’s growth closer to its level during 1980-2000 and
to the average emerging market country in the decade before the pandemic (2010-19).
• The financial sector reforms being considered could alone add at least 0.5 percentage point to growth by
reducing the gap in financial development between Ecuador and the average emerging market country
for the sub-index of “institutions”.1
Impact of Structural Reforms on Potential Growth
• As to governance reforms, previous IMF (percentage points)
analyses (IMF, 2019) indicate that a Effect
significant governance reform can raise Financial Sector Reforms +0.5 ppt
output by 2 percent after six years, yielding More market based interest rates and domestic
market auctions of bonds and treasury notes
an annual increase in growth of about
Governance
0.3 percentage point. Financial audits of PetroEcuador; upgraded
System of Public Procurement 1/ +0.3 ppt
• The reforms to attract private investment
would help bring the capital-to-labor ratio
Sources: Sahay and others (2015); World Bank (2024); and IMF (2024);
back to its pre-pandemic trend, in line with
1/ Upper bound estimate.
staff’s baseline scenario (IMF, 2024).
• With respect to the labor market, a significant employment gap between men and women persists, and
closing it over a period of 10 years could boost annual growth by up to 1.6 percent (IMF, 2024). Other
economic and development policies, including reducing labor market rigidities, increasing educational
attainment, and enhancing access to job opportunities for youth, are also important, while mitigating risks
of youth at risk and crime.
While structural reforms can enhance long-term efficiency and resilience, they could entail near-term costs
or transitional challenges that may disproportionately affect vulnerable groups. Careful sequencing, targeted
support measures, and strong communication are essential to ensure an effective and successful
implementation of the reform agenda.
1/ The overall financial sector index consists of sub-indices for financial institutions and financial markets, each assessed
by its depth, access, and efficiency.

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28. Ecuador continues its efforts to fight the financing of organized crime with robust
financial integrity tools. In July 2024, the National Assembly approved an AML/CFT law,
incorporating reforms in line with the Financial Action Task Force (FATF) standards (end-February
2025 SB, met). Once in effect, expected by July 2025, the updated legal framework will strengthen
financial integrity tools, and its effective implementation will be key. To better tackle organized
crime proceeds and weaken its financing sources and profitability, the authorities are working, with
IMF TA support, on an AML/CFT Strategic Action Plan, establishing actionable policy priorities to
mitigate money laundering, including by organized crime, and terrorist financing risks identified in
the National Risk Assessment approved in 2024 (end-September 2025 SB). Effectively tackling the
laundering of criminal proceeds requires a government-wide approach, including concerted action
among relevant authorities, information sharing, and coordination.

29. The authorities are working to increase transparency and accountability to mitigate
vulnerabilities to corruption. In December 2024, the National Procurement Service (SERCOP) and
other institutions approved the National Integrity Strategy for Public Procurement (ENICOP), a multi-
sector initiative with public and private participation, to strengthen transparency and integrity in
public procurement. In June 2025, the National Assembly approved a law to strengthen the
procurement framework. To help limit corruption risks, it is important to ensure the accuracy of
beneficial ownership information of participants in procurement processes. Also in December 2024,
the authorities approved the 2024-28 National Integrity and Anti-Corruption Plan, aimed at
strengthening institutional capacity, increasing transparency, and fostering citizen participation in
the fight against corruption. Key steps to further strengthen the anticorruption framework include
sustaining enforcement efforts against corruption, effectively operationalizing the enhanced asset
and interest declaration framework introduced by the recently approved AML/CFT law, and passing
legislation to prevent conflicts of interest in public administration.

30. Building macroeconomic resilience to natural disasters is essential to reduce

macroeconomic and financial risks. Ecuador is highly vulnerable to extreme weather events and
natural disasters, including droughts, wildfires, floods, and landslides, the frequency and severity of
which have increased in recent decades (2024 Article IV Consultation Selected Issues Paper). The
consecutive historical droughts in 2023 and 2024 triggered electricity crises that severely disrupted
economic activities, underscoring the country’s macroeconomic vulnerabilities. Moreover, floods,
landslides, and sea-level rise could erode infrastructures and cause route disruptions affecting
economic activities and other critical services, such as schools and health centers. Absent reform
efforts, more frequent and severe natural disasters will continue to hamper productivity and growth.
The authorities have made significant progress in establishing a policy and institutional framework
for their adaptation and mitigation priorities, but further work is needed to address existing
institutional, legislative, data, and policy gaps and attract necessary financing to build
macroeconomic resilience. The authorities are interested in requesting an arrangement under the
Resilience and Sustainability Facility (RSF) in the future to advance their critical and ambitious
agenda.

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PROGRAM MODALITIES
31. Balance of Payment need. Ecuador is facing headwinds from exceptionally uncertain global
environment with negative effects to Ecuadorian exports, remittances, fiscal revenues, and financing
prospects. Staff estimates that, after accounting for an additional fiscal effort and a larger financing
envelope of US$600 million from other IFIs, Ecuador would face a financing gap of US$1 billion in
2025-27. An augmentation of access under the EFF is proposed to address the temporary shortfall in
external financing and support the fiscal adjustment plan, while strengthening reserves and deposit
buffers. Staff proposes to augment overall access under the EFF by SDR 750.4 million (107.6 percent
of quota). To align disbursements with reform efforts, an additional SDR 125.5 million (US$164.4
million) would be disbursed at the second EFF review, while the bulk of the augmentation would be
disbursed in future reviews (Table 10) after the enactment of important fiscal reforms. It is envisaged
that the remaining disbursements under the EFF, including the augmentation, will be used for
budget support.

32. Program implementation remains strong. All QPCs through end-April 2025 have been
met. Between January and April 2025, NFPS deposits at the central bank increased by
US$423 million, exceeding the adjusted end-April QPC of -US$957 million. In addition, net
international reserves (NIR) increased by US$828 million over the same period, overperforming the
adjusted end-April IT of -US$991 million. The continuous PC on no accumulation of external arrears
and no new central bank credit to the NFPS were also met. The end-April 2025 IT on the PGE arrears
with the public sector was missed owing to tight liquidity conditions associated with delays in IFI
disbursements due to the elections and the shift in global conditions but is expected to be
compensated in the remainder of the year.

33. QPCs are set through December 2025, with ITs covering the next twelve-month period.
Targets for end-December 2025 are adjusted to reflect the updates to the fiscal and financing plan,
including the larger fiscal adjustment, the impact of shocks on fiscal and external balances, and the
impact of larger Fund disbursements and other IFI financing on NIR. The attached Technical
Memorandum of Understanding (TMU) clarifies definitions for the EFF reviews and defines adjustors
as relevant to assess program performance.

Quantitative Performance Criteria and Indicative Targets, 2024-26

(Million of U.S. dollars, unless otherwise indicated)

End-Aug. End-Dec. End-Jun.

End-December 2024 End-April 2025 2025 2025 2026

Program 2/ Adj. 3/ Actual Status Program 2/ Adj. 3/ Actual Status Program Program IT
(US$ million, unless otherwise indicated)
Quantitative performance criteria
1. Nonoil primary balance of the budgetary central government (PGE) (floor) 1/ -2,295 -2,295 -1,801 Met -341 -341 312 Met -1,220 -1,964 -52
2. Overall balance of the PGE and CFDD (floor) 1/ -4,213 -4,215 -3,058 Met -1,041 -1,181 -796 Met -2,628 -3,795 -1091
3. Accumulation of NFPS deposits at the central bank (floor) 1/ 360 154 850 Met 0 -957 423 Met 0 557 200
4. Non-accumulation of external payments arrears by the NFPS (continuous performance criterion) 0 0 Met 0 0 Met 0 0 0
5. (No new) Central bank direct and indirect financing to the NFPS (continuous performance criterion) 0 0 Met 0 0 Met 0 0 0

Indicative targets
6. Overall balance of the NFPS (floor) 1/ -2,442 -2,444 -1,590 Met -89 -1,103 -1,147 217
7. Nonoil primary balance including fuel subsidies (NOPBS) of the NFPS (floor) 1/ -6,528 -6,526 -6,674 Not Met -1,151 -3,070 -5,151 -1,317
8. Change in the stock of NIR (floor) 1/ 65 -141 1 Met -34 -991 828 Met -579 147 315
9. Stock of PGE arrears to the domestic private sector (ceiling) 662 505 Met 600 660 Not Met 400 105 0
10. Number of families in the first three income deciles nationwide covered by cash transfer programs (floor) 1,212,984 1,214,638 Met 1,228,660 1,248,805 Met 1,244,336 1,260,012 1,279,012
Sources: Ministry of Economy and Finance and IMF staff estimates.
Note: Aggregates and adjustors as defined in the Technical Memorandum of Understanding (TMU).
1/ Cumulative from January 1.
2/ Staff report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
3/ Adjusted for oil prices and disbursements from multilateral institutions.

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34. The authorities continue advancing the implementation of structural reforms under
the EFF-supported program. Most SBs for the second review have been implemented (two with
delay), including the operationalization of the SNC to increase transparency in procurement, the
tender process to select of an auditor for the 2023 and 2024 healthcare audits, the completion of
the 2019 and 2020 Petroecuador and Petroamazonas audits, the enactment of new AML/CFT
legislation, the establishment of an inter-institutional group within the Financial Stability Committee
to coordinate resolution reforms and strategies, the completion of a study of the system of interest
rates, and the signing of a contract to implement a new platform for the BCE’s central securities
depository. Work is advancing on the other SBs, which require additional time to be completed: the
implementation of an automatized process for PGE payments (end-March 2025 SB, proposed to be
reset to end-July 2025) and the establishment of an updated agreement between the Ministry of
Finance (MEF) and social security agency (IESS) on the transfer of healthcare obligations (end-March
2025 SB, proposed to be reset to end-August 2025). Six new SBs have been added to the program
to enhance transparency and governance, foster domestic capital market development, attract
private investment, foster energy security, and unlock Ecuador’s growth potential (Table 12).

35. Capacity to Repay. Ecuador’s capacity to repay is subject to significant risks (¶13 and 40),
critically depending on the implementation of envisaged policies and availability of external
financing. Total Fund credit outstanding will peak in 2025, reaching 1032.8 percent of quota,
equivalent to 7.4 percent of GDP, 98.7 percent of GIR, and 24.5 percent of exports of goods and
services (Table 9). Total obligations to the Fund relative to GIR will peak in 2025 at 15.9 percent and
decline steadily to 3.1 percent by 2034. Fund obligations in percent of GDP and exports of goods
and services will peak at 1.3 and 4.6 percent in 2027. Important risk mitigants, including the
authorities’ bold policy actions, strong program performance, and reaffirmed commitment to
continue implementing the policies under the revised program (¶40), would help reduce the risk to
capacity to repay.

36. Financing Assurances. The program is fully financed, with firm financing commitments for
the next 12 months and good prospects of adequate financing for the remaining program period
(Table 6). IFIs (WB, IDB, CAF, and Latin American Reserve Fund (FLAR)) have committed to maintain
or increase their support for Ecuador. Firm financing commitments for the next 12 months have also
been obtained from all official bilateral creditors providing budget support. Financing is also partly
predicated on assumptions of project financing from commercial and official bilateral creditors (see
¶16) and external market access of approximately US$1 billion in 2026, US$1.5 billion in 2027, and
US$2 billion thereafter, which are more conservative than Ecuador’s average access before the
pandemic. In the event of financing plan shortfalls, alternative financing sources and/or a contingent
policy response would be required in line with the contingency plans discussed with Fund staff.

37. Safeguards. A safeguards assessment undertaken in 2024 concluded that safeguards had
been strengthened since 2019, particularly following the 2021 Organic Monetary and Financial Code
(COMYF) reforms. The BCE took steps to implement some recommendations from the 2024
assessment and efforts should continue to fully implement governance related reforms, strengthen
the central bank’s financial autonomy and align the BCE annual financial statements with

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International Financial Reporting Standards. Additionally, the 2021 COMYF reforms established a
“backing rule” that aims to fully cover the BCE monetary liabilities and government deposits with
international reserve assets to strengthen the Central Bank’s balance sheet and safeguard
dollarization. To ensure effective implementation, the authorities aligned the implementation of the
backing rule with the 2023 reprofiling of the government’s debt held by the BCE, deferring the
requirement for full coverage of the first, second, and third balances to 2040. A fiscal safeguards
review has also been recently completed. The main finding was that Ecuador’s PFM system provides
broadly adequate safeguards for the use of Fund resources for budget support, with progress
achieved since the last review in 2021. In line with existing priorities for PFM reform, further work is
needed to improve treasury and budget management to prevent domestic arrears accumulation.

38. Lending into Arrears. Ecuador maintains a residual amount of arrears to international
private bond holders arising from outstanding claims on those international bonds that the
authorities repudiated in 2008-09. At that time, most government obligations were repurchased by
the government. However, US$52 million remain outstanding in the hands of individual creditors,
and the authorities have been unable to identify these creditors to settle the claims. The authorities
established a public procedure to follow in the event these bondholders request liquidation of the
securities, which continues to operate to solve outstanding claims. Staff judges that the authorities
continue to make good faith efforts to reach a collaborative agreement with the remaining creditors.

39. Article VIII/Capital Flow Management Measures (CFMs). Ecuador maintains a 5 percent
tax on transfers abroad (“impuesto a la salida de divisas”, ISD) for financial and current international
transactions. The measure constitutes both an outflow CFM under the Fund’s Institutional view on
the Liberalization and Management of Capital Flows, and an exchange restriction subject to Fund
approval under Article VIII, Section 2(a). The authorities remain committed to gradually phasing out
the tax as macroeconomic and balance of payments stability is restored and the reserve position is
strengthened, supported by the implementation of the policies under the EFF-supported program.
The ISD rate for the imports of certain items was reduced in January 2025.7

40. Enterprise Risks. The Fund continues to face significant business, operational, financial, and
reputational risks related to the EFF arrangement, which have increased since the first EFF review
due to the deterioration of the global landscape. Although political uncertainty has dissipated after
the presidential election in April 2025, and program implementation has been strong, other risks
identified at program approval remain in place. Business risks of analytical accuracy arise from an
uncertain economic outlook and exceptionally high global policy uncertainty. Operational risks
involve risks to mission and field presence from the challenging security situation. Business risks of
the quality of policy and technical advice stem from weaknesses in Ecuador’s institutional capacity,
notably lags and variability in data sources. These risks could slow program implementation and
result in larger-than-envisaged financing gaps. Financial risks could arise if global economic and

7 TheISD rate for a list of imports in the pharmaceutical sector was reduced to 0 percent from 5 percent as of January
2025 for the year 2025. The ISD for a list of imports for other productive sectors was temporarily reduced from
5 percent to 0 percent between January and April 2025, and was reduced to 2.5 percent as of May 2025 for the
remainder of 2025.

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financial conditions deteriorate and/or difficulties in program implementation, including due to

possible social backlash under large fiscal adjustment and weak growth, delay additional
international financial support (including financing commitments) and/or affect market re-access.
These scenarios could also carry reputational risks for the Fund. There are also important risk
mitigants, including the bold policy actions already taken by the authorities; the authorities’ strong
program implementation since program approval (including meeting most program targets with
significant margins), and their reaffirmed commitment to continue implementing the policies under
the revised program (including larger fiscal adjustment, progress towards meeting SBs, and
additional structural reforms to support growth); the stronger mandate and larger support in the
National Assembly attained by President Noboa in the recent elections; strong multilateral financial
support; the authorities' commitment to honoring external debt obligations; the program’s
protection of social spending; and contingency planning, with clearly-defined triggers to enable
timely and effective responses. Operational risks to field presence could be mitigated by support
from Fund headquarters inter alia through close monitoring and dynamic adjustments to field
presence. However, on balance, staff continues to judge these risks to be lower than the
reputational, financial, and business risks of the Fund not continuing to support a member facing
severe challenges amid exceptionally high global policy uncertainty that has already taken
substantive actions to address them, demonstrated strong ownership of program objectives, and
met all QPCs, most with wide margins, under very challenging economic conditions.

Box 3. Assessment of Exceptional Access Criteria

Criterion 1 – The member is experiencing or has the potential to experience exceptional balance of payments
pressures on the current account or the capital account resulting in a need for Fund financing that cannot be
met within the normal limits.
Staff assesses that this criterion is met. Ecuador continues to experience an exceptional balance of
payment (BoP) need stemming from large external debt repayments and loss of market access. The
authorities’ stabilization plan and multilateral support have contributed to alleviate financing pressures in
2024 and rebuild reserve buffers; however, the country still faces exceptional BoP pressures exacerbated by
heightened global economic uncertainties. Staff estimates that, after accounting for additional fiscal and
reform efforts and additional financing from other IFIs, Ecuador would face a financing gap of US$1 billion in
2025-27. Ecuador’s credit outstanding with the Fund stands at SDR6.4 billion (US$8.7 billion, or 922 percent
of quota) as of end-April 2025, so IMF support requires exceptional access.
Criterion 2 – A rigorous and systematic analysis indicates that there is a high probability that the member’s
debt is sustainable in the medium-term; where the member’s debt is considered sustainable but not with a high
probability, exceptional access would be justified if financing provided from sources other than the Fund,
although it may not restore sustainability with high probability, improves debt sustainability and sufficiently
enhances the safeguards for Fund resources.
Staff assesses that this criterion is met. Under the staff’s baseline scenario, the 2024 debt sustainability
updated assessment (Annex II) continues to assess public debt as sustainable but not with high probability.
In addition to the sustainability conclusions, staff assesses that adequate safeguards remain in place to meet
EA Criterion 2 (EA2) should adverse shocks materialize. The assessment is finely balanced and hinges on the
steadfast implementation of the fiscal plan and reforms supported by the program and timely disbursement
of bilateral and commercial project financing, with limited margins for maneuver.

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Box 3. Assessment of Exceptional Access Criteria (concluded)

To establish whether Ecuador meets EA2, staff carried out two tests that utilize the tools of the Fund’s new
Debt Sustainability Framework for Market Access Countries (see Review of the Debt Sustainability
Framework for Market Access Countries):
• Debt sustainability test. The analysis examined whether Ecuador’s public debt would remain sustainable
in the face of a large shock at the end of the program period (defined as a shock that would propel
Ecuador’s debt to the 80th percentile of the debt fan-chart by 2034). Staff assesses that this condition is
met.

• FX availability test. A shock of the simulated magnitude would imply that Ecuador would face additional
financing needs. Given that debt would remain sustainable under the shock, the analysis examined
whether, after such a shock, Ecuador would have sufficient FX liquidity to manage its international
obligations under a set of plausible assumptions with regard to fiscal adjustment and net financing
(including from liability management operations to extend maturities) from domestic and external
creditors. Staff assesses that this condition is met.
Criterion 3 – Staff judges that the member has prospects of gaining or regaining access to private capital
markets within a timeframe and on a scale that would enable the member to meet its obligations falling due to
the Fund.
Staff assesses that this criterion is met. While sovereign spreads remain elevated, they have declined by
over 1,000 basis points since the April 2025 presidential election. Ecuador had regularly issued international
bonds until 2019, providing reasonable prospects for external debt issuance in a context of gradual
macroeconomic improvement and robust policy reforms under the EFF arrangement. Since then, the
authorities have implemented a nimble debt management strategy, including a guaranteed bond in 2020
and two successful debt-for-nature swaps in 2023 and 2024, respectively. Staff judges that robust
implementation of the recalibrated EFF-supported plan (which increases fiscal consolidation and structural
reforms and further builds buffers), the continued strong commitment to remain current on external debt
obligations, and adherence to a sustainable and firmly declining debt path consistent with achieving
COPLAFIP’s debt ceilings ahead of schedule will help Ecuador bolster market confidence, further lower
sovereign spreads, and re-access international markets as envisaged under the program’s revised baseline.
This assessment is subject to significant risks and depends on the steadfast implementation of the
authorities’ fiscal and reform plans as well as global economic and financial conditions.
Criterion 4 – The policy program provides a reasonably strong prospect of success, including not only the
member’s adjustment plans but also its institutional and political capacity to deliver that adjustment.
Staff assesses that this criterion is met. In April 2025, President Noboa won reelection, and he has forged
a working majority in the National Assembly. The authorities remain fully committed to the objectives of the
program and are implementing policies to ensure its success. All QPCs for end-April 2025 have been met,
and the authorities have completed or are in the process of completing all SBs envisaged under the
program. The government has demonstrated capacity to implement needed reforms to address
longstanding fiscal and macroeconomic challenges under very difficult circumstances and strong ownership
of the broader objectives of the program. While these considerations support prospects for program
success, the assessment remains subject to risks related to the challenging domestic and global economic
environment and Ecuador’s longstanding socio-political complexities.

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STAFF APPRAISAL
41. The authorities made significant progress in the implementation of their economic
program supported by the EFF arrangement under very difficult circumstances. Decisive policy
actions successfully mobilized nonoil revenues and boosted fiscal and external buffers. The
authorities were also able to clear a significant amount of domestic arrears. All QPCs for the second
EFF review have been met, and substantial progress was made in the implementation of the
structural reform agenda, achieving progress on fiscal, governance, and financial sector SBs. The
end-April 2025 IT on the PGE arrears with the public sector was missed owing to tight liquidity
conditions associated with delays in IFI disbursements due to the elections and the shift in global
conditions but is expected to be compensated in the remainder of the year.

42. The authorities are taking swift policy action to address the challenges arising from
the new global landscape. They will adopt additional fiscal measures to strengthen the fiscal
position and build buffers in a highly uncertain global environment. The updated fiscal plan
envisages a fiscal consolidation of 6.6 percent of GDP over the program period, up from 5.5 percent
at the first EFF review, along with additional structural reforms to foster economic growth. The
proposed augmentation of the EFF arrangement of SDR 750.4 million (about $1 billion), together
with additional support from other multilateral partners, would cover the remaining financing need.
The fiscal plan maintains public debt on a firm downward path and supports the authorities’
objective of further lowering sovereign debt spreads and regaining access to capital markets, which
was deferred to 2026.

43. Economic growth is projected to recover gradually, alongside low inflation and a
sizable current account surplus under the baseline scenario. Following a 2 percent contraction in
2024 amid severe security and electricity crises, real GDP growth is expected to recover gradually in
2025 and over the forecast period. Inflation is projected to remain low, below that of trading
partners. The current account balance would continue to record sizable surpluses, supporting a
continued improvement in reserve buffers.

44. Overall risks to the outlook have increased since the first EFF review and remain high.
Low reserves and liquidity constraints, a large fiscal consolidation need, and potential delays in
securing external financing and regaining market access represent key vulnerabilities. The proposed
recalibration of the EFF arrangement aims to address these challenges by increasing buffers,
achieving a fiscal surplus to durably reduce the government’s financing need, and implementing
reforms to promote growth. Steadfast implementation of the program is key to achieving these
objectives.

45. The adoption of a strengthened structural reform agenda is important to unlock

Ecuador’s growth potential. The authorities will pursue new structural benchmarks to attract
private investment into high potential sectors such as mining, hydrocarbons, and the energy sector,
as well as to foster domestic capital market development. They are also working to strengthen
energy resilience, by increasing the electricity supply, diversifying the energy matrix, and building

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resilience to natural disasters. Decisively advancing the economic reform agenda could realize
significant growth dividends over the medium term.

46. The authorities continue expanding the social safety net. They are actively working to
enhance the coverage of the social registry and expand cash transfers to vulnerable groups. These
efforts are crucial to ensure that the most vulnerable populations continue to receive support,
mitigating any adverse impact from fiscal adjustment and maintaining strong support for the fiscal
consolidation and economic reform agenda.

47. Efforts to bolster financial stability and domestic capital market development are
welcome. The financial sector has remained broadly stable, with improvements in credit and
financial soundness indicators. The authorities continue strengthening financial regulation and
oversight, enhancing resolution tools, and have completed a study of the interest rate system to
inform future reforms. They are also taking steps to foster the development of the government
bond market, which would support the government’s borrowing needs and promote further
domestic capital market development.

48. Combating illicit activities and enhancing governance will support growth. Effective
implementation of the recently approved AML/CFT legislation and the development of the AML/CFT
Strategic Action Plan will be key to combat the financing of organized crime. In addition, the
authorities have launched initiatives for strengthening procurement governance, focusing on
increasing transparency and efficiency, and continue working to increase transparency and
accountability to mitigate vulnerabilities to corruption. Continued efforts to reduce crime and
strengthen governance are key for enhancing the investment environment and boosting growth.

49. Staff supports the completion of the Second Review and the augmentation of the EFF
arrangement with the rephasing of the availability date for the third review. Staff also
recommends the completion of the financing assurances review.

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Figure 1. Ecuador: Recent Economic Developments

The economy contracted in the first three quarters of 2024,
… and a broad-based contraction across sectors.
amid weak domestic demand…

High-frequency data point to weak activity in 2024Q4 Oil production has declined, driven by lower production in
amid the electricity crisis and a recovery in 2025Q1. the ITT field.

Inflation has ticked up recently…. …driven mainly by a normalization in electricity prices.

Sources: Ecuador’s Internal Revenue Service, Central Bank of Ecuador, INEC, and IMF staff calculations.
1/ Core CPI excludes food (except for coffee, tea, and cocoa; and mineral water, soft drinks, and fruit/vegetable juices), gas, and
fuel and lubricants.

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Figure 2. Ecuador: Fiscal Developments 1/

The fiscal position strengthened in 2024, with the fiscal …supporting the rebuilding of fiscal buffers. The financing
deficit declining significantly … mix relied on support from multilateral partners.

Successful revenue mobilization was achieved with the

…while primary expenditures remained contained.
authorities’ fiscal package in 2024…

Despite the fiscal improvement, gross financing needs Sovereign spreads narrowed sharply after the second-
remained large. round presidential election.

Sources: Central Bank of Ecuador, Ministry of Economy and Finance, Haver, Bloomberg, and IMF staff calculations.
1/ The data for Ecuador reflect net lending/borrowing for the Non-Financial Public Sector (NFPS).

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Figure 3. Ecuador: External Sector Developments

The economic contraction compressed imports in 2024…. …while export growth accelerated…

…especially for nonoil products… … supporting a record current account surplus.

Pressures on the financial account from debt … contributing to a recovery in gross international
amortizations subsided amid large IFI disbursements… reserves.

Sources: Central Bank of Ecuador, STA BOP database, Haver, and IMF staff calculations.

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Figure 4. Ecuador: Financial System Developments

Robust deposit growth facilitated an incipient recovery in
…and a decline in borrowing costs.
credit growth…

The credit-to-GDP gap seems to have closed, suggesting Liquidity ratios remain on a downward trend, with early
credit growth is in line with macroeconomic developments. signs of recovery.

Provisioning and loan quality improved in recent months. Solvency ratios have stabilized above the regulatory norm.

Sources: Central Bank of Ecuador, Superintendency of Banks, IMF Monetary and Financial Statistics, and IMF staff calculations.
1/ Loan-to-deposit data corresponds to Other Depository Institutions, which include private banks, Banecuador, Banco del
Pacifico, private financial companies, mutualists, cooperatives, and credit card companies. Credit and deposit data correspond to
the whole financial system.
2/ Data correspond to the private banks aggregate, which includes Banco del Pacifico.

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Figure 5. Ecuador: Deposit and Credit Market Dynamics

Deposit growth has been strong for both private banks Credit growth is leveling up, led by productive credit, while
and credit cooperatives. microfinance credit continues to deline. 1/

…and credit by public banks has resumed positive growth

Across institutions, credit by private banks is accelerating…
for the first time since the pandemic.

The restructured and refinanced share of credit remains

Cooperatives’ credit growth remains negative.
stable, with notable improvement in public banks.

Sources: Central Bank of Ecuador, Superintendency of Banks, IMF Monetary and Financial Statistics, and IMF staff calculations.
1/ Productive credit refers to credit granted to finance productive projects, in particular the acquisition of capital goods, land,
infrastructure construction, and purchase of industrial property rights.

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Figure 6. Ecuador: Labor Market and Socio-Economic Developments 1/

Formal private employment has returned to pre-pandemic … but total employment has not, and inadequate
levels, … employment has risen, especially among the youth.

The unemployment rate is in single digits, but is significantly

… and informality has risen, particularly among the youth.
higher among the youth ...

The gender gap in labor force participation remains wide. Poverty has recently risen, especially in urban areas.

Sources: IESS, INEC, and IMF staff calculations.

1/ For the second, third, and fourth charts, the latest data points available for the youth aged 15 to 24 correspond to March 2025.
2/ There is no data for March and June 2020 due to the Covid-19 pandemic.
3/ Calculated as the ratio between the total number of people below the poverty line and the total population. There is no data for
June 2020 due to the Covid-19 pandemic.

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Table 1. Ecuador: Selected Economic and Financial Indicators, 2023-30

Table 1. Ecuador: Selected Economic and Financial Indicators
Projections
2023 2024 2025 2026 2027 2028 2029 2030
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/

(Percent change, unless otherwise indicated)

National income and prices
Nominal GDP (US$ million) 121,147 120,433 124,676 125,038 129,139 129,175 133,461 138,957 144,786 151,095 158,029
GDP per capita (US$) 6,793 6,703 6,939 6,907 7,133 7,080 7,315 7,558 7,814 8,092 8,399

Real GDP 2.0 -0.4 -2.0 1.6 1.7 1.8 2.1 2.5 2.6 2.8 3.0
Domestic demand (contribution to growth) 1.9 -3.2 -2.0 1.9 2.4 2.0 2.2 2.5 2.6 2.8 3.0
Consumption (contribution to growth) 2.9 -0.9 -1.3 1.1 2.8 0.8 1.3 1.0 1.0 1.0 1.0
Investment (contribution to growth) -1.0 -2.4 -0.8 0.8 -0.4 1.2 0.9 1.5 1.6 1.8 2.1
External demand (contribution to growth) 0.1 2.8 0.0 -0.3 -0.7 -0.1 -0.1 0.0 0.0 0.0 0.0
Exports (contribution to growth) 0.3 1.6 0.5 0.3 0.8 1.3 0.4 1.3 1.7 2.1 1.8
Imports (contribution to growth) -0.2 1.2 -0.5 -0.5 -1.5 -1.5 -0.5 -1.3 -1.7 -2.1 -1.8

Consumer price index (period average) 2.2 1.9 1.5 2.2 1.3 1.6 1.5 1.5 1.5 1.5 1.5
Consumer price index (end-of-period) 1.3 2.8 0.5 1.7 3.4 1.5 1.5 1.5 1.5 1.5 1.5

(Percent of GDP)
Saving-investment balance
Consumption 79.2 77.8 78.2 77.6 78.2 77.3 77.7 77.4 77.0 76.9 76.9
Private 65.6 64.2 64.9 64.2 64.9 64.2 64.9 64.9 64.9 64.9 64.9
Public 13.6 13.6 13.3 13.4 13.3 13.1 12.8 12.5 12.1 12.0 12.0
National saving 22.5 23.8 24.2 24.0 24.3 24.3 24.6 25.0 25.5 25.7 25.8
Private 24.2 23.8 23.9 23.5 23.7 22.6 22.9 22.3 22.1 22.2 22.2
Public -1.8 0.0 0.2 0.5 0.6 1.7 1.7 2.7 3.5 3.5 3.6
Gross investment 20.7 19.4 18.5 20.9 19.6 21.4 21.2 21.9 22.6 23.0 23.2
Private 2/ 15.6 14.0 14.0 15.6 15.1 15.9 15.8 15.9 16.1 16.5 16.7
Public 5.1 5.3 4.5 5.3 4.4 5.6 5.3 6.0 6.5 6.5 6.5

(Millions of barrels, unless otherwise indicated)

Oil production, demand, and prices
Oil production 173.5 173.8 174.0 172.5 173.0 174.6 175.3 176.9 176.5 177.0 177.2
Domestic
Domestic consumption
consumption of derivatives
of oil oil derivatives 104.1 106.9 106.5 108.0 108.7 110.1 110.6 113.2 116.5 118.8 122.4
Oil price West Texas Intermediate (US$ per barrel) 77.6 78.5 76.6 70.2 66.1 67.4 59.5 59.6 60.2 60.6 60.9
Oil price
External Ecuador
Trade, mixOil,
Goods, (US$ per barrel) Value of Crude Oil Exports, Private
Deflator/Unit 68.0 68.5 68.5 63.2 60.1 61.4 53.5 53.6 54.2 54.6 54.9

(Percent of GDP, unless otherwise indicated)

External sector
Current account balance 1.8 4.4 5.7 3.1 4.7 2.8 3.4 3.1 2.9 2.7 2.6
Trade balance 1.8 4.6 5.5 3.3 4.7 3.0 3.5 3.2 2.9 2.6 2.5
Financial account balance 3.9 1.8 4.1 0.9 2.6 1.2 2.0 1.1 0.8 1.2 1.2
Exports of oil (US$ million) 8,952 9,053 9,572 7,824 7,915 7,579 6,868 6,904 6,971 6,977 7,005
Gross international reserves (US$ million) 3/ 4,454 7,648 6,900 10,544 9,700 12,676 11,710 14,645 17,800 20,112 22,423
As a percent of the ARA metric 4/ 17.0 29 26.1 39 35.6 45.2 42.3 51.6 61.1 67.4 73.6
Real effective exchange rate (2010=100) 116.5 … 116.4 … … … … … … … …
Real effective exchange rate, end-of-period (depreciation,-) -1.1 … -0.1 … … … … … … … …

(Percent of GDP)
Public finances
Non-financial public sector (NFPS)
Overall balance -3.5 -1.8 -1.3 -1.3 -0.9 -0.2 -0.1 0.7 1.3 1.3 1.4
Primary balance -2.6 -0.8 -0.2 -0.3 0.2 0.9 1.0 1.8 2.4 2.4 2.4
NOPBS -7.5 -5.6 -5.4 -4.6 -4.0 -3.5 -2.3 -1.4 -0.9 -0.8 -0.6
Budgetary Central Government (PGE+CFDD)
Overall balance -5.3 -3.4 -2.5 -3.1 -2.9 -2.0 -1.8 -0.8 0.1 0.1 0.3
Public debt 5/ 54.3 56.8 53.8 56.8 53.2 55.7 52.1 50.4 48.4 45.5 42.5
Domestic 14.6 14.6 14.0 14.0 13.3 13.6 12.9 12.6 12.2 11.5 10.8
External 39.8 42.1 39.8 42.7 39.9 42.1 39.1 37.9 36.2 34.0 31.7

(Percent change)
Monetary sector
Broad money (M2) (percent change, yoy) 6/ 6.7 4.8 4.8 3.8 3.6 3.3 3.3 4.1 4.2 4.4 4.6
Credit to the private sector (percent change, yoy) 7/ 8.4 4.5 6.2 4.0 4.5 4.0 3.1 4.1 4.2 5.1 5.5
Net international reserves (US$ million) 8/ -7,639 -7,574 -7,638 -6,470 -7,291 -4,821 -6,017 -3,677 -385 1,956 4,436

Sources: Ministry of Economy and Finance; Central Bank of Ecuador; Haver; and Fund staff calculations and projections.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
2/ Includes inventories.
3/ Gross international reserves excludes non-liquid and encumbered assets.
4/ Does not include the Liquidity Fund.
5/ Gross debt consolidated at the level of the NFPS.
6/ Broad money comprises monetary species in circulation, demand deposits, and quasi-money.
7/ Consolidated banking system.
8/ Program net international reserves are equal to gross international reserves less outstanding credit to the IMF, short-term foreign liabilities of the BCE, deposits of other
depository institutions and other financial institutions (excl. BEDE and BIESS) at the central bank, and short-term liabilities of the central government.

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Table 2. Ecuador: Real and Oil Sector, 2023-30

Projections
2023 2024 2025 2026 2027 2028 2029 2030
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/

(Percent change, unless otherwise indicated)

National income and prices
Nominal GDP (US$ million) 121,147 120,433 124,676 125,038 129,139 129,175 133,461 138,957 144,786 151,095 158,029
Nominal GDP 4.3 1.3 2.9 3.8 3.6 3.3 3.3 4.1 4.2 4.4 4.6
Population (millions) 17.8 18.0 18.0 18.1 18.1 18.2 18.2 18.4 18.5 18.7 18.8
GDP per capita (US$) 6,793 6,703 6,939 6,907 7,133 7,080 7,315 7,558 7,814 8,092 8,399
Real GDP per capita 1.3 -1.1 -2.7 0.8 1.0 1.0 1.3 1.8 1.8 2.0 2.3

Real GDP 2.0 -0.4 -2.0 1.6 1.7 1.8 2.1 2.5 2.6 2.8 3.0
Domestic demand 1.9 -3.4 -2.0 1.9 2.4 2.1 2.2 2.6 2.7 2.9 3.1
Consumption 3.7 -1.1 -1.6 1.4 3.3 1.0 1.6 1.2 1.2 1.3 1.2
Investment -5.2 -12.1 -3.9 4.3 -2.4 6.6 5.4 8.8 8.9 9.2 10.3
External demand
Exports 1.0 5.5 1.9 0.9 2.9 4.7 1.5 4.7 6.1 7.3 6.0
Imports 0.8 -4.3 1.8 2.0 5.5 5.4 2.0 4.6 5.9 7.0 5.7

Real GDP 2.0 -0.4 -2.0 1.6 1.7 1.8 2.1 2.5 2.6 2.8 3.0
Domestic demand (contribution to growth) 1.9 -3.2 -2.0 1.9 2.4 2.0 2.2 2.5 2.6 2.8 3.0
Consumption (contribution to growth) 2.9 -0.9 -1.3 1.1 2.8 0.8 1.3 1.0 1.0 1.0 1.0
Investment (contribution to growth) -1.0 -2.4 -0.8 0.8 -0.4 1.2 0.9 1.5 1.6 1.8 2.1
External demand (contribution to growth) 0.1 2.8 0.0 -0.3 -0.7 -0.1 -0.1 0.0 0.0 0.0 0.0
Exports (contribution to growth) 0.3 1.6 0.5 0.3 0.8 1.3 0.4 1.3 1.7 2.1 1.8
Imports (contribution to growth) -0.2 1.2 -0.5 -0.5 -1.5 -1.5 -0.5 -1.3 -1.7 -2.1 -1.8

Consumer price index (period average) 2.2 1.9 1.5 2.2 1.3 1.6 1.5 1.5 1.5 1.5 1.5
Consumer price index (end-of-period) 1.3 2.8 0.5 1.7 3.4 1.5 1.5 1.5 1.5 1.5 1.5
GDP deflator (period average) 2.3 1.7 5.0 2.2 1.8 1.5 1.2 1.5 1.5 1.5 1.5

(Millions of barrels, unless otherwise indicated)

Oil production, demand, and prices
Oil production 173.5 173.8 174.0 172.5 173.0 174.6 175.3 176.9 176.5 177.0 177.2
Exports of crude oil 115.0 123.0 126.3 112.7 121.4 114.6 115.1 114.9 114.9 113.8 114.2
Exports of derivative 2/ 10.6 7.0 6.6 8.5 5.0 6.7 6.5 6.7 6.7 6.7 6.5
Domestic consumption of oil derivatives 104.1 106.9 106.5 108.0 108.7 110.1 110.6 113.2 116.5 118.8 122.4
Import of oil derivatives 66.1 67.9 70.9 61.2 65.7 60.6 60.6 62.2 62.7 64.2 65.8
Oil price West Texas Intermediate (US$ per barrel) 77.6 78.5 76.6 70.2 66.1 67.4 59.5 59.6 60.2 60.6 60.9
Oil price Ecuador mix (US$ per barrel) 68.0 68.5 68.5 63.2 60.1 61.4 53.5 53.6 54.2 54.6 54.9

Sources: Ministry of Economy and Finance; Central Bank of Ecuador; Haver; and Fund staff calculations and projections.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
2/ For derivatives, only exports of public companies are included.

32 INTERNATIONAL MONETARY FUND

 ECUADOR

Table 3a. Ecuador: Statement of Nonfinancial Public Sector Operations, 2023-30

Projections
2023 2024 2025 2026 2027 2028 2029 2030
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/
(US$ million)
Revenue (1) 43,580 46,791 45,876 47,104 46,845 49,046 48,208 50,942 53,237 55,101 57,267
Oil revenue 14,510 14,800 14,847 14,251 14,086 15,105 13,660 13,854 14,196 14,410 14,765
Nonoil revenue 29,070 31,991 31,029 32,853 32,759 33,941 34,548 37,089 39,041 40,691 42,502
Taxes 15,049 17,239 16,995 18,204 18,596 18,855 19,740 20,901 21,959 22,916 23,969
Income tax 4,635 5,567 5,382 5,576 5,658 5,821 6,630 7,179 7,586 7,916 8,279
Property tax 872 1,104 1,081 885 1,491 665 749 772 798 833 871
Goods and services 7,391 8,341 8,335 9,307 9,236 9,860 9,818 10,309 10,833 11,305 11,824
o/w Value added tax 6,269 7,525 7,549 8,108 8,120 8,519 8,605 9,046 9,517 9,931 10,387
o/w Excise tax 813 768 751 826 795 913 865 900 938 978 1,023
International trade and transactions 1,885 1,927 1,893 2,076 1,868 2,187 2,189 2,272 2,360 2,463 2,576
Other tax 266 300 303 360 343 324 355 368 382 399 418
Social security contributions 6,051 6,220 6,062 6,444 6,279 6,645 6,433 6,618 6,827 7,124 7,451
Other revenue 7,969 8,533 7,972 8,205 7,884 8,441 8,375 9,571 10,256 10,651 11,082
Interest 1,559 1,640 1,510 1,718 1,659 1,780 1,724 1,804 1,843 1,871 1,900
Other 6,410 6,893 6,462 6,487 6,225 6,661 6,650 7,767 8,413 8,780 9,182
Expenditure (2) 47,797 48,978 47,467 48,674 47,992 49,326 48,357 49,969 51,396 53,079 55,087
Expense 45,712 46,805 45,586 46,420 46,047 46,883 45,946 47,162 48,228 49,773 51,630
Compensation of employees 12,925 13,194 13,094 13,431 13,267 13,573 13,407 13,597 13,742 14,249 14,801
Use of goods and services 16,865 16,508 15,913 15,526 15,410 15,450 14,831 15,037 15,162 15,503 16,043
Oil 2/ 11,806 11,937 11,392 10,748 10,430 10,570 10,040 10,201 10,283 10,412 10,718
Nonoil 5,060 4,570 4,521 4,778 4,979 4,881 4,792 4,836 4,879 5,091 5,325
Interest 2,609 2,848 2,882 2,971 3,108 3,203 3,255 3,337 3,447 3,453 3,457
Nonresidents 2,126 2,439 2,456 2,523 2,626 2,760 2,738 2,816 2,910 2,965 2,985
Residents 483 409 427 447 481 443 517 520 537 487 472
Social benefits 10,219 10,507 10,424 10,736 10,832 11,088 10,917 11,315 11,739 12,250 12,813
Social security benefits 7,164 7,278 7,285 7,553 7,444 7,802 7,632 7,938 8,267 8,627 9,023
Social assistance benefits 1,295 1,434 1,275 1,387 1,513 1,439 1,355 1,382 1,409 1,470 1,538
Employment-related social benefits 1,760 1,794 1,864 1,796 1,875 1,847 1,930 1,995 2,063 2,153 2,252
Other expense 3,094 3,619 3,273 3,482 3,430 3,484 3,537 3,876 4,138 4,318 4,516
Transfers not elsewhere classified 2,181 2,611 2,208 2,368 2,149 2,347 2,258 2,481 2,693 2,811 2,940
Current 1,017 1,089 1,095 1,006 998 872 1,029 1,052 1,072 1,119 1,170
Capital 1,165 1,522 1,113 1,362 1,151 1,474 1,229 1,429 1,621 1,692 1,770
Other 912 976 1,065 1,143 1,281 1,138 1,279 1,395 1,445 1,508 1,577
Net/gross investment in nonfinancial assets 2,085 2,173 1,881 2,254 1,946 2,443 2,411 2,807 3,168 3,306 3,458
Net lending (+) / Net borrowing (-) (NLB = 1-2) -4,217 -2,187 -1,590 -1,570 -1,147 -280 -149 974 1,842 2,022 2,180
Net acquisition of financial assets (3) -538 362 -232 1,070 557 718 645 1,523 1,896 605 567
Net incurrence of liabilities (4) 4,348 2,548 1,918 2,640 1,704 998 794 549 54 -1,417 -1,612
Domestic 4,377 -18 -338 -58 -209 39 52 199 195 -309 -313
External -30 2,566 2,256 2,698 1,913 959 742 351 -141 -1,108 -1,299
Overall statistical discrepancy (-NLB+3-4) -668 0 -560 0 0 0 0 0 0 0 0
Memorandum items:
Primary balance -3,167 -979 -218 -317 301 1,143 1,382 2,507 3,446 3,604 3,737
Nonoil primary revenue 27,511 30,352 29,519 31,136 31,100 32,161 32,824 35,285 37,198 38,820 40,602
Nonoil primary expenditure 33,343 34,193 33,161 34,956 34,423 35,554 35,031 36,400 37,634 39,183 40,881
Nonoil primary balance (NOPB) -5,833 -3,841 -3,643 -3,820 -3,323 -3,393 -2,207 -1,115 -436 -363 -279
NOPB including fuel subsidies (NOPBS) -9,098 -6,722 -6,674 -5,751 -5,151 -4,460 -3,120 -2,001 -1,256 -1,160 -976
Oil balance 2,665 2,850 3,424 3,490 3,625 4,523 3,589 3,622 3,882 3,968 4,016
Central government (PGE+CFDD) NLB -6,449 -4,070 -3,058 -3,868 -3,795 -2,545 -2,425 -1,137 100 170 447
NFPS gross debt 65,821 68,370 67,019 71,009 68,723 72,008 69,517 70,066 70,120 68,703 67,091
Domestic 17,633 17,615 17,429 17,557 17,220 17,596 17,272 17,470 17,665 17,355 17,042
External 48,188 50,755 49,590 53,453 51,503 54,412 52,246 52,596 52,456 51,348 50,049
Nominal GDP 121,147 120,433 124,676 125,038 129,139 129,175 133,461 138,957 144,786 151,095 158,029
Sources: Ministry of Economy and Finance; and IMF staff estimates and projections.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
2/ Includes cost of importing oil derivatives (CFDD), of oil contracts (SHE), of goods and services used in oil production, and of oil services (PEC and PAM).

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ECUADOR

Table 3b. Ecuador: Statement of Nonfinancial Public Sector Operations, 2023-30

Projections
2023 2024 2025 2026 2027 2028 2029 2030
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/
(In percent of GDP)
Revenue (1) 36.0 38.9 36.8 37.7 36.3 38.0 36.1 36.7 36.8 36.5 36.2
Oil revenue 12.0 12.3 11.9 11.4 10.9 11.7 10.2 10.0 9.8 9.5 9.3
Nonoil revenue 24.0 26.6 24.9 26.3 25.4 26.3 25.9 26.7 27.0 26.9 26.9
Taxes 12.4 14.3 13.6 14.6 14.4 14.6 14.8 15.0 15.2 15.2 15.2
Income tax 3.8 4.6 4.3 4.5 4.4 4.5 5.0 5.2 5.2 5.2 5.2
Property tax 0.7 0.9 0.9 0.7 1.2 0.5 0.6 0.6 0.6 0.6 0.6
Goods and services 6.1 6.9 6.7 7.4 7.2 7.6 7.4 7.4 7.5 7.5 7.5
o/w Value added tax 5.2 6.2 6.1 6.5 6.3 6.6 6.4 6.5 6.6 6.6 6.6
o/w Excise tax 0.7 0.6 0.6 0.7 0.6 0.7 0.6 0.6 0.6 0.6 0.6
International trade and transactions 1.6 1.6 1.5 1.7 1.4 1.7 1.6 1.6 1.6 1.6 1.6
Other tax 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Social contributions 5.0 5.2 4.9 5.2 4.9 5.1 4.8 4.8 4.7 4.7 4.7
Other revenue 6.6 7.1 6.4 6.6 6.1 6.5 6.3 6.9 7.1 7.0 7.0
Interest 1.3 1.4 1.2 1.4 1.3 1.4 1.3 1.3 1.3 1.2 1.2
Other 5.3 5.7 5.2 5.2 4.8 5.2 5.0 5.6 5.8 5.8 5.8
Expenditure (2) 39.5 40.7 38.1 38.9 37.2 38.2 36.2 36.0 35.5 35.1 34.9
Expense 37.7 38.9 36.6 37.1 35.7 36.3 34.4 33.9 33.3 32.9 32.7
Compensation of employees 10.7 11.0 10.5 10.7 10.3 10.5 10.0 9.8 9.5 9.4 9.4
Use of goods and services 13.9 13.7 12.8 12.4 11.9 12.0 11.1 10.8 10.5 10.3 10.2
Oil 2/ 9.7 9.9 9.1 8.6 8.1 8.2 7.5 7.3 7.1 6.9 6.8
Nonoil 4.2 3.8 3.6 3.8 3.9 3.8 3.6 3.5 3.4 3.4 3.4
Interest 2.2 2.4 2.3 2.4 2.4 2.5 2.4 2.4 2.4 2.3 2.2
Nonresidents 1.8 2.0 2.0 2.0 2.0 2.1 2.1 2.0 2.0 2.0 1.9
Residents 0.4 0.3 0.3 0.4 0.4 0.3 0.4 0.4 0.4 0.3 0.3
Social benefits 8.4 8.7 8.4 8.6 8.4 8.6 8.2 8.1 8.1 8.1 8.1
Social security benefits 5.9 6.0 5.8 6.0 5.8 6.0 5.7 5.7 5.7 5.7 5.7
Social assistance benefits 1.1 1.2 1.0 1.1 1.2 1.1 1.0 1.0 1.0 1.0 1.0
Employer social benefits 1.5 1.5 1.5 1.4 1.5 1.4 1.4 1.4 1.4 1.4 1.4
Other expense 2.6 3.0 2.6 2.8 2.7 2.7 2.7 2.8 2.9 2.9 2.9
Transfers not elsewhere classified 1.8 2.2 1.8 1.9 1.7 1.8 1.7 1.8 1.9 1.9 1.9
Current 0.8 0.9 0.9 0.8 0.8 0.7 0.8 0.8 0.7 0.7 0.7
Capital 1.0 1.3 0.9 1.1 0.9 1.1 0.9 1.0 1.1 1.1 1.1
Other 0.8 0.8 0.9 0.9 1.0 0.9 1.0 1.0 1.0 1.0 1.0
Net/gross investment in nonfinancial assets 1.7 1.8 1.5 1.8 1.5 1.9 1.8 2.0 2.2 2.2 2.2
Net lending (+) / Net borrowing (-) (NLB = 1-2) -3.5 -1.8 -1.3 -1.3 -0.9 -0.2 -0.1 0.7 1.3 1.3 1.4
Net acquisition of financial assets (3) -0.4 0.3 -0.2 0.9 0.4 0.6 0.5 1.1 1.3 0.4 0.4
Net incurrence of liabilities (4) 3.6 2.1 1.5 2.1 1.3 0.8 0.6 0.4 0.0 -0.9 -1.0
Domestic 3.6 0.0 -0.3 0.0 -0.2 0.0 0.0 0.1 0.1 -0.2 -0.2
External 0.0 2.1 1.8 2.2 1.5 0.7 0.6 0.3 -0.1 -0.7 -0.8
Overall statistical discrepancy (-NLB+3-4) -0.6 0.0 -0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Memorandum items:
Primary balance -2.6 -0.8 -0.2 -0.3 0.2 0.9 1.0 1.8 2.4 2.4 2.4
Nonoil primary revenue 22.7 25.2 23.7 24.9 24.1 24.9 24.6 25.4 25.7 25.7 25.7
Nonoil primary expenditure 27.5 28.4 26.6 28.0 26.7 27.5 26.2 26.2 26.0 25.9 25.9
Nonoil primary balance (NOPB) -4.8 -3.2 -2.9 -3.1 -2.6 -2.6 -1.7 -0.8 -0.3 -0.2 -0.2
NOPB including fuel subsidies (NOPBS) -7.5 -5.6 -5.4 -4.6 -4.0 -3.5 -2.3 -1.4 -0.9 -0.8 -0.6
Oil balance 2.2 2.4 2.7 2.8 2.8 3.5 2.7 2.6 2.7 2.6 2.5
Central government (PGE+CFDD) NLB -5.3 -3.4 -2.5 -3.1 -2.9 -2.0 -1.8 -0.8 0.1 0.1 0.3
NFPS gross debt 54.3 56.8 53.8 56.8 53.2 55.7 52.1 50.4 48.4 45.5 42.5
Domestic 14.6 14.6 14.0 14.0 13.3 13.6 12.9 12.6 12.2 11.5 10.8
External 39.8 42.1 39.8 42.7 39.9 42.1 39.1 37.9 36.2 34.0 31.7
Sources: Ministry of Economy and Finance; and IMF staff estimates and projections.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
2/ Includes cost of importing oil derivatives (CFDD), of oil contracts (SHE), of goods and services used in oil production, and of oil services (PEC and PAM).

34 INTERNATIONAL MONETARY FUND

 ECUADOR

Table 4. Ecuador: Nonfinancial Public Sector Financing, 2023-30

Projections
2023 2024 2025 2026 2027 2028 2029 2030
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/
(US$ million)
Gross financing needs 9,810 8,097 10,574 8,250 8,201 8,264 7,123 7,195 5,541 6,285 6,258
NFPS deficit (=-NLB) 4,217 2,187 1,590 1,570 1,147 280 149 -974 -1,842 -2,022 -2,180
Amortization 5,592 5,910 8,983 6,680 7,053 7,984 6,975 8,168 7,382 8,308 8,437
Domestic 2,936 3,598 5,757 3,467 3,638 3,708 3,033 3,622 3,098 3,820 3,758
Loans 0 79 0 158 309 161 305 301 305 309 313
Securities 2,936 3,320 4,734 2,909 2,929 3,248 2,585 3,321 2,792 3,511 3,445
Treasury certificates 1,873 2,166 2,166 2,166 1,887 2,166 1,887 1,887 1,887 1,887 1,887
Bonds 1,063 1,154 2,568 743 1,042 1,082 697 1,433 905 1,623 1,558
Other accounts payable clearance 2/ 0 200 1,023 400 400 300 143 0 0 0 0
External 2,656 2,312 3,226 3,212 3,415 4,276 3,942 4,546 4,285 4,488 4,679
Loans 1,867 2,181 2,148 3,052 3,268 3,291 3,055 3,678 3,470 3,670 3,855
Multilateral 1,003 1,314 1,325 2,211 2,432 2,502 2,275 2,987 2,990 2,896 3,088
Bilateral 709 406 406 392 387 401 395 400 441 550 529
Commercial 154 461 417 449 450 387 384 291 39 224 239
Securities (Eurobonds) 708 44 1,004 74 74 905 813 813 815 818 824
Other accounts payable clearance 3/ 81 87 74 87 74 80 74 55 0 0 0
Gross financing sources 9,810 8,097 10,574 8,250 8,201 8,264 7,123 7,195 5,541 6,285 6,258
Domestic 6,775 3,219 4,351 2,339 2,872 3,029 2,439 2,298 1,396 2,905 2,878
Use of deposits 3,156 -362 -996 -1,070 -557 -718 -645 -1,523 -1,896 -605 -567
o/w Deposits at the BCE 2,864 -362 -850 -1,070 -557 -718 -645 -1,523 -1,896 -605 -567
Loans 11 0 2,522 0 0 0 0 0 0 0 0
Securities 2,918 3,580 2,825 3,409 3,429 3,748 3,085 3,821 3,292 3,511 3,445
Treasury certificates 2,166 2,166 1,887 2,166 1,887 2,166 1,887 1,887 1,887 1,887 1,887
Bonds 752 1,414 938 1,243 1,542 1,582 1,197 1,933 1,405 1,623 1,558
Other accounts payable accumulation 2/ 689 0 0 0 0 0 0 0 0 0 0
External 2,626 4,878 5,482 5,911 5,329 5,235 4,684 4,897 4,144 3,380 3,380
Loans 2,611 4,878 5,467 4,411 5,329 3,235 3,684 3,397 2,144 1,380 1,380
Multilateral 1,581 4,559 4,268 3,400 4,800 2,400 2,850 2,650 1,650 1,180 1,180
World Bank (WB) 700 916 908 400 400 400 400 400 400 400 400
Inter-American Development Bank (IDB) 594 1,198 1,179 800 800 550 550 550 550 330 330
Development Bank of Latin America (CAF) 285 445 385 450 450 450 450 450 450 450 450
International Monetary Fund (IMF GRA) 0 1,500 1,487 1,250 1,750 500 750 750 250 0 0
Latin America Reserve Fund (FLAR) 0 500 308 0 500 0 0 0 0 0 0
Other 2 0 0 500 900 500 700 500 0 0 0
Bilateral 256 319 196 630 398 490 490 490 490 200 200
Commercial 775 0 1,004 381 131 345 344 257 4 0 0
Securities (Eurobonds) 15 0 15 1,500 0 2,000 1,000 1,500 2,000 2,000 2,000
Special Drawing Rights (2021 SDR allocation) 0 0 0 0 0 0 0 0 0 0 0
Other accounts payable accumulation 3/ 0 0 0 0 0 0 0 0 0 0 0
Other assets (-)/liabilities 4/ 1,077 0 1,300 0 0 0 0 0 0 0 0
Statistical discrepancy -668 0 -560 0 0 0 0 0 0 0 0
Net financing 4,885 2,187 2,150 1,570 1,147 280 149 -974 -1,842 -2,022 -2,180
Net acquisition of financial assets -538 362 -232 1,070 557 718 645 1,523 1,896 605 567
Net incurrence of liabilities 4,348 2,548 1,918 2,640 1,704 998 794 549 54 -1,417 -1,612
Domestic 4,377 -18 -338 -58 -209 39 52 199 195 -309 -313
External -30 2,566 2,256 2,698 1,913 959 742 351 -141 -1,108 -1,299
(In percent of GDP)
Gross financing needs 8.1 6.7 8.5 6.6 6.4 6.4 5.3 5.2 3.8 4.2 4.0
NFPS deficit (=-NLB) 3.5 1.8 1.3 1.3 0.9 0.2 0.1 -0.7 -1.3 -1.3 -1.4
Amortization 4.6 4.9 7.2 5.3 5.5 6.2 5.2 5.9 5.1 5.5 5.3
Gross financing sources 8.1 6.7 8.5 6.6 6.4 6.4 5.3 5.2 3.8 4.2 4.0
Domestic 5.6 2.7 3.5 1.9 2.2 2.3 1.8 1.7 1.0 1.9 1.8
External 2.2 4.1 4.4 4.7 4.1 4.1 3.5 3.5 2.9 2.2 2.1
Other assets (-)/liabilities 4/ 0.9 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Statistical discrepancy (-) -0.6 0.0 -0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NFPS gross debt 54.3 56.8 53.8 56.8 53.2 55.7 52.1 50.4 48.4 45.5 42.5
Domestic 14.6 14.6 14.0 14.0 13.3 13.6 12.9 12.6 12.2 11.5 10.8
External 39.8 42.1 39.8 42.7 39.9 42.1 39.1 37.9 36.2 34.0 31.7
Sources: Ministry of Economy and Finance; and IMF staff estimates and projections.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
2/ Includes domestic arrears accumulation/clearance and convenio de liquidez.
3/ Includes accumulation/clearance of oil related financing.
4/ Includes accumulation of assets other than deposits and incurrence of non-debt liabilities.

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ECUADOR

Table 5a. Ecuador: Balance of Payments, 2023-30

Projections
2023 2024 2025 2026 2027 2028 2029 2030
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/
(US$ million)
Current account 2,217 5,280 7,082 3,886 6,060 3,642 4,601 4,373 4,270 4,086 4,132
Trade balance 2,207 5,566 6,813 4,087 6,023 3,872 4,713 4,419 4,222 3,947 3,957
Exports, f.o.b. 31,484 33,423 34,699 32,645 35,268 33,851 34,275 35,557 37,347 39,326 41,619
Oil 8,952 9,053 9,572 7,824 7,915 7,579 6,868 6,904 6,971 6,977 7,005
Nonoil 22,532 24,370 25,127 24,820 27,353 26,273 27,407 28,653 30,375 32,350 34,614
Imports, f.o.b. 29,277 27,857 27,886 28,558 29,245 29,980 29,563 31,137 33,125 35,379 37,662
Oil 7,045 6,957 6,949 5,690 5,784 5,350 4,898 4,992 5,028 5,105 5,206
Nonoil 22,232 20,899 20,937 22,867 23,461 24,629 24,665 26,145 28,096 30,275 32,457
Services -1,940 -2,316 -2,315 -2,421 -2,816 -2,514 -2,927 -3,089 -3,271 -3,485 -3,702
Credits 4,203 2,910 3,769 2,979 3,847 3,098 3,901 4,051 4,229 4,413 4,616
Debits 6,144 5,226 6,084 5,400 6,663 5,613 6,828 7,141 7,500 7,898 8,318
Primary income -2,816 -3,157 -3,337 -3,081 -2,612 -3,158 -2,673 -2,640 -2,613 -2,576 -2,539
Credits 292 210 293 230 183 259 222 251 291 334 367
Debits 3,108 3,367 3,630 3,311 2,795 3,417 2,895 2,892 2,904 2,911 2,906
Secondary income 4,767 5,186 5,921 5,301 5,466 5,442 5,489 5,683 5,932 6,201 6,417
Of which: workers' remittances, net 4,747 5,166 5,912 5,280 5,456 5,420 5,479 5,673 5,922 6,190 6,405

Capital account 78 83 79 85 82 88 85 87 91 95 99

Financial account 2/ 4,741 2,170 5,093 1,074 3,342 1,598 2,676 1,525 1,206 1,869 1,921
Direct investment, net -475 -368 -232 -557 -708 -1,397 -1,128 -1,573 -1,979 -2,312 -2,567
Public sector, net 30 -2,566 -2,256 -2,698 -1,913 -959 -742 -351 141 1,108 1,299
Disbursements -2,626 -4,878 -5,482 -5,911 -5,329 -5,235 -4,684 -4,897 -4,144 -3,380 -3,380
Multilaterals 1,581 4,559 4,268 3,400 4,800 2,400 2,850 2,650 1,650 1,180 1,180
Bilaterals 256 319 196 630 398 490 490 490 490 200 200
Commercial 775 0 1,004 381 131 345 344 257 4 0 0
External securities 15 0 15 1,500 0 2,000 1,000 1,500 2,000 2,000 2,000
Others 0 0 0 0 0 0 0 0 0 0 0
Amortizations 2,656 2,312 3,226 3,212 3,415 4,276 3,942 4,546 4,285 4,488 4,679
Multilaterals 1,003 1,314 1,325 2,211 2,432 2,502 2,275 2,987 2,990 2,896 3,088
Bilaterals 709 406 406 392 387 401 395 400 441 550 529
Commercial 154 461 417 449 450 387 384 291 39 224 239
External securities 708 44 1,004 74 74 905 813 813 815 818 824
Others 81 87 74 87 74 80 74 55 0 0 0
Private sector, net 5,186 5,105 7,582 4,329 5,963 3,954 4,546 3,448 3,045 3,073 3,189
Portfolio investment, net 1,462 1,314 3,091 1,439 2,556 1,433 1,986 1,024 614 321 249
Other investment, net 3,724 3,791 4,491 2,890 3,407 2,521 2,560 2,425 2,431 2,751 2,940

Errors and omissions -1,838 0 -62 0 0 0 0 0 0 0 0

Overall balance -4,284 3,193 2,007 2,896 2,800 2,132 2,010 2,935 3,154 2,313 2,311

Change in reserve assets (increase, -) 2/ 4,284 -3,193 -2,007 -2,896 -2,800 -2,132 -2,010 -2,935 -3,154 -2,313 -2,311
IMF net credit -228 959 951 229 742 -570 -313 -505 -1,093 -1,438 -1,610
Of which: purchases under the EFF 0 1,500 1,487 1,250 1,750 500 750 750 250 0 0
Other external financing 3/ 19 0 18 0 0 0 0 0 0 0 0

Memorandum items: (Units as indicated)

Gross international reserves (US$ million) 4,454 7,648 6,900 10,544 9,700 12,676 11,710 14,645 17,800 20,112 22,423
In months of the following year's imports of G&S 1.6 2.7 2.3 3.6 3.2 4.1 3.7 4.3 4.9 5.2 5.6
As a percent of ARA metric, excluding the Liquidity Fund 17.0 29.1 26.1 38.7 35.6 45.2 42.3 51.6 61.1 67.4 73.6
As a percent of ARA metric, including the Liquidity Fund 30.3 42.8 42.6 52.3 53.0 58.9 60.3 70.2 80.1 87.0 94.0
Oil balance (US$ million) 1,907 2,095 2,623 2,134 2,131 2,228 1,971 1,912 1,943 1,872 1,799
Exports (US$ million) 8,952 9,053 9,572 7,824 7,915 7,579 6,868 6,904 6,971 6,977 7,005
Imports (US$ million) 7,045 6,957 6,949 5,690 5,784 5,350 4,898 4,992 5,028 5,105 5,206
Nonoil balance (US$ million) 311 3,185 4,459 1,752 3,929 1,414 2,631 2,461 2,327 2,215 2,333
Export volume growth (percent) 6.7 6.0 4.8 1.4 3.0 3.8 1.8 3.4 4.4 4.9 5.5
Nonoil 10.1 9.5 7.0 4.5 7.2 5.5 3.5 4.6 6.1 7.1 7.5
Import volume growth (percent) 2.6 -4.1 -3.3 3.1 6.1 4.4 1.6 4.1 4.9 6.6 6.2
Nonoil 1.3 -6.1 -7.3 8.2 11.1 6.6 5.0 5.1 6.6 8.1 7.5
Goods terms of trade growth (percent) -5.8 -1.0 3.9 -2.9 -1.0 -0.4 -0.7 0.9 1.1 0.0 0.1
Foreign direct investment, net (US$ million) 475 368 232 557 708 1,397 1,128 1,573 1,979 2,312 2,567
External debt (US$ million) 59,816 65,786 59,839 68,657 66,188 71,905 67,771 68,266 69,218 70,104 70,260
Private 11,628 11,818 10,249 10,929 14,685 12,984 15,525 15,670 16,763 18,756 20,211
Public 48,188 53,967 49,590 57,729 51,503 58,921 52,246 52,596 52,456 51,348 50,049
Sources: Central Bank of Ecuador; and Fund staff calculations and estimates.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
2/ Includes net IMF credit. Positive numbers indicate outflows.
3/ Includes foreign arrears and net flows from oil funds held abroad and flows associated with debt default and restructuring.

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Table 5b. Ecuador: Balance of Payments, 2023-30

Projections
2023 2024 2025 2026 2027 2028 2029 2030
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/
(In percent of GDP)
Current account 1.8 4.4 5.7 3.1 4.7 2.8 3.4 3.1 2.9 2.7 2.6
Trade balance 1.8 4.6 5.5 3.3 4.7 3.0 3.5 3.2 2.9 2.6 2.5
Exports, f.o.b. 26.0 27.8 27.8 26.1 27.3 26.2 25.7 25.6 25.8 26.0 26.3
Oil 7.4 7.5 7.7 6.3 6.1 5.9 5.1 5.0 4.8 4.6 4.4
Nonoil 18.6 20.2 20.2 19.9 21.2 20.3 20.5 20.6 21.0 21.4 21.9
Imports, f.o.b. 24.2 23.1 22.4 22.8 22.6 23.2 22.2 22.4 22.9 23.4 23.8
Oil 5.8 5.8 5.6 4.6 4.5 4.1 3.7 3.6 3.5 3.4 3.3
Nonoil 18.4 17.4 16.8 18.3 18.2 19.1 18.5 18.8 19.4 20.0 20.5
Services -1.6 -1.9 -1.9 -1.9 -2.2 -1.9 -2.2 -2.2 -2.3 -2.3 -2.3
Credits 3.5 2.4 3.0 2.4 3.0 2.4 2.9 2.9 2.9 2.9 2.9
Debits 5.1 4.3 4.9 4.3 5.2 4.3 5.1 5.1 5.2 5.2 5.3
Primary income -2.3 -2.6 -2.7 -2.5 -2.0 -2.4 -2.0 -1.9 -1.8 -1.7 -1.6
Credits 0.2 0.2 0.2 0.2 0.1 0.2 0.2 0.2 0.2 0.2 0.2
Debits 2.6 2.8 2.9 2.6 2.2 2.6 2.2 2.1 2.0 1.9 1.8
Secondary income 3.9 4.3 4.7 4.2 4.2 4.2 4.1 4.1 4.1 4.1 4.1
Of which: workers' remittances, net 3.9 4.3 4.7 4.2 4.2 4.2 4.1 4.1 4.1 4.1 4.1

Capital account 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Financial account 2/ 3.9 1.8 4.1 0.9 2.6 1.2 2.0 1.1 0.8 1.2 1.2
Direct investment, net -0.4 -0.3 -0.2 -0.4 -0.5 -1.1 -0.8 -1.1 -1.4 -1.5 -1.6
Public sector, net 0.0 -2.1 -1.8 -2.2 -1.5 -0.7 -0.6 -0.3 0.1 0.7 0.8
Disbursements -2.2 -4.1 -4.4 -4.7 -4.1 -4.1 -3.5 -3.5 -2.9 -2.2 -2.1
Multilaterals 1.3 3.8 3.4 2.7 3.7 1.9 2.1 1.9 1.1 0.8 0.7
Bilaterals 0.2 0.3 0.2 0.5 0.3 0.4 0.4 0.4 0.3 0.1 0.1
Commercial 0.6 0.0 0.8 0.3 0.1 0.3 0.3 0.2 0.0 0.0 0.0
External securities 0.0 0.0 0.0 1.2 0.0 1.5 0.7 1.1 1.4 1.3 1.3
Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Amortizations 2.2 1.9 2.6 2.6 2.6 3.3 3.0 3.3 3.0 3.0 3.0
Multilaterals 0.8 1.1 1.1 1.8 1.9 1.9 1.7 2.1 2.1 1.9 2.0
Bilaterals 0.6 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.3
Commercial 0.1 0.4 0.3 0.4 0.3 0.3 0.3 0.2 0.0 0.1 0.2
External securities 0.6 0.0 0.8 0.1 0.1 0.7 0.6 0.6 0.6 0.5 0.5
Others 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0
Private sector, net 4.3 4.2 6.1 3.5 4.6 3.1 3.4 2.5 2.1 2.0 2.0
Portfolio investment, net 1.2 1.1 2.5 1.2 2.0 1.1 1.5 0.7 0.4 0.2 0.2
Other investment, net 3.1 3.1 3.6 2.3 2.6 2.0 1.9 1.7 1.7 1.8 1.9

Errors and omissions -1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Overall balance -3.5 2.7 1.6 2.3 2.2 1.7 1.5 2.1 2.2 1.5 1.5

Change in reserve assets (increase, -) 2/ 3.5 -2.7 -1.6 -2.3 -2.2 -1.7 -1.5 -2.1 -2.2 -1.5 -1.5
Of which: IMF net credit -0.2 0.8 0.8 0.2 0.6 -0.4 -0.2 -0.4 -0.8 -1.0 -1.0
Purchases under the EFF 0.0 1.2 1.2 1.0 1.4 0.4 0.6 0.5 0.2 0.0 0.0
Of which: Other external financing 3/ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Memorandum items:
Gross international reserves 3.7 6.4 5.5 8.4 7.5 9.8 8.8 10.5 12.3 13.3 14.2
Oil balance 1.6 1.7 2.1 1.7 1.7 1.7 1.5 1.4 1.3 1.2 1.1
Exports 7.4 7.5 7.7 6.3 6.1 5.9 5.1 5.0 4.8 4.6 4.4
Imports 5.8 5.8 5.6 4.6 4.5 4.1 3.7 3.6 3.5 3.4 3.3
Nonoil balance 0.3 2.6 3.6 1.4 3.0 1.1 2.0 1.8 1.6 1.5 1.5
Foreign direct investment, net 0.4 0.3 0.2 0.4 0.5 1.1 0.8 1.1 1.4 1.5 1.6
External debt 49.4 54.6 48.0 54.9 51.3 55.7 50.8 49.1 47.8 46.4 44.5
Private 9.6 9.8 8.2 8.7 11.4 10.1 11.6 11.3 11.6 12.4 12.8
Public 39.8 44.8 39.8 46.2 39.9 45.6 39.1 37.9 36.2 34.0 31.7
Sources: Central Bank of Ecuador; and Fund staff calculations and estimates.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
2/ Incudes net IMF credit. Positive numbers indicate outflows.
3/ Includes foreign arrears and net flows from oil funds held abroad and flows associated with debt default and restructuring.

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Table 6. Ecuador: External Financing, 2023-30

Projections
2023 2024 2025 2026 2027 2028 2029 2030
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/
(US$ million)
Gross external financing requirements 7,473 888 4,410 4,000 3,431 4,407 5,950 7,170 7,002 7,069 7,362
Current account deficit -2,217 -5,280 -7,082 -3,886 -6,060 -3,642 -4,601 -4,373 -4,270 -4,086 -4,132
Public sector amortizations 2,656 2,312 3,226 3,212 3,415 4,276 3,942 4,546 4,285 4,488 4,679
Multilaterals 1,003 1,314 1,325 2,211 2,432 2,502 2,275 2,987 2,990 2,896 3,088
Of which: IMF 228 529 536 995 1008 1070 1063 1255 1343 1438 1610
Bilaterals 709 406 406 392 387 401 395 400 441 550 529
Commercial 154 461 417 449 450 387 384 291 39 224 239
External securities 708 44 1,004 74 74 905 813 813 815 818 824
Others 81 87 74 87 74 80 74 55 0 0 0
Private sector amortizations 7,034 3,857 8,267 4,674 6,076 3,773 6,609 6,997 6,987 6,667 6,815

External financing sources 3,189 4,082 6,417 6,897 6,231 6,539 7,960 10,105 10,157 9,381 9,672
Public sector 2,626 4,878 5,482 5,911 5,329 5,235 4,684 4,897 4,144 3,380 3,380
Multilateral 1,581 4,559 4,268 3,400 4,800 2,400 2,850 2,650 1,650 1,180 1,180
Of which: IMF (EFF) 0 1,500 1,487 1,250 1,750 500 750 750 250 0 0
Bilaterals 256 319 196 630 398 490 490 490 490 200 200
Commercial 775 0 1,004 381 131 345 344 257 4 0 0
External securities 15 0 15 1,500 0 2,000 1,000 1,500 2,000 2,000 2,000
Others 0 0 0 0 0 0 0 0 0 0 0
Private sector 2,323 -880 917 902 821 1,216 3,192 5,121 5,921 5,907 6,193
Direct investment 475 368 232 557 708 1,397 1,128 1,573 1,979 2,312 2,567
Portfolio investment -1,462 -1,314 -3,091 -1,439 -2,556 -1,433 -1,986 -1,024 -614 -321 -249
Other investment 2/ 3,310 65 3,775 1,784 2,669 1,252 4,050 4,572 4,557 3,916 3,875
Net transfers 3/ -1,761 83 18 85 82 88 85 87 91 95 99

Change in reserve assets (-, increase) 4,284 -3,193 -2,007 -2,896 -2,800 -2,132 -2,010 -2,935 -3,154 -2,313 -2,311
Of which: Net IMF credit -228 959 951 229 742 -570 -313 -505 -1,093 -1,438 -1,610

Sources: Central Bank of Ecuador and Fund staff calculations and estimates.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
2/ Excludes private sector amortizations.
3/ Net transfers is defined as capital account flows plus unidentified flows (errors and omissions).

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Table 7. Ecuador: Monetary and Financial Statistics, 2023-30

Projections
2023 2024 2025 2026 2027 2028 2029 2030
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/
(US$ million)
I. Central Bank
Net foreign assets 5,976 8,793 8,104 11,734 10,728 13,905 12,772 15,752 18,953 21,316 23,682
Of which: gross international reserves 2a/ 4,454 7,648 6,900 10,544 9,700 12,676 11,710 14,645 17,800 20,112 22,423
Of which: net international reserves 2b/ -7,639 -7574 -7,638 -6470 -7,291 -4,821 -6,017 -3,677 -385 1,956 4,436
Gross international reserves at TMU prices 4,633 … 6,626 … 9,426 … 11,436 14,372 17,526 19,839 22,149
Fund credit 7,761 … 8,712 … 9,440 … 9,132 8,638 7,569 6,166 4,594
Bank reserves of ODIs and OFIs (exc. BDE, BIESS/IESS) 4,484 … 5,552 … 7,277 … 8,321 9,410 10,342 11,717 13,119

Net domestic assets -389 -1,290 -1,740 -2,761 -2,647 -3,878 -3,621 -5,478 -7,712 -8,661 -9,583
Credit to the nonfinancial public sector, net 1,386 769 371 -566 -504 -1,557 -1,447 -3,272 -5,473 -6,388 -7,268
Of which: central government deposits 569 … 1,080 … … … … … … … …
Credit to financial institutions 686 670 683 639 652 607 620 588 555 520 479
Other depository institutions 112 112 118 112 118 112 118 118 118 116 109
Other financial institutions 573 558 566 526 534 495 502 470 437 404 371
Credit to the private sector 8 8 7 8 7 8 7 7 7 7 7
Other, net -2,469 -2,737 -2,801 -2,842 -2,801 -2,936 -2,801 -2,801 -2,801 -2,801 -2,801
Liabilities 5,587 7,503 6,364 8,972 8,081 10,027 9,151 10,274 11,241 12,655 14,099
Banks' reserves 5,484 7,401 6,255 8,866 7,968 9,917 9,035 10,153 11,116 12,525 13,964
Other depository institutions 3/ 3,890 6,132 5,242 7,549 6,811 8,556 7,839 8,908 9,819 11,171 12,548
Other financial institutions 4/ 1,595 1,269 1,013 1,318 1,157 1,361 1,196 1,245 1,297 1,354 1,416
Other 5/ 15 16 18 16 18 17 18 18 18 18 18

II. Other Depository Institutions (ODI) and Other Financial Institutions (OFI) 3/ 6/
Net foreign assets 5,950 6,612 7,493 6,777 8,322 6,913 8,600 8,955 9,330 9,737 10,184
Net domestic assets 54,457 59,654 60,559 63,440 65,544 66,635 68,766 72,667 76,626 81,317 86,426
Assets held at the BCE, net 3,438 5,720 4,757 7,175 6,514 8,221 7,589 8,711 9,675 11,084 12,519
Credit to the nonfinancial public sector, net 2,952 3,158 3,460 3,663 3,965 4,168 4,470 4,976 5,482 5,489 5,496
Of which: central government, net 1,772 1,984 2,493 2,299 2,842 2,614 3,191 3,541 3,890 3,890 3,890
Credit to the private sector 63,984 66,893 67,922 69,601 70,983 72,397 73,176 76,150 79,381 83,462 88,011
Other items, net -15,916 -16,117 -15,581 -17,000 -15,918 -18,152 -16,469 -17,169 -17,912 -18,717 -19,601
Liabilities 60,407 66,266 68,051 70,217 73,866 73,548 77,366 81,621 85,956 91,054 96,610
Of which: Private sector deposits 60,407 66,266 68,051 70,217 73,866 73,548 77,366 81,621 85,956 91,054 96,610

III. Depository Corporations Survey

Net foreign assets 11,926 15,405 15,597 18,510 19,049 20,817 21,373 24,706 28,283 31,052 33,865
Net domestic assets 48,583 50,963 52,564 51,813 54,929 52,840 56,110 57,035 57,798 60,131 62,878
Credit to the nonfinancial public sector, net 4,338 3,927 3,831 3,098 3,461 2,612 3,022 1,704 9 -899 -1,772
Credit to the private sector 63,991 66,901 67,929 69,609 70,990 72,405 73,183 76,157 79,389 83,469 88,019
Other items, net -19,745 -19,865 -19,197 -20,894 -19,521 -22,177 -20,096 -20,826 -21,600 -22,439 -23,368
Liabilities 60,509 66,368 68,161 70,323 73,979 73,657 77,482 81,742 86,080 91,183 96,744

Memorandum items: (Units as indicated)

Change in Gross International Reserves (US$ million, increase, +) 7/ -4,004 3,193 2,445 2,896 2,800 2,132 2,010 2,935 3,154 2,313 2,311
Change in Net International Reserves (US$ million, increase, +) -1,446 65 1 1,104 347 1,648 1,274 2,340 3,291 2,341 2,480
1st COMYF balance (percent) 8/ 115 125 129 140 142 148 149 164 181 180 178
2nd COMYF balance (percent) 9/ 36 121 155 228 249 303 323 459 614 659 695
3rd COMYF balance (percent) 10/ -18 6 15 30 30 44 43 60 72 78 83
Broad money (M2) (percent change, yoy) 11/ 6.7 4.8 4.8 3.8 3.6 3.3 3.3 4.1 4.2 4.4 4.6
Credit to the private sector (percent of GDP) 12/ 52.8 55.6 54.5 55.7 55.0 56.1 54.8 54.8 54.8 55.2 55.7
Credit to the private sector (percent change, yoy) 12/ 8.4 4.5 6.2 4.0 4.5 4.0 3.1 4.1 4.2 5.1 5.5
Liabilities (percent of GDP) 49.9 55.1 54.7 56.2 57.3 57.0 58.1 58.8 59.5 60.3 61.2
Deposits of the private sector (percent change, yoy) 12/ 7.9 9.7 12.7 6.0 8.5 4.7 4.7 5.5 5.3 5.9 6.1
ODI and OFI reserves at the central bank as a share of liabilities (percent) 3/ 4/ 9.1 11.2 9.2 12.6 10.8 13.5 11.7 12.4 12.9 13.8 14.5
Liquidity Fund (US$ million) 3,451 3,589 3,589 3,712 3,712 3,837 3,837 3,988 4,151 4,320 4,494
Sources: Central Bank of Ecuador; and Fund staff calculations and estimates.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
2a/ Excludes non-liquid and encumbered reserves included in the authorities' definition of GIR.
2b/ Program net international reserves are equal to gross international reserves less outstanding IMF credit, short-term foreign liabilities of the BCE, deposits of other depository institutions and
other financial institutions (excl. BEDE and BIESS) at the BCE, and short-term liabilities of the central government.
3/ ODI include private banks, Banecuador (formerly Banco Nacional de Fomento), Banco del Pacifico, private financial companies, mutualists, cooperatives, and credit card companies.
4/ Reserves of OFIs includes deposits of Corporación Financiera Nacional, COSEDE, BIESS, BDE, and a transitory account for the payments system.
5/ Includes monetary deposits, Titulos del Banco Central de Ecuador, stabilization bonds, and accounts payable.
6/ OFI comprises Corporación Financiera Nacional and BDE.
7/ Changes in Gross International Reserves include valuation effects and could differ from change in reserves arising from BOP flows reported in Table 5a.
8/ Liabilities of this balance include the national monetary species minted by the Central Bank of Ecuador that are in circulation, Central Bank Securities (TBC), any other direct obligation with the
public and the deposits of other depository institutions, which include private banks, mutual banks, savings and credit cooperatives, and public banks with demand deposits. These liabilities must be
covered one hundred percent with the assets of the International Reserves.
9/ Liabilities of this balance include the deposits of other financial entities, including CFN, BIESS (Banco del Instituto Ecuatoriano de Seguridad Social), other public sector financial entities and
financial intermediaries that do not take demand deposits from the public. These liabilities will be covered with the remaining reserve assets once the First Balance is covered and must be equivalent
to one hundred percent of the liabilities in this balance.
10/ Liabilities of this balance include deposits of the Non-Financial Public Sector (NFPS), deposits of authorized private legal entities in the Central Bank of Ecuador and transfers through the
payments system pending settlement, as well as the BCE's own external indebtedness. These liabilities must be one hundred percent covered with the assets of the International Reserves, once the
Second Balance has been fully covered.
11/ Broad money comprises monetary species in circulation, demand deposits, and quasi-money.
12/ Consolidated banking system.

INTERNATIONAL MONETARY FUND 39

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Table 8. Ecuador: Financial Soundness Indicators, 2019-25

2019 2020 2021 2022 2023 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25
(In percent, end of period)
Banking system
Capital adequacy
Regulatory capital to risk-weighted assets 16.7 17.3 15.8 15.7 15.1 14.7 16.5 16.8 17.0 16.6

Asset quality and distribution

Nonperforming loans to total gross loans 3.2 3.6 3.7 3.7 4.6 4.7 4.6 4.4 4.2 4.3
Provisions to nonperforming loans 203.0 230.7 232.9 225.9 185.9 161.5 168.4 181.7 187.6 188.1

Earnings and profitability

Return on assets 2.0 0.7 0.7 1.8 2.2 1.7 1.7 1.6 1.8 1.8
Return on equity 8.8 3.1 2.3 9.5 11.8 9.5 9.4 8.5 10.5 10.7
Interest margin to gross income 63.7 66.1 66.3 64.3 60.4 59.8 59.8 59.4 63.2 62.1
Noninterest expenses to gross income 54.8 54.7 55.7 49.6 46.2 47.9 47.7 47.5 44.5 45.0

Liquidity
Liquid assets to total assets 16.4 23.6 20.7 18.3 15.2 16.6 15.8 16.3 15.9 16.1
Liquid assets to short-term liabilities 35.5 48.1 36.9 34.4 29.5 32.6 30.9 30.6 30.6 30.6
Customer deposits to total (noninterbank) loans 107.2 119.8 117.2 109.0 105.1 109.0 108.9 111.1 111.1 112.3

Cooperatives (Segment 1-3)

Capital adequacy (Segment 1)
Regulatory capital to risk-weighted assets 17.0 17.2 17.3 16.0 15.5 16.7 16.7 17.1 17.4 17.2

Asset quality and distribution

Nonperforming loans to total gross loans 3.9 3.8 4.2 4.0 7.0 9.0 8.9 8.0 8.2 8.2
Provisions to nonperforming loans 127.5 162.4 142.9 145.9 102.8 87.7 88.9 101.9 100.5 101.0

Earnings and profitability

Return on assets 1.0 0.5 0.5 0.4 0.5 0.3 0.3 0.3 0.7 0.5
Return on equity 7.5 3.4 4.1 3.5 4.0 2.7 2.4 2.2 5.5 4.3

Liquidity
Liquid assets to short-term liabilities 24.4 30.0 28.5 24.5 26.4 32.2 32.7 35.7 36.3 37.0
Sources: IMF Financial Soundness Indicators and Superintendency of Popular and Solidarity Economy.

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Table 9. Ecuador: Indicators of Fund Credit, 2023-34

2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
CR/24/357 1/ CR/24/357 1/ CR/24/357 1/
Existing and prospective Fund credit (SDR million)
Disbursements 0 1,129 1,129 939 1,315 374 561 561 185 0 0 0 0 0 0
Stock of existing and prospective Fund credit 5,925 6,650 6,650 6,829 7,206 6,407 6,971 6,594 5,778 4,707 3,507 2,687 1,935 1,310 748
Obligations 577 860 860 1,189 1,160 1,231 1,222 1,349 1,380 1,390 1,448 998 877 714 629
Principal (repayments/repurchases) 172 403 403 759 759 796 796 938 1,001 1,072 1,200 820 752 625 562
Charges and interest 406 457 457 430 401 436 426 411 380 318 248 178 125 89 67
Basic charges 276 304 242 255 246 230 196 156 117 87 61 39
Surcharges 96 110 110 126 124 129 141 134 122 95 64 34 11 0 0
Level-based 94 96 90 103 98 88 69 47 24 8 0 0
Time-based

Fund obligations (repurchases and charges) in percent of:

Quota 82.8 123.3 123.3 170.4 166.3 176.5 175.2 193.3 197.8 199.2 207.5 143.1 125.7 102.3 90.2
GDP 0.6 1.0 0.9 1.3 1.2 1.3 1.2 1.3 1.3 1.2 1.2 0.8 0.7 0.5 0.4
Exports of goods and services 2.2 3.2 3.0 4.5 3.9 4.5 4.3 4.6 4.5 4.3 4.2 2.8 2.4 1.8 1.6
Gross international reserves 17.3 15.0 16.6 15.1 15.9 13.1 13.9 12.3 10.4 9.3 8.7 5.6 4.7 3.7 3.1
Government revenue 1.8 2.4 2.5 3.4 3.3 3.4 3.4 3.5 3.5 3.4 3.4 2.2 1.9 1.5 1.2
External debt service, public 29.0 49.6 35.4 49.7 45.1 38.7 41.4 39.7 43.2 41.6 41.5 22.5 17.7 13.9 12.1

Fund credit outstanding in percent of:

Quota 849.2 953.1 953.1 978.8 1,032.8 918.4 999.2 945.1 828.2 674.6 502.6 385.1 277.3 187.7 107.1
GDP 6.5 7.4 7.1 7.3 7.4 6.7 7.0 6.4 5.4 4.2 3.0 2.2 1.5 1.0 0.5
Exports of goods and services 22.1 24.4 22.9 25.7 24.5 23.3 24.4 22.3 18.7 14.4 10.2 7.6 5.2 3.4 1.8
Gross international reserves 177.4 115.8 128.0 86.9 98.7 68.0 79.5 60.3 43.6 31.4 21.0 15.2 10.4 6.8 3.7
Government revenue 13.6 14.2 14.5 14.5 15.4 13.1 14.5 12.9 10.9 8.5 6.1 4.5 3.1 2.0 1.1
External debt, public 16.4 17.4 17.8 17.1 18.6 15.8 17.8 16.8 14.8 12.3 9.4 7.4 5.6 4.0 2.4

Memorandum items:
Quota (SDR million) 698 698 698 698 698 698 698 698 698 698 698 698 698 698 698
Gross domestic product (US$ million) 121,147 120,433 124,676 125,038 129,139 129,175 133,461 138,957 144,786 151,095 158,029 165,281 172,866 180,800 189,097
Exports of goods and services (US$ million) 35,687 36,334 38,468 35,624 39,115 36,950 38,176 39,608 41,575 43,739 46,235 47,504 49,685 51,965 54,350
Gross international reserves (US$ million) 4,454 7,648 6,900 10,544 9,700 12,676 11,710 14,645 17,800 20,112 22,423 23,763 24,853 25,994 27,187
Government revenue (US$ million) 43,580 46,791 45,876 47,104 46,845 49,046 48,208 50,942 53,237 55,101 57,267 59,895 62,644 65,519 68,526
External debt service, public (US$ million) 2,656 2,312 3,226 3,212 3,415 4,276 3,942 4,546 4,285 4,488 4,679 5,961 6,653 6,905 6,963
Total external debt, public (US$ million) 48,188 50,755 49,590 53,453 51,503 54,412 52,246 52,596 52,456 51,348 50,049 48,468 46,195 43,670 41,087
SDR per US$ 0.75 0.75 0.75 0.75 0.75 0.74 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75
Source: IMF staff calculations.
1/ Staff Report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).

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Table 10a. Ecuador: Schedule of Reviews and Purchases 1/

Original Amounts
Availability Date Conditions
Millions of SDRs Percent of Quota
May 31, 2024 752.9 107.9 Approval of arrangement
November 15, 2024 375.9 53.9 First review and end-August 2024 performance/continuous criteria
March 15, 2025 312.9 44.8 Second review and end-December 2024 performance/continuous criteria 2/
July 15, 2025 312.9 44.8 Third review and end-April 2025 performance/continuous criteria
November 15, 2025 312.9 44.8 Fourth review and end-August 2025 performance/continuous criteria
March 15, 2026 186.9 26.8 Fifth review and end-December 2025 performance/continuous criteria
September 15, 2026 186.9 26.8 Sixth review and end-June 2026 performance/continuous criteria
March 15, 2027 186.9 26.8 Seventh review and end-December 2026 performance/continuous criteria
September 15, 2027 186.9 26.8 Eighth review and end-June 2027 performance/continuous criteria
March 15, 2028 184.9 26.5 Ninth review and end-December 2027 performance/continuous criteria

Total 3,000.0 430.0

Source: IMF staff estimates.
1/ Ecuador's quota is SDR 697.7 million.
2/ End-April 2025 performance/continuous criteria applicable to the second review.

Table 10b. Ecuador: Proposed Schedule of Reviews and Purchases 1/

Original Amounts Proposed Augmentation

Availability Date Conditions
Millions of SDRs Percent of Quota Millions of SDRs Percent of Quota
May 31, 2024 752.9 107.9 752.9 107.9 Approval of arrangement
November 15, 2024 375.9 53.9 375.9 53.9 First review and end-August 2024 performance/continuous criteria
March 15, 2025 312.9 44.8 438.4 62.8 Second review and end-December 2024 performance/continuous criteria 2/
August 15, 2025 312.9 44.8 438.4 62.8 Third review and end-April 2025 performance/continuous criteria
November 15, 2025 312.9 44.8 438.4 62.8 Fourth review and end-August 2025 performance/continuous criteria
March 15, 2026 186.9 26.8 280.5 40.2 Fifth review and end-December 2025 performance/continuous criteria
September 15, 2026 186.9 26.8 280.5 40.2 Sixth review and end-June 2026 performance/continuous criteria
March 15, 2027 186.9 26.8 280.3 40.2 Seventh review and end-December 2026 performance/continuous criteria
September 15, 2027 186.9 26.8 280.3 40.2 Eighth review and end-June 2027 performance/continuous criteria
March 15, 2028 184.9 26.5 184.8 26.5 Ninth review and end-December 2027 performance/continuous criteria

Total 3,000.0 430.0 3,750.4 537.5

Source: IMF staff estimates.
1/ Ecuador's quota is SDR 697.7 million.
2/ End-April 2025 performance/continuous criteria applicable to the second review.

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Table 11. Ecuador: Quantitative Performance Criteria and Indicative Targets, 2024-26
End-Aug. End-Dec. End-Jun.
End-December 2024 End-April 2025 2025 2025 2026

Program 2/ Adj. 3/ Actual Status Program 2/ Adj. 3/ Actual Status Program Program IT
(US$ million, unless otherwise indicated)
Quantitative performance criteria
1. Nonoil primary balance of the budgetary central government (PGE) (floor) 1/ -2,295 -2,295 -1,801 Met -341 -341 312 Met -1,220 -1,964 -52
2. Overall balance of the PGE and CFDD (floor) 1/ -4,213 -4,215 -3,058 Met -1,041 -1,181 -796 Met -2,628 -3,795 -1091
3. Accumulation of NFPS deposits at the central bank (floor) 1/ 360 154 850 Met 0 -957 423 Met 0 557 200
4. Non-accumulation of external payments arrears by the NFPS (continuous performance criterion) 0 0 Met 0 0 Met 0 0 0
5. (No new) Central bank direct and indirect financing to the NFPS (continuous performance criterion) 0 0 Met 0 0 Met 0 0 0

Indicative targets
6. Overall balance of the NFPS (floor) 1/ -2,442 -2,444 -1,590 Met -89 -1,103 -1,147 217
7. Nonoil primary balance including fuel subsidies (NOPBS) of the NFPS (floor) 1/ -6,528 -6,526 -6,674 Not Met -1,151 -3,070 -5,151 -1,317
8. Change in the stock of NIR (floor) 1/ 65 -141 1 Met -34 -991 828 Met -579 147 315
9. Stock of PGE arrears to the domestic private sector (ceiling) 662 505 Met 600 660 Not Met 400 105 0
10. Number of families in the first three income deciles nationwide covered by cash transfer programs (floor) 1,212,984 1,214,638 Met 1,228,660 1,248,805 Met 1,244,336 1,260,012 1,279,012
Sources: Ministry of Economy and Finance and IMF staff estimates.
Note: Aggregates and adjustors as defined in the Technical Memorandum of Understanding (TMU).
1/ Cumulative from January 1.
2/ Staff report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
3/ Adjusted for oil prices and disbursements from multilateral institutions.

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 Table 12. Ecuador: Structural Benchmarks

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44

Reform Area Structural Conditionality Objectives Due Date Status

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Structural Benchmarks

Public Financial 1. Publish an updated Medium-Term Fiscal Framework Strengthen fiscal planning and End-October Met
Management (MTFF) in line with program targets. management. 2024

Public Financial 2. Publish a Medium-Term Debt Management Strategy Strengthen fiscal planning and End-October Met
Management in line with program targets. management. 2024

Public Financial 3. Implement an automatized process for budgetary Strengthen financial management, End-March 2025 Not met.
Management central government (PGE) payments, including arrears’ increase transparency, and reduce Proposed to
payments. accumulation of payment arrears. be reset to
end-July
2025
Domestic 4. Share with Fund staff an updated plan to clear and Strengthen the monitoring and End-November Met
Arrears prevent the resurgence of domestic arrears of the reduce accumulation of payment 2024
budgetary central government (PGE), including arrears.
obligations to the private sector and intra-public sector
claims.

Tax Reform 5. Prepare and share with the Fund a plan to mobilize Inform future efforts to broaden the Mid-November Met
nonoil fiscal revenues, including by streamlining tax base and streamline tax 2024
inefficient tax expenditures and replacing transitory expenditures.
revenue measures with permanent high-quality ones.

Fiscal Strategy 6. Enact regulation on revenue and/or expenditure Ensure fiscal consolidation. December 6, Met
measures to ensure that the 2025 fiscal plan is in line 2024
with program and MTFF commitments.

Social Safety 7. Share with the Fund a plan to complete the social Enhance the social safety net. End-October Met
Net registry to cover families in the lowest three deciles of 2024
the income distribution throughout the country.
 Table 12. Ecuador: Structural Benchmarks (continued)
Reform Area Structural Conditionality Objectives Due Date Status

Governance 8. Establish an updated agreement between the MEF Improve expenditure control. End-March 2025 Not met.
and IESS on the transfer of healthcare obligations Proposed to
(including both internal and external providers), be reset to
building on the December 2022 agreement. The end-August
updated agreement should include a decision about 2025
the 2022 healthcare audits.

Governance 9. Establish a timeline to operationalize the National Strengthen anticorruption End-December Met
Control Subsystem (SNC) to increase transparency in framework and improve 2024
procurement. expenditure control.

Governance 10. Prepare and share with the Fund the conceptual Increase transparency and efficiency End-July 2025
and operational framework for an upgraded Official in procurement and improve
System of Public Procurement (Sistema Oficial de expenditure control.
Contratación Pública del Ecuador, SOCE).

Transparency 11. Initiate the tender process to select an auditor to Improve the quality and reliability End-December Met
and Governance undertake the 2023 and 2024 healthcare audits (based of fiscal data. 2024
on the updated MEF/IESS agreement).
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Transparency 12. Complete the audits of the 2019 and 2020 financial Enhance transparency and End-March 2025 Met
and Governance statements of Petroecuador and Petroamazonas and governance in the oil sector.
share the results with Fund staff.

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 Table 12. Ecuador: Structural Benchmarks (continued)

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Reform Area Structural Conditionality Objectives Due Date Status

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Anti-Money 13. Enact new AML/CFT legislation to strengthen the Mitigate the risk of illicit flows End-February Met
Laundering AML/CFT framework in line with FATF standards. including those related to 2025
Framework organized crimes.
Anti-Money 14. The National AML/CFT Coordination Committee to Mitigate the risk of illicit flows, End-September
Laundering approve and publish a summarized version of an including those related to 2025
Framework AML/CFT Strategic Action Plan, establishing actionable organized crimes.
policy priorities to mitigate money laundering, including
by organized crime, and terrorist financing risks
identified in the National Risk Assessment approved in
2024.

Financial Sector 15. Establish a Financial Stability Committee in line with Enhance coordination among End-September Met
best international practices, comprising the BCE, MEF, agencies involved in financial 2024
JPRF, JPRM, SB, SEPS, SCVS, and COSEDE. sector oversight.

Financial Sector 16. Establish an inter-institutional group within the Strengthen financial sector End-January 2025 Met
Financial Stability Committee, comprising BCE, MEF, resolution framework.
JPRF, JPRM, SB, SEPS, and COSEDE to coordinate
resolution reforms and strategies.
Financial Sector 17. Issue macroprudential regulations on bank capital Strengthen financial sector buffers. End-November Met
buffers, including surcharges on systemically important 2024
institutions and a countercyclical capital buffer.

Financial Sector 18. Prepare and share with Fund staff a study of the Foster financial sector deepening End-March 2025 Not met.
system of interest rates, including recommendations to and improve economy’s growth Implemented
improve credit allocation, financial inclusion, and potential. with delay
economic growth, while preserving financial stability.
 Table 12. Ecuador: Structural Benchmarks (continued)

Reform Area Structural Conditionality Objectives Due Date Status

Domestic 19. Sign a contract to implement a new platform for the Foster domestic capital market End-January 2025 Not met.
Capital Market BCE’s central securities depository (DCV) to modernize development. Implemented
Development the compensation, liquidation, and custody functions in with delay
line with international standards.

Domestic 20. Issue regulation for domestic market auctions for Foster domestic capital market End-November Proposed
Capital Market bonds and treasury notes, including procedures, auction development. 2025
Development format, and rules for participation, bidding, and
allocation.

Mining Sector 21. Implement the regulation for the opening of the Enhance transparency and attract End-June 2026 Proposed
mining cadaster. private investment.

Mining Sector 22. Develop a new fiscal regime for the mining sector to Enhance transparency and attract End-December Proposed
enhance its efficiency and revenue potential (informed private investment. 2025
by IMF technical assistance).

Oil Sector 23. Complete the audit of the 2021 financial statements Enhance transparency and End-September Proposed
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Transparency of Petroecuador and share the results with IMF staff. governance in the oil sector. 2025
and Governance

Electricity Sector 24. Enact secondary regulations under existing Attract private investment. Foster End-August 2025 Proposed
electricity laws to allow private entities to sell surplus energy security and economic
electricity from self-generation to the national grid. growth.

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48

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Table 12. Ecuador: Structural Benchmarks (concluded)
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Reform Area Structural Conditionality Objectives Due Date Status

Electricity Sector 25. Adopt a transparent and cost-reflective pricing Attract private investment. Foster End-August 2025 Proposed
mechanism, with regular reviews, for medium- and energy security, fiscal
high-voltage electricity tariffs, in line with gradually sustainability, and economic
reducing energy subsidies and enhancing fiscal growth.
sustainability.
 ECUADOR

Annex I. Risk Assessment Matrix1

Source of Risks Relative Likelihood Possible Impact Policy Response

Conjunctural Shocks and Scenarios

Trade Policy and Adopt policies to improve
High Medium
Investment Shocks. trade resilience, including
Higher trade barriers or Higher trade barriers or enhancing diversification
sanctions reduce external sanctions that impact of trade markets and
trade, disrupt FDI and commodity prices (in export products and
supply chains, and trigger particular oil) and limiting policy uncertainty
further U.S. dollar volumes of nonoil through clearly articulated
appreciation, tighter products (such as medium-term policy
financial conditions, and bananas and shrimps) frameworks. In the event
higher inflation. could have significant tensions reduce oil prices,
ramifications on growth implement fiscal
and fiscal and external contingency measures.
balances. Higher oil and
metal prices would have
a net positive impact on
Ecuador’s external and
fiscal balances.

Sovereign Debt Distress. Pursue fiscal consolidation

High High
Higher interest rates, to rebuild credibility with
stronger U.S. dollar, and Higher risk aversion and markets. Strengthen
shrinking development aid tighter financial (financial) crisis
amplified by sovereign- conditions could delay preparedness and
bank feedback result in market access, cause management. Continue to
capital outflows, rising risk capital outflows, address financing needs
premia, loss of market adversely affecting the by closely working with
access, abrupt expenditure economy and financial international financial
cuts, and lower growth in system. institutions and seek
highly indebted countries. opportune times to re-
access international
markets.

Tighter Financial Continue stepping up

Medium Medium
Conditions and Systemic financial supervision,
Instability. Higher-for- including by imposing
Abrupt market
longer interest rates and capital restoration plans
movements could hit
term premia amid looser on troubled institutions.
Ecuador through higher
financial regulation, rising Strengthen financial crisis
funding costs, and

1 The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood
is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability
below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50
percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions
with the authorities. Non-mutually exclusive risks may interact and materialize jointly. The conjunctural shocks and
scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current
baseline. Structural risks are those that are likely to remain salient over a longer horizon.

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Source of Risks Relative Likelihood Possible Impact Policy Response

investments in negative spillovers via preparedness and
cryptocurrencies, and lower growth in trading management.
higher trade barriers partners and lower
trigger asset repricing, commodity prices.
market dislocations, weak
bank and NBFI distress,
and further U.S. dollar
appreciation, which widens
global imbalances,
worsens debt affordability,
and increases capital
outflow from EMDEs.

Regional Conflicts. Gradually reduce

Medium Medium
Intensification of conflicts dependency on oil
(e.g., in the Middle East, Difficulties in finding through economic
Ukraine, Sahel, and East new markets for exports diversification and
Africa) or terrorism disrupt hit by the disruptions promote private sector-led
trade in energy and food, can reduce trade flows growth. Continue to
tourism, supply chains, and slow economic diversify export markets
remittances, FDI and growth. Higher oil and through new high
financial flows, payment metal prices are standard regional free
systems, and increase expected to have a net trade agreements.
refugee flows. positive impact on
Ecuador’s external and
fiscal balances.

Commodity Price Pursue fiscal consolidation

Medium High
Volatility. Supply and to restore confidence and
demand volatility (due to Uncertainty on ensure debt and fiscal
conflicts, trade restrictions, commodity prices will sustainability. Gradually
affect investment and
OPEC+ decisions, AE reduce dependency on oil
economic activity.
energy policies, or green Financial conditions will through economic
transition) increases tighten, leading to diversification and
commodity price volatility, higher funding costs for promote private sector-led
external and fiscal banks and non-financial growth. Continue to
pressures, social corporations. closely monitor financial
discontent, and economic Fluctuations in sector stability. Continue
commodity prices would
instability. to address financing needs
impact the fiscal sector
and Ecuador’s balance of by closely working with
payments. IFIs and seek opportune
times to re-access
international markets.

Global Growth Diversify the economy to

Low Medium
Acceleration. Easing of reduce dependency of
conflicts, positive supply- A global growth commodity export and to
side surprises (e.g., oil acceleration could be able to take advantage
production shocks), increase economic of a growth pickup more
productivity gains from AI, activity and impact the broadly. Continue to
balance of payments in diversify export markets

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Source of Risks Relative Likelihood Possible Impact Policy Response

or structural reforms raise Ecuador via direct trade through new high
global demand and trade. effects—China, the U.S. standard regional free
and Europe are trade agreements.
Ecuador’s largest trading
partners—and indirect
effects stemming from
the wider growth pickup.

Structural Risks
Deepening Geoeconomic High Adopt policies to improve
Medium
Fragmentation. Persistent trade resilience, including
conflicts, inward-oriented Geopolitical tensions enhancing diversification
policies, protectionism, that impact commodity of trade markets and
weaker international prices (in particular oil) export products and
cooperation, labor mobility could have significant limiting policy uncertainty
curbs, and fracturing ramifications on growth through clearly articulated
technological and and fiscal and external medium-term policy
payments systems lead to balances. Tensions could frameworks. In the event
higher input costs, hinder also affect Ecuador via tensions reduce oil prices,
green transition, and lower reductions in the trade implement fiscal
trade and potential volumes of nonoil contingency measures.
growth. products (such as
bananas or shrimps).
Higher oil and metal
prices are expected to
have a net positive
impact on Ecuador’s
external and fiscal
balances. Labor mobility
curbs could hit Ecuador
through lower
remittances.

Cyberthreats. High Ensuring critical systems

High
Cyberattacks on physical are properly protected and
or digital infrastructure Cyberattacks on critical backup systems are
(including digital currency infrastructures (including available. Insurance could
and crypto assets), through state-owned help mitigate some of the
technical failures, or enterprises) could fiscal risk.
misuse of AI technologies jeopardize operational,
trigger financial and energy, financial, and
economic instability. economic stability.
Cyberattacks could also
imply serious costs.

Climate Change. Extreme Medium Implement policies to

High
climate events driven by build resilience in
rising temperatures cause Ecuador is vulnerable to infrastructure to natural
loss of life, damage to a wide range of natural disasters. Invest to protect
infrastructure, food hazards related to critical financial, transport,

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Source of Risks Relative Likelihood Possible Impact Policy Response

insecurity, supply climate change, such as communication, or energy
disruptions, lower growth, landslides, floods, infrastructure to minimize
and financial instability. extreme heat, and disruptions. Build
droughts. Ecuador is also precautionary savings
exposed to volcanic and buffers.
seismic activity. Such
disasters could cause
infrastructure damage
and hit production
(including in the oil and
mining sectors) with
knock-on effects to the
fiscal, external, and
financial sectors.

Social Discontent. Real Medium Design reforms such that

High
income loss, spillovers the fiscal adjustment does
from conflicts, Social unrest and not hurt the poor and the
dissatisfaction with uncertainty regarding vulnerable. Continue
migration, and worsening future macroeconomic engaging the broader
inequality ignite social policies could lead to public, explaining the
unrest, populism, increase in interest benefits of the reform
polarization, and spreads and hurt program. Prioritize social
resistance to reforms or confidence and spending to achieve more
suboptimal policies. This economic activity. inclusive growth. Continue
weakens growth and leads to liberalize trade and
to policy uncertainty and improve the business
market repricing. climate to promote faster
job creation, including for
youth, and foster inclusive
growth.
Domestic Risks
Prolonged or Deeper Ensure adequate fiscal
High High
Security Crisis. A renewed spending on security,
flare-up in domestic High insecurity would through adequate
violence causing renewed lower domestic activity, prioritization. Implement
curfews and other tourism, and fiscal contingency fiscal measures
disruptions. revenue, and deter long- to ensure fiscal sustainability
term investment. is not undermined.
Implement targeted
measures to support the
most vulnerable. Advance
governance, AML/CFT, and
inclusive growth agenda.

Renewed Political Design reforms such that

High High
Impasse. The government the fiscal adjustment does
is unable to complete its Lack of access to not hurt the poor and the
reform agenda due to international financing vulnerable. Continue
and lower investment.
engaging the broader
Further build-up of

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Source of Risks Relative Likelihood Possible Impact Policy Response

faltering political and arrears, which will hit the public, explaining the
public support. economy and lower benefits of the reform
growth. program. Prioritize social
spending to achieve more
inclusive and job-rich
growth.

Unexpected and Large Medium Invest in maintenance of

High
Disruptions in Oil oil infrastructure. Advance
Production. Repeated and Reduced oil production the diversification and SOE
long disruptions to oil and export. Lower fiscal governance agendas.
production owing to revenue, leading to
natural disasters and further liquidity
lacking maintenance of constraints for the
infrastructure. government along with
additional build-up in
arrears.

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Annex II. Sovereign Risk and Debt Sustainability Framework

Ecuador’s public debt continues to be assessed as sustainable but not with high probability, with the
fiscal plan supported by the EFF program essential to continue rebuilding buffers and restore market
confidence. The fiscal adjustment effort remains ambitious as highlighted by the realism assessment
and the debt fanchart module continues to flag significant uncertainty around the debt path.

1. Background. The public debt-to-GDP ratio

decreased in 2024 to 53.8 percent of GDP from
54.3 percent in 2023 (Text table). The decrease was
mostly driven by a new debt-for-nature swap that
lowered the amount of external debt outstanding
by US$527 million and the repayment of domestic
accounts payable—including in arrears, while new
debt was mostly related to Ecuador’s large
borrowing from multilateral institutions, which was
catalyzed by the Fund-supported EFF program. The
significant access to multilateral financing and the
strengthening of the fiscal position facilitated a
large accumulation of deposit buffers. Spreads
have declined to around 800 basis points as of
early-July 2025.

2. Baseline Assumptions. The fiscal and debt

projections continue to be based on the successful
implementation of the fiscal reform plan supported
by the EFF-program. The NFPS primary balance,
defined as the overall fiscal balance excluding
interest revenue and interest expense, is projected
at 0.2 percent of GDP in 2025, and to converge to a
primary surplus of 2.4 percent of GDP in the medium term. The fiscal adjustment would keep debt
on a sustained downward path with the public debt-to-GDP ratio expected to decline from
53.8 percent in 2024 to below 40 percent by 2031, reaching the COPLAFIP debt limit one year ahead
of schedule. Gross financing needs (GFNs) are forecasted to decline from 8.5 percent of GDP in 2024
to 6.4 percent in 2025 and then to decline further to around 4 percent of GDP over the medium
term.

3. Public Debt Definition. Public debt in the SRDSF is defined as the consolidated liabilities of
the NFPS, comprising the PGE, the CFDD, social security funds, public nonfinancial corporations, and
the Development Bank of Ecuador (BEDE). Instruments in the debt measure include loans, securities
(bonds and Treasury bills), liabilities under oil related financing, central bank lending to the
government, deposits at BEDE, and other accounts payable including arrears.

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4. Fiscal Multiplier. The baseline scenario continues to assume a fiscal multiplier of 0.5 and a
growth path that is somewhat more conservative than the benchmark metrics provided in the SRDSF
to assess the realism of the fiscal adjustment (Figure 5). The impact of the negative fiscal impulse is
assessed to have been highest in 2024, including with a more frontloaded consolidation effort than
originally envisaged, and is expected to gradually dissipate during the program starting in 2025.

5. Risks to the Debt Outlook and Realism. As in the 2023 SRDSF, the realism assessment
continues to illustrate that sustaining the primary consolidation envisaged under the program will
be ambitious compared to cross-country historical experience. The width of the debt fanchart tool,
determined by past outcomes for debt in Ecuador, shows that debt could increase significantly
under an adverse yet plausible scenario, underscoring the need to continue reducing outstanding
debt in the program. Downside risks to the fiscal plan mainly stem from the uncertainty of external
financing sources and the implementation capacity of the fiscal program, while risks to revenues
relate to the possibility of growth underperforming, including given uncertainty on the evolution of
the security situation, thereby reducing tax revenue, lower oil prices under high global uncertainty,
as well as possible disruptions in oil production or renewed energy shortages. Mitigating factors
include the large share of multilateral and bilateral official debt, with comparatively low rollover risk
and long maturities, and the relatively low GFNs in the projection, as well as the successful
performance of the fiscal measures implemented so far under the program.

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Figure 1. Ecuador: Risk of Sovereign Stress

Mechanical Final
Horizon Comments
signal assessment

Overall … Moderate The overall risk of sovereign stress is moderate, reflecting the
moderate level of vulnerability assessed for the medium-term and the
large adjustment needs to ensure fiscal sustainability.

Near term 1/ n.a. n.a. Not applicable.

Medium term Moderate Moderate Medium-term risks are assessed as moderate in line with the
mechanical signal. The largest risk driver in the moderate assessment
Fanchart Moderate … is the width of the debt fanchart, representing the uncertainty
GFN Low … surrounding the baseline forecast.
Stress test Comm. Prices …
Nat. Disast.

Long-term risks are assessed as moderate. The large amortization

Long term … Moderate
module projects a low risk scenario under the EFF baseline, with
risks increasing proportionally if adjustment falls short. The natural
resources module points to the continued need to diversify fiscal
revenue out of oil revenue, though pressures from reasource
exhaustion are only projected to increase in the long-term.

Sustainable but
Sustainability Debt is assessed as sustainable but not with high probability, given
not with high
assessment 2/ the high downside risks faced by the baseline scenario.
probability

Debt stabilization in the baseline Yes

DSA Summary Assessment
Commentary: Ecuador is at a moderate overall risk of sovereign stress and debt is sustainable but not with high probability
in the baseline program forecast. Debt decreased in 2024 to 53.8 percent of GDP and is expected to remain on a downward
trajectory over the medium-term provided the program fiscal plan is implemented successfully. Medium-term liquidity risks
are assessed as low by the GFN module, but financing risks remain subject to high sovereign spreads. Steadfast
implementation of fiscal reforms would strenghten Ecuador's public debt sustainability.

Source: Fund staff.

Note: The risk of sovereign stress is a broader concept than debt sustainability. Unsustainable debt can only be resolved
through exceptional measures (such as debt restructuring). In contrast, a sovereign can face stress without its debt
necessarily being unsustainable, and there can be various measures—that do not involve a debt restructuring—to remedy
such a situation, such as fiscal adjustment and new financing.
1/ The near-term assessment is not applicable in cases where there is a disbursing IMF arrangement. In surveillance-only
cases or in cases with precautionary IMF arrangements, the near-term assessment is performed but not published.
2/ A debt sustainability assessment is optional for surveillance-only cases and mandatory in cases where there is a Fund
arrangement. The mechanical signal of the debt sustainability assessment is deleted before publication. In surveillance-only
cases or cases with IMF arrangements with normal access, the qualifier indicating probability of sustainable debt ("with high
probability" or "but not with high probability") is deleted before publication.

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Figure 2. Ecuador: Debt Coverage and Disclosures

Comments
1. Debt coverage in the DSA: 1/ CG GG NFPS CPS Other
1a. If central government, are non-central government entities insignificant? n.a.
2. Subsectors included in the chosen coverage in (1) above:
Subsectors captured in the baseline Inclusion
1 Budgetary central government Yes
GG: expected

2 Extra budgetary funds (EBFs) No Not applicable

CG

3 Social security funds (SSFs) Yes

NFPS

4 State governments Yes

CPS

5 Local governments Yes

6 Public nonfinancial corporations Yes
7 Central bank No
8 Other public financial corporations No
3. Instrument coverage: Currency Debt Oth acct.
Loans IPSGSs 3/
& deposits securities payable 2/

4. Accounting principles: Basis of recording Valuation of debt stock

Non-cash Nominal Face value Market
Cash basis
basis 4/ value 5/ 6/ value 7/

5. Debt consolidation across sectors: Consolidated Non-consolidated

Color code: █ chosen coverage █ Missing from recommended coverage █ Not applicable
Reporting on Intra-Government Debt Holdings
Extra- Social
Holder Budget.
budget. security Nonfin. Central Oth. pub.
central State govt. Local govt. Total
funds funds pub. corp. bank fin corp
Issuer govt
(EBFs) (SSFs)
1 Budget. central govt 0
GG: expected

2 Extra-budget. funds 0
CG

3 Social security funds 0

NFPS

4 State govt. 0
CPS

5 Local govt. 0
6 Nonfin pub. corp. 0
7 Central bank 0
8 Oth. pub. fin. corp 0
Total 0 0 0 0 0 0 0 0 0
Source: Fund staff.
1/ CG=Central government; GG=General government; NFPS=Nonfinancial public sector; PS=Public sector.
2/ Stock of arrears could be used as a proxy in the absence of accrual data on other accounts payable.
3/ Insurance, Pension, and Standardized Guarantee Schemes, typically including government employee pension liabilities.
4/ Includes accrual recording, commitment basis, due for payment, etc.
5/ Nominal value at any moment in time is the amount the debtor owes to the creditor. It reflects the value of the instrument at creation and subsequent
economic flows (such as transactions, exchange rate, and other valuation changes other than market price changes, and other volume changes).
6/ The face value of a debt instrument is the undiscounted amount of principal to be paid at (or before) maturity.
7/ Market value of debt instruments is the value as if they were acquired in market transactions on the balance sheet reporting date (reference date). Only
traded debt securities have observed market values.

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Figure 3. Ecuador: Public Debt Structure Indicators

Debt by Currency (Percent of GDP)

80
Projection
70
60
50
40
30
20
10
0
2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
Foreign currency Local currency Local-linked
Note: The perimeter shown is nonfinancial public sector.

Public Debt by Holder (Percent of GDP) Public Debt by Governing Law, 2024 (Percent)
100

50

0
2015 2017 2019 2021 2023
External private creditors
Domestic law
External official creditors
Domestic other creditors Foreign law ex. multilateral
Domestic commercial banks
Multilateral
Domestic central bank
Note: The perimeter shown is nonfinancial public sector. Note: The perimeter shown is nonfinancial public sector.

Debt by Instruments (Percent of GDP) Public Debt by Maturity (Percent of GDP)

80 80
Proj. Proj
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
2020 2022 2024 2026 2028 2030 2020 2022 2024 2026 2028 2030

Marketable debt Nonmarketable debt Residual maturity: 6. years

≤ 1 year 1-5 years > 5 years

Note: The perimeter shown is nonfinancial public sector. Note: The perimeter shown is nonfinancial public sector.

Source: Fund staff.

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Figure 4. Ecuador: Baseline Scenario

(Percent of GDP unless indicated otherwise)
Actual Medium-term projection Extended projection
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Public debt 53.8 53.2 52.1 50.4 48.4 45.5 42.5 39.4 36.2 33.0 30.1 27.4
Change in public debt -0.6 -0.5 -1.1 -1.7 -2.0 -3.0 -3.0 -3.0 -3.2 -3.2 -3.0 -2.7
Contribution of identified flows 0.5 -0.5 -1.1 -1.7 -2.0 -3.0 -3.0 -3.0 -3.2 -3.2 -3.0 -2.7
Primary deficit 0.2 -0.2 -1.0 -1.8 -2.4 -2.4 -2.4 -2.4 -2.4 -2.4 -2.4 -2.4
Noninterest revenues 35.6 35.0 34.8 35.4 35.5 35.2 35.0 35.0 35.0 35.0 35.0 35.0
Noninterest expenditures 35.8 34.8 33.8 33.6 33.1 32.8 32.7 32.7 32.7 32.7 32.7 32.7
Automatic debt dynamics 0.8 0.5 0.7 0.3 0.4 0.3 0.2 0.2 0.3 0.3 0.3 0.3
Real interest rate and relative inflation -0.3 1.5 1.8 1.6 1.6 1.6 1.5 1.5 1.4 1.3 1.2 1.1
Real interest rate -0.3 1.5 1.8 1.6 1.6 1.6 1.5 1.5 1.4 1.3 1.2 1.1
Relative inflation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Real growth rate 1.1 -0.9 -1.1 -1.3 -1.3 -1.3 -1.3 -1.3 -1.2 -1.1 -1.0 -0.9
Real exchange rate 0.0 … … … … … … … … … … …
Other identified flows -0.4 -0.9 -0.8 -0.2 0.0 -0.8 -0.8 -0.9 -1.1 -1.0 -0.9 -0.5
Contingent liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(minus) Interest Revenues -1.2 -1.3 -1.3 -1.3 -1.3 -1.2 -1.2 -1.2 -1.2 -1.2 -1.2 -1.2
Other transactions 0.8 0.4 0.5 1.1 1.3 0.4 0.4 0.3 0.1 0.2 0.3 0.7
Contribution of residual -1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Gross financing needs 8.5 6.4 5.3 5.2 3.8 4.2 4.0 4.4 4.5 4.2 3.8 3.3
of which: debt service 9.5 7.9 7.7 8.3 7.5 7.8 7.5 8.0 8.1 7.7 7.4 6.9
Local currency 9.5 7.9 7.7 8.3 7.5 7.8 7.5 8.0 8.1 7.7 7.4 6.9
Foreign currency 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Memo:
Real GDP growth (percent) -2.0 1.7 2.1 2.5 2.6 2.8 3.0 3.0 3.0 3.0 3.0 3.0
Inflation (GDP deflator; percent) 5.0 1.8 1.2 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5
Nominal GDP growth (percent) 2.9 3.6 3.3 4.1 4.2 4.4 4.6 4.6 4.6 4.6 4.6 4.6
Effective interest rate (percent) 4.4 4.6 4.7 4.8 4.9 4.9 5.0 5.2 5.3 5.3 5.4 5.5
Contribution to Change in Public Debt
(Percent of GDP) 20 Primary deficit
20
Projection 10 16 Real Interest rate and
15
0 0 relative inflation
10 -8 Real GDP growth
-10
-13
5 -20 -26 Exch. rate
depreciation
0 -30 Other flows
-22
-5 -40
Residual
-50
-10 Change in public
Cumulative in the
2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 debt
projection period
Commentary: Public debt would be on a downward path under the program.
Source: Fund staff.

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Figure 5. Ecuador: Realism of Baseline Assumptions

Forecast Track Record 1/ t+1 t+3 t+5 Comparator Group:

Public debt to GDP Emerging Markets, Commodity Exporter,
Program
Primary deficit
r-g Color Code:
Exchange rate depreciaton █ > 75th percentile
Optimistic
SFA █ 50-75th percentile
real-time t+3 t+5 █ 25-50th percentile
Pessimistic
Historical Output Gap Revisions 2/ █ < 25th percentile
Public Debt Creating Flows Bond Issuances (Bars, debt issuances (RHS,
(Percent of GDP) %GDP); lines, avg marginal interest rates (LHS, percent))
Primary deficit 20 20 3% 5 5+ yr term
4
Real interest rate and 10 10
2% 1-5 yr term
relative inflation 3
Real GDP growth 0 0
2 <1 yr term
Exch. rate 1%
-10 -10 1
depreciation
Spread vs 10-yr
Residual
-20 -20 0% 0 US Treas.

5y hist
2025

2028
2026
2027

2029
2030
Change in public Past 5 Next 5 Implied spread,
sector debt years years Laubach rule 4/

3-Year Debt Reduction 3-Year Adjustment in Cyclically-Adjusted

(Percent of GDP) Primary Balance (Percent of GDP)
12 12 Distribution 3/
Distribution 3/ percentile rank 70 percentile rank 71
10 3-year debt 10 3-year adjustment
3-year 3-year adjustment above 75th percentile
8 reduction above 8
reduction 75th percentile (5.9 (2 ppts of GDP)
Max. 3-year
6 Max. 3-year ppts of GDP) 6
adjustment
reduction
4 4

2 2

0 0
-6.5
-5.5
-4.5
-3.5
-2.5
-7.5

-1.5
-0.5

2.5
3.5
4.5
5.5
0.5
1.5

6.5
7.5
-8
-4

8
0
4
-16
-12
-28
-24
-20

12
16
20
24
28

Fiscal Adjustment and Possible Growth Paths Real GDP Growth

(Lines, real growth using multiplier (LHS); bars, fiscal adj. (RHS))
(In percent)
20 10 20 10
In percentage points of GDP

Fiscal Adjustment (rhs) Baseline real growth (lhs)

15 Baseline Baseline real potential growth (lhs)
Multiplier=0.5 10-yr avg. real growth (lhs)
10 5 10 5
In percent

Multiplier=1
5 Multiplier=1.5

0 0 0 0
-5
-10 -5 Output gap (rhs)
-10 -5
2020 2021 2022 2023 2024 2025 2026 2027 2014 2016 2018 2020 2022 2024 2026 2028 2030

Commentary: The program fiscal plan features a fiscal adjustment that is large relative to historical and cross-country
comparisons. To achieve the debt reduction goals specified in the plan it will be important to avoid policy slippages.
Source : IMF Staff.
1/ Projections made in the October and April WEO vintage.
2/ Calculated as the percentile rank of the country's output gap revisions (defined as the difference between real
time/period ahead estimates
3/ Data cover annual obervations from 1990 to 2019 for MAC advanced and emerging economies. Percent of sample on
vertical axis.
4/ The Laubach (2009) rule is a linear rule assuming bond spreads increase by about 4 bps in response to a 1 ppt increase in
the projected debt-to-GDP ratio.

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Figure 6. Ecuador: Medium-Term Risk Assessment

Value Contrib 1/ Percentile in peer group 2/

Final Fanchart (Percent of GDP) Debt fanchart module

100 5-25 pct Fanchart width 77.4 1.1
25-50 pct (percent of GDP)
50-75 pct
Probability of debt non- 16.1 0.1
75-95 pct
Actual stabilizaiton (percent)
50 Terminal debt-to-GDP x 30.8 0.7
institutions index
0 25 50 75 100

Debt fanchart index (DFI) 1.9

0
2020 2022 2024 2026 2028 2030 Risk signal: 3/ Moderate
Gross Financing Needs (Percent of GDP) Gross financing needs (GFN) module

20 Average baseline GFN 4.8 1.6

Financing provided by banks
(percent of GDP)
Actual
15 Baseline Initial Banks' claims on the 4.3 1.4
Stress scenario gen. govt (pct bank assets)

10 Chg. In banks' claims in 9.9 3.3

stress (pct banks' assets)

5 0 25 50 75 100

GFN financeability index (GFI) 6.4

0
2020 2022 2024 2026 2028 2030 Risk signal: 4/ Low
Triggered stress tests (stress tests not activated in gray)
Banking crisis Commodity prices Exchange rate Contingent liab. Natural disaster
Medium-Term Index (Index Number) Medium-term risk analysis
Value
0.50 Value
(normalized) Weight Contribution
0.40
Debt fanchart index 1.9 0.4 0.5 0.2
0.30
GFN finaceability index 6.4 0.1 0.5 0.1
0.20
Medium-term index 0.3
0.10 Risk signal: 5/ Moderate
0.00 Final assessment: Moderate
2022 2023 2024 2025
Medium-term index
Prob. of missed crisis, 2025-2030, if stress not predicted: 18.2 pct.
Low risk Prob. of false alarms, 2025-2030, if stress predicted: 37.5 pct.
Commentary: The two medium-term tools assess sovereign risk as moderate, mostly driven by the width of the confidence interval in the debt fanchart
tool. The stress test analysis shows that gross financing needs could increase substantially in case of an unexpected natural disaster, while the impact
would be smaller following a commodity price decline.
Source: IMF staff estimates and projections.
1/ See Annex IV of IMF, 2022, Staff Guidance Note on the Sovereign Risk and Debt Sustainability Framework for details on index calculation.
2/ The comparison group is emerging markets, commodity exporter, program.
3/ The signal is low risk if the DFI is below 1.13; high risk if the DFI is above 2.08; and otherwise, it is moderate risk.
4/ The signal is low risk if the GFI is below 7.6; high risk if the DFI is above 17.9; and otherwise, it is moderate risk.
5/ The signal is low risk if the GFI is below 0.26; high risk if the DFI is above 0.40; and otherwise, it is moderate risk.

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Figure 7. Ecuador: Long-Term Modules

Ecuador: Triggered Modules

Large amortizations Pensions Climate change: Adaptation Natural Resources

Health Climate change: Mitigation

Ecuador: Long-Term Risk Assessment: Large Amortization

Projection Variable Risk Indication

GFN-to-GDP ratio
Medium-term extrapolation Amortization-to-GDP ratio
Amortization

GFN-to-GDP ratio
Medium-term extrapolation with debt stabilizing
Amortization-to-GDP ratio
primary balance
Amortization

GFN-to-GDP ratio
Historical average assumptions Amortization-to-GDP ratio
Amortization

Overall Risk Indication

GFN-to-GDP Ratio Total Public Debt-to-GDP Ratio

60 200

40 150

100 COPLAFIP limit

20
50
0
0

-20 -50
2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
2050
2053

2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
2050
2053

Long run projection Long run projection

Projection Projection
Baseline with t+5
Baseline with t+5
Baseline with t+5 and DSPB
Baseline with t+5 and DSPB
Historical 10-year average
Historical 10-year average
Commentary: Ecuador faces sizeable amortizations in the medium-term. Following the program completion,
maintaining a fiscal stance consistent with a debt stabilizing primary balance would ensure that debt remains
below the COPLAFIP limit. At the same time, the module highlights that large fiscal imbalances as experienced
in the past decade could lead to a rapidly increasing debt ratio.
Source: Fund staff.

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Figure 8. Ecuador: Natural Resources Long-Term Module

GFN-to-GDP Ratio Total Public Debt-to-GDP Ratio

60 200

150
40
COPLAFIP limit
100
20
50
0
0

-20 -50
2026

2047
2017
2020
2023

2029
2032
2035
2038
2041
2044

2050
2053

2053
2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
2050
Baseline with t+5 and DSPB
Baseline with t+5 and DSPB
Natural Resources Natural Resources

Commentary: Ecuador does not face immediate pressures from depleting oil resources.

Source: Fund staff.

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Appendix I. Letter of Intent

Quito, July 8, 2025

Ms. Kristalina Georgieva

The Managing Director
International Monetary Fund
Washington, D.C.

Dear Ms. Georgieva:

1. With the decisive victory of President Daniel Noboa in the April runoff election, our
government started a four-year term on May 24, 2025. We have continued to make important
progress in the implementation of our economic reform program, supported by the 48-month
Extended Fund Facility (EFF) arrangement. We have strengthened our public finances, inflation has
remained low, and our international reserves have recovered on the back of a record high current
account surplus. We continue to address the security and energy challenges that severely affected
the Ecuadorian economy in 2024. Our economic program is currently facing new shocks stemming
from oil price volatility, a highly unpredictable global environment, and adjustments in international
financial markets.

2. In the face of new global shocks and challenges for the Ecuadorian economy, we remain
committed to a path of fiscal sustainability that protects the most vulnerable. Disbursements from
the IMF and other development partners are critically supporting our budget needs. We are
rebuilding our fiscal and reserve buffers, which help increase economic resilience and safeguard the
dollarization regime. To enhance economic growth and create favorable conditions for investment
and employment, we are also strengthening our structural reform agenda.

3. We have accomplished the goals set for the Second Review under the EFF arrangement. All
quantitative performance criteria (QPC) and most indicative targets for end-December 2024 were
met. Only the indicative target on the nonoil primary balance including fuel subsidies was not met,
by a small margin, due to an unexpected increase in diesel consumption caused by the 2024
electricity crisis. We continued to enhance social protection, with 1,214,638 lower-income families
covered by the social safety net as of December 2024. Furthermore, we met the QPC for end-April
2025. We also have made further progress on the implementation of structural benchmarks under
our policy program, and we have proposed updated timeframes to meet some outstanding
commitments and new structural benchmarks to help unlock Ecuador’s growth potential.

4. Considering the new external shocks that Ecuador is facing, we are requesting an
augmentation of access under the current EFF arrangement by SDR 750.4 million (about US$1
billion). We request the completion of the Second Review under the EFF arrangement, allowing for
the associated disbursement of SDR 438.4 million (about US$610 million) to be made available for

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budget support. In addition, we request a rephasing of the availability date associated with the Third
Review of the EFF arrangement from July 15, 2025 to August 15, 2025. The IMF’s enhanced support
is being complemented by increased financing from development partners, particularly other
international financial institutions. These funds would provide resources to help address headwinds
from volatile oil prices shock and the exceptionally uncertain global environment, mitigating the
impact on the Ecuadorian economy and vulnerable groups, as well as to continue supporting our
planned reforms and policies to promote inclusive and sustainable economic growth. We also
request completion of the financing assurances review.

5. The attached Memorandum of Economic and Financial Policies (MEFP) reports on progress
in implementing Ecuador’s economic program and lays out the macroeconomic and structural
policies that we plan to implement. We believe that the policies described in the attached MEFP are
adequate to achieve the objectives underpinning the program. However, if necessary, we stand
ready to take additional measures that may become necessary to achieve our program objectives.
We will consult with the Fund on the adoption of these measures and in advance of any substantive
revisions to the policies contained in the MEFP, in accordance with the Fund’s policies on such
consultations. We will also continue to provide the Fund’s staff with all the relevant information
required to complete the program reviews and to monitor performance on a timely basis.

6. The Government will observe the standard performance criteria against imposing or
intensifying foreign exchange restrictions or introducing or modifying multiple currency practices.
Equally, we will not conclude bilateral payment agreements that are inconsistent with Article VIII of
the Fund’s Articles of Agreement, nor will we impose or intensify import restrictions for balance of
payments reasons. We are committed to gradually phasing out the tax on transfers abroad (ISD) as
macroeconomic and balance of payments stability are restored and the foreign exchange reserve
position is strengthened, supported by implementation of the policies under the EFF-supported
program.

7. In line with our commitment to foster transparency, we consent to the publication of this
letter, its attachment, and the Staff Report to keep domestic and international agents informed
about our policy actions and intentions.

8. We thank you for your support and sustained partnership with Ecuador as we carry forward
our efforts to tackle new global shocks, continue addressing our security and energy challenges, and
achieve sustainable growth with more jobs and prosperity for all Ecuadorians.

Sincerely yours,

/s/ /s/

Sariha Moya Guillermo Avellán

Minister of Economy and Finance General Manager, Central Bank of Ecuador

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Attachment I. Memorandum of Economic and Financial Policies

This memorandum describes the key policies of our IMF-supported program under a
48-month Extended Fund Facility (EFF) arrangement, approved by the IMF Executive Board on
May 31, 2024.

1. Ecuador made significant progress in implementing important structural and fiscal

reforms in recent years. The 2020-22 EFF arrangement was instrumental in helping Ecuador
recover from the pandemic, strengthen fiscal sustainability, support the dollarization regime, and
advance the transparency and anti-corruption agendas. In 2022, we reached an overall fiscal
balance, the strongest fiscal result in over a decade. Key structural reforms included updating the
Organic Budget Code (COPLAFIP) that established a prudent fiscal framework and reinforced public
financial management (PFM); enacting legislation that criminalized acts of corruption (COIP); and
reforming the Organic Monetary and Financial Code (COMYF) to strengthen the independence and
governance of the Central Bank of Ecuador (BCE). During the EFF, we also boosted the social safety
net, increasing social assistance spending to protect the most vulnerable segments of the
population and making it more geographically inclusive.

2. Political events and other shocks hindered further progress with the reform plans that
started under the 2020-22 EFF arrangement. Political uncertainty dominated most of 2023
constraining financing options and fiscal and other reform efforts. In addition, oil revenue declined
due to a fall in both production and prices, while interest payments on external public debt with
floating rates increased significantly amid the global monetary policy tightening cycle. Together with
a sharp slowdown in economic activity, these developments negatively impacted public finances.
The fiscal position weakened markedly, and treasury deposits and international reserves declined
sharply during 2023.

3. In addition, a severe security crisis exacerbated Ecuador’s fiscal and economic

challenges. In recent years, Ecuador has grappled with a surge in criminal activities connected to
international organized crime and drug trafficking. In early January 2024, in response to security
breaches, the government declared a 60-day state of emergency (later extended for another
30 days) and an internal armed conflict, including curfews and mobility restrictions further weighing
on the fragile macroeconomic situation back then. Addressing the security situation is a key priority
for the well-being of our population and to help reactivate our economy. Our efforts are being
supported by several development partners.

4. During the first period of our administration (November 2023-May 2024), we took
bold actions to address the fiscal and security challenges. On the fiscal and economic fronts, we
implemented a three-percentage point value added tax (VAT) rate hike alongside additional revenue
measures, totaling about 2 percent of GDP, to reduce the fiscal gap. We also introduced a limited
set of tax incentives to stimulate growth and promote youth employment and took steps to
encourage private participation in the electricity generation sector. In January 2024, we announced
the intention to target the fuel subsidies to the most vulnerable, with subsequent actions

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implemented in June 2024, as described below. On the security front, we bolstered the
government’s capability to fight crime, including by reorienting current expenditure to boost the
security envelope and enhancing the role of the military. A referendum held in April 2024 approved
measures to tackle the security situation. Our decisive actions to address the fiscal and security
challenges contributed to a substantial decline in sovereign debt spreads to about 800 basis points
as of early July 2025. Against the background of a severe electricity crisis, driven by a historic
drought, real GDP contracted in 2024. Nevertheless, inflation has remained low and, partly due to
the strength of nonoil exports, the current account reached a record surplus in 2024.

5. Addressing the causes of last year’s significant electricity crisis remains critical. We
continue to tackle this issue, largely caused by climate effects on hydroelectric power generation,
which normally provides around 70 percent of our total generation capacity. We are undertaking
substantial efforts to enhance our electricity supply capacity both in the short term and over the
medium and long term. To address the energy deficit in the short term, we are incorporating new
sources of generation, including through the purchase or lease of land-based or floating thermal
generation. To strengthen energy security, two laws were enacted in January and October 2024 to
stimulate private investment in energy generation. These laws grant the Ministry of Energy and
Mines the authority to directly delegate projects of up to 100 MW in non-conventional and
transitional renewable energy. Additionally, we are promoting diversification of the energy matrix
through conventional and non-conventional renewable energy projects.

6. We are committed to continuing implementing policies to protect macroeconomic

stability, strengthen fiscal sustainability, enhance the social safety net, and foster inclusive
growth. Building on the important structural reforms supported by previous IMF arrangements and
the significant measures that we have already implemented, the current IMF-supported EFF
arrangement intends to: (i) strengthen fiscal sustainability, while protecting vulnerable groups; (ii)
rebuild fiscal and external buffers; (iii) safeguard dollarization and macroeconomic stability; (iv)
enhance financial stability and integrity; and (v) continue the structural reform agenda to unlock the
economy’s potential, fostering strong and inclusive economic growth.

7. We are taking actions in response to significant new global shocks. Our economic
program is currently facing new shocks stemming from volatile oil prices, a highly unpredictable
global environment, and adjustments in international financial markets. Together with an updated
fiscal strategy in response to these challenges, we are receiving enhanced support from the IMF and
other international financial institutions. Moreover, we are strengthening our structural reform
agenda to enhance economic growth and create favorable conditions for private investment and
employment.

8. The following sections of this memorandum outline our policy plans under the EFF
arrangement.

A. Strengthening Fiscal Sustainability

9. In recent years, we have undertaken reforms to ensure the sustainability of Ecuador’s

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public finances and build a more robust PFM framework underpinned by stronger
institutions. Key elements introduced by the updated COPLAFIP included the establishment of a
medium-term fiscal framework (MTFF), the introduction of clear anchors to reduce public debt, the
setup of the National Fiscal Coordination Committee, and the introduction of a fiscal risk
management exercise. Fiscal governance was further enhanced by a comprehensive revamp of fiscal
statistics and cash management, supported by Fund technical assistance (TA). An updated IMF Fiscal
Safeguards Review, conducted in 2024, confirmed that Ecuador’s PFM system has made progress
since the previous 2021 review.

10. Our fiscal policy will continue to be guided by the principle of strengthening the
sustainability of public finances and reducing public debt, while protecting the most
vulnerable. We will aim at placing our public debt ratio on a firmly downward trajectory,
maintaining manageable gross financing needs, and respecting the expenditure growth rules and
the debt limit of 40 percent of GDP by 2032 that are enshrined in COPLAFIP. We will continue to
allocate fiscal space in our budgets to protect the most vulnerable segments of our population and
for priority investment projects. As a sign of our commitment, we have published a MTFF that is in
line with these objectives and the EFF-supported program (end-October 2024 structural
benchmark, met). We stand ready to take additional revenue or expenditure measures should fiscal
shortfalls emerge that would jeopardize the achievement of program targets. To that effect, as prior
action for program approval in May 2024, we have elaborated a contingency plan.

11. The 2024 fiscal position strengthened, with a reduction of the non-financial public
sector (NFPS) overall fiscal deficit of over 2 percentage points of GDP to 1.3 percent of GDP.
The 2024 plan accommodated urgent spending needs to deal with the security situation and the
electricity crisis, while protecting the most vulnerable segments of the population. We also started
clearing domestic payment arrears, thereby improving the difficult liquidity situation facing the
economy. The fiscal efforts were supported by the revenue measures enacted in 2024 as well as
expenditure restraint. On the revenue side, the enacted measures led to a historic high level of total
gross tax revenue. Main measures taken included a hike in the value added tax (VAT) rate and
temporary contributions payable on corporate and bank profits. On the expenditure side, the
strategy was underpinned by maintaining wages and goods and services broadly constant in real
terms, reprioritizing some spending towards addressing the electricity crisis, while protecting space
to address the security crisis and meet urgent social and investment needs. To monitor fiscal
liquidity in real time, as a prior action before program approval, we prepared and shared with Fund
staff a projected monthly cash flow and financing plan for the budgetary central government (PGE).

12. The global landscape in 2025 presents new fiscal challenges for Ecuador. Volatile oil
prices, together with the deterioration of the global backdrop, have worsened investor risk appetite.
To address the effects of these shocks, we have strengthened our fiscal consolidation plan.

13. The revised medium-term fiscal consolidation plan aims to place public finances on a
sustainable path. To this end, we expect to maintain the NFPS overall deficit as a percent of GDP
broadly unchanged in 2025 and reach an overall surplus of 1.3 percent of GDP by the end of the
program in 2028. This is consistent with achieving a NFPS primary surplus of 2.4 percent of GDP in
2028 and a cumulative consolidation of about 6.6 percentage points of GDP in the non-oil primary

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balance including fuel subsidies (NOPBS) over 2024-28 relative to end-2023 (compared to a
cumulative consolidation of 5.5 percentage points of GDP in the NOPBS at the time of the first
review of the EFF in December 2024). This ambitious consolidation effort balances the need to
strengthen fiscal sustainability, regain market access, and protect the most vulnerable, while the
economy recovers. This strategy also allows us to reduce oil dependence and meet public debt
limits set out in the COPLAFIP legislation. The measures that we are planning to take to achieve the
projected medium-term consolidation would include the following key items:

• Non-Oil Revenues. Increasing non-oil revenues remains important to reduce volatility in fiscal
revenues triggered by global commodity prices. We have prepared a plan to mobilize non-oil
revenues to replace temporary measures with permanent high-quality ones, mainly through
streamlining inefficient tax expenditures and exemptions, thereby sustaining a higher level of
non-oil fiscal revenues over the medium term (mid-November 2024 structural benchmark,
met). We will also develop a new fiscal regime for the mining sector to enhance its efficiency
and revenue potential, with IMF TA support (proposed structural benchmark for end-
December 2025).

• Oil Revenues. As we announced in January 2024, one of the administration’s priorities is to

make fuel subsidies more focused, while ensuring an appropriate social protection mechanism
for the most vulnerable. In June 2024, with World Bank (WB) technical support, we enacted a
reform of the price-setting mechanism for domestic sales of low-octane gasoline, aligning
domestic prices with international prices, which is expected to boost oil revenue by about
0.4 percent of GDP in steady state, reducing the fiscal opportunity cost of selling oil derivatives
at below market prices. In addition, the government is launching initiatives to increase net oil
revenues, including by gradually increasing production (partly through greater private
investments) and enhancing the capacity of the oil refinery system. Most of these subsidies
benefit many who do not need the support, encourage over-consumption of fossil fuels,
undermine the energy transition, damage the environment, and provide ground for corruption
and smuggling, benefiting informal mining activities and drug trafficking. In line with this policy
priority, in June 2025, we decided to eliminate the diesel subsidy for the industrial tuna fishing
sector.

• Public Sector Wage Bill. We are committed to continuing efforts to contain the public sector
wage bill, building on efforts made in recent years. To this end, we plan to limit increases in
headcount and wages. In this spirit, we issued a norm in 2024 to enforce that all public sector
wages be capped below the salary of the President. We will also review and streamline
temporary contracts. The strategy will be carefully crafted to ensure the delivery of quality public
services and needed hiring of additional police personnel and domestic security forces to
counter the security crisis.

• Procurement. We aim to continue reforming our procurement system to optimize expenditure

in goods and services, while ensuring the highest standards of transparency and the quality of
public services. In July 2023, the National Public Procurement Agency (SERCOP) issued norms to
operationalize the 2022 Procurement Law and its bylaws. Ongoing efforts to increase efficiency

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include the cataloguing of public procurement processes and prices, introducing standardized
and bulk purchases of medicine, medical inputs, and other goods and services. In June 2024,
SERCOP presented the evaluation report of the public procurement systems (“MAPS”), a joint
work with the Inter-American Development Bank (IDB). An urgent economic law was approved
by the National Assembly in June 2025, establishing new mechanisms in public procurement,
with the goal of eradicating corruption and improving efficiency in the public sector. To promote
transparency, we have created the National Control Subsystem (SNC), presided by SERCOP, and
comprised by the Economic and Financial Analysis Unit (UAFE), the Internal Revenue Service
(SRI), the Office of the Comptroller, the State Attorney’s Office, and financial regulators. The SNC
will facilitate coordination among public entities with control competencies over the public
procurement system, via the interoperability of their databases. We have established a timeline
to operationalize the SNC (end-December 2024 structural benchmark, met), and we will
prepare and share with the Fund the conceptual and operational framework to upgrade the
Public Sector Procurement System (SOCE) (end-July 2025 structural benchmark), with support
from the IDB.

• Capital Expenditure. We will prioritize capital expenditure projects based on their estimated
social and economic impact. We will also promote public-private partnerships (PPPs) and
concessions to the private sector for infrastructure investment, with due account of contingent
liabilities and the associated fiscal risks. The Ecuadorian Development Bank (a public bank) will
channel multilateral and bilateral resources for infrastructure investment by local governments.
We undertook a Public Investment Management Assessment (PIMA) in 2023 to improve our
public investment process. This TA included a climate-related assessment of public investment
management (C-PIMA) to help us build low-carbon and climate-resilient infrastructure. We
intend to gradually implement the recommendations of the PIMA/C-PIMA assessments.

14. Specific actions to achieve annual fiscal targets will be established in the
corresponding annual budgets. Given that 2025 has been an election year, the 2024 budget was
extended into 2025, as stipulated by COPLAFIP. In late 2024, we enacted the necessary measures to
ensure that our 2025 fiscal plan is in line with the EFF-supported program targets and the MTFF
(early December 2024 structural benchmark, met). We will ensure that the revised budget for
2025 and the next MTFF are also aligned with the EFF-supported program targets.

15. We remain committed to clearing domestic arrears. The accumulation of public sector
arrears due to tight fiscal and liquidity conditions has been weighing heavily on economic activity.
As the fiscal liquidity situation improves, we will continue working on regularizing overdue
obligations to the private sector and intra-public sector claims. To this effect, we have already
included in the multi-year fiscal financing plan the clearance of PGE arrears with the private sector,
and in November 2024 we prepared and shared with Fund staff a plan for clearing and preventing
the resurgence of PGE arrears, including obligations to the private sector and intra-public sector
claims (end-November 2024 structural benchmark, met).

16. Our financing strategy relies on multilateral and bilateral sources in the near term,
while seeking to regain access to international capital markets in 2026, and gradually

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developing domestic financing sources. We will pursue an active public debt management
strategy with the goal of covering the public sector’s financing needs at the lowest possible cost
with a prudent level of risk. We have published a new medium-term debt management strategy
(MTDS) in line with these objectives and the EFF-supported program (end-October 2024 structural
benchmark, met). We are in active dialogue with our official bilateral partners to secure continued
financial support. We will establish a dedicated working group tasked with overseeing and
monitoring project financing transactions which will meet every two weeks. This group will ensure
effective management, facilitate communication among stakeholders, and enhance the overall
efficiency of financing processes to deliver project progress and disbursements in line with program
assumptions. We hope to return to the international capital markets as soon as possible, as the
market conditions allow. We will continue to work on developing the domestic capital market.

B. Expanding Our Social Safety Nets

17. Our goal is to ensure that the burden of fiscal consolidation is not borne by the poor
and vulnerable. We have made big strides in protecting the social and economic conditions of the
most vulnerable in recent years by upgrading our social registry and expanding the coverage of the
social protection system with the assistance of the WB. We have also prepared a plan to further
enhance the social registry and aim to cover all families in the lowest three deciles of the income
distribution throughout the country (end-October 2024 structural benchmark, met). As of April
2025, over 1.2 million family units from the bottom three income deciles already benefit from social
protection transfers. We aim to extend the coverage of social protection for 47,000 additional family
units per year into the social protection programs, thereby ensuring that almost all the families in
the bottom two income deciles and the majority of the families in the third income decile are
covered by social protection by the end of the IMF-supported program. Additionally, we are working
on the permanent updating of the social registry base that includes institutional strengthening at
the central level and territorial deployment work in coordination with subnational governments
(GADs). Also, with the support of the WB, we have undertaken several actions to make the current
social protection system more efficient and comprehensive, not only through monetary transfers but
also through the provision of complementary services by the State. Social protection will continue to
increase through our multiple social assistance transfer programs, listed in the Technical
Memorandum of Understanding (TMU). To increase efficiency and transparency, the Ministry of
Economic and Social Inclusion (MIES) has led a campaign to increase the use of banking services by
recipients of these social protection transfers.

C. Enhancing the Institutional Framework, Governance, and Transparency

18. We have made significant improvements in enhancing the timeliness, reliability, and
consistency of fiscal statistics. The 2020 COPLAFIP reforms included the adoption of regulations,
including those that require timely collection, accurate compilation, and transparent publication of
fiscal data, with adequate coverage (by subsectors of the NFPS). We have enhanced our technical
and institutional capacity in fiscal data recording and reconciliation. In that regard, we established a
dedicated statistics unit at the Ministry of Economy and Finance (MEF), with expertise in government

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finance statistics compilation. With the support of IMF TA, we have updated the training curriculum
in GFS compilation and produced a training schedule, to ensure ongoing training of new and
existing staff in above- and below-the-line fiscal data recording, reconciliation, and verification. An
IMF long-term expert (LTX) worked during one year with the statistics unit on improving MEF’s
capacity in compiling, verifying, and reconciling government finance and debt statistics. Additionally,
one of the objectives of the fiscal statistics team is to increase the coverage of the NFPS through the
inclusion of public companies in the electricity sector and expand the statistical sample of local
government companies. In February 2025, we issued a technical regulation (norma técnica), in line
with COPLAFIP, defining the procedures for monitoring and evaluating compliance with fiscal rules.

19. Currently fiscal statistics are disseminated monthly according to a pre-established

publication calendar, which is updated once a year. The time series data on revenues,
expenditures, and transactions in financial assets and liabilities by each subsector of the NFPS are
published monthly along with indication whether the data is preliminary or definitive. Additionally,
in collaboration with the IMF’s Statistics Department, an analytical report on the Budgetary Central
Government GFS has been created and is published alongside the monthly time series.

20. Working closely with the IMF’s Statistics Department, we have revised the historical
balances of the Social Security Fund (IESS). Based on this work, we adjusted the compilation
process of the IESS and corrected the transfers from the central government to IESS for accrued
pension liabilities going back to 2013. We also incorporated into our expenditure and debt statistics
additional healthcare transfer obligations to IESS based on a conservative estimation while
healthcare audits are pending. We have included in the central government 2024 budget and MTFF
the accrued pension transfer obligations and the estimation of the healthcare transfer allocations to
the IESS and will continue recording conservative estimates in future budgets.

21. We are committed to making steadfast progress in establishing a revised mechanism

to settle healthcare claims from IESS. This will bring legal predictability to the process of auditing
and clearing verified obligations. To that effect, we will establish an updated agreement between the
MEF and IESS on the transfer of healthcare obligations (including both internal and external
providers), building on the December 2022 agreement (end-March 2025 structural benchmark,
not met, proposed to be reset for end-August 2025). The updated MEF/IESS agreement will also
stipulate the process to be taken to audit and settle the 2022 healthcare obligations. We will
implement the resulting agreement, to prevent future arrears on healthcare obligations, improve the
reliability of fiscal statistics, and strengthen the sustainability of the IESS. We have finalized the
procurement to hire the external auditor to review the 2023 and 2024 healthcare obligations to IESS
(end-December 2024 structural benchmark, met) and the audits are underway.

22. We will continue working on strengthening PFM and implementing better cash
management practices. With the assistance of a PFM expert provided by the IMF, we have been
able to expand our cash management planning capability and horizon to encompass the full length
of the annual budget cycle. The remaining challenge is to develop further capability to update our
cash management planning on a 12-month rolling basis from any given point in the budget year.
The expert has also helped implement a new monitoring system to evaluate the existing stock of

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domestic payment arrears of the central government and selected relevant entities of the NFPS. In
January 2022, we published a methodology to estimate the stock of arrears and the reporting
templates to be used by public sector entities. We have estimated the stock of potential claims on
PGE, including with the IESS, GADs, private sector, or others (if any) by type of expenditure, year, and
beneficiaries. We have started publishing data on monthly arrears in the public debt bulletins, as per
COPLAFIP law. We will design a policy so MEF can gather monthly information on arrears from other
entities of the NFPS, as mandated by COPLAFIP. To further strengthen financial management,
increase transparency, and reduce accumulation of payment arrears, we are working to finalize with
IMF technical support an automatized process for PGE payments, including arrears’ payments (end-
March 2025 structural benchmark, not met, proposed to be reset for end-July 2025).

23. We will continue improving the efficiency of state-owned enterprises (SOEs) and
monitoring fiscal risks. At the moment, seven public companies that were not managed efficiently
are in the process of closure, such as the Public Enterprise Coordinating Company (EMCO), which
was closed in 2024. For SOEs that will remain in operation, we are committed to strengthening their
operational framework, reforming collective labor agreements, and implementing best practices to
improve efficiency and limit contingent liabilities to the budget. These efforts will support a
structural cost-optimization strategy, including a comprehensive efficiency assessment of the state,
which would enable us to curtail unproductive activities and obtain efficiency gains.

24. MEF has implemented several actions to improve public debt transparency. Following
the new debt methodological definition and with WB and Fund TA, a new Debt Bulletin was
developed and is published monthly on the official website of the MEF. The Bulletin also includes
detailed information on previously not included past obligations related to internal debt, arrears,
accounts payable, and previous unregistered budgetary obligations. In addition, the current public
external and internal debt profile is published, as well as the amortization profile by source and
operation. The detailed database supporting the Bulletin is now accessible on our website.

25. We plan to implement IMF TA recommendations on strengthening tax administration.

In 2023, we produced an assessment of our tax administration, and with the support of the IMF, we
also undertook the Tax Administration Diagnostic Assessment (TADAT). We plan to implement an
institutional model under the TADAT methodology to close the gaps in tax administration against
best international practices, especially in control processes. Implementation, with support from the
IDB, will focus on process integration, transparency, tax registration, data intelligence, and
information management. Moreover, we have requested IDB’s TA for the National Customs Service
of Ecuador (SENAE), aiming to enhance its modernization process.

D. Strengthening the Institutional Framework and Capacity of the BCE and

Safeguarding the Dollarization Regime

26. We have made significant progress in strengthening the institutional framework of the
BCE in recent years. In 2021, we revised the COMYF with measures to support the dollarization
regime, which included eliminating the possibility of direct and indirect central bank financing of the

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government, restoring full reserve coverage of private and public financial institutions’ deposits at
the BCE; and giving technical and managerial autonomy to the BCE. The revised law also
strengthened the BCE balance sheet, including by removing all legacy assets from the 1999 banking
crisis. It also improved central bank transparency, by establishing an audit committee, appointing
external auditors, and publishing the audited BCE financial statements on the BCE website. Besides
enacting the law, we took other steps to strengthen institutional framework of the BCE by: (i)
implementing a capacity development program for auditors; (ii) requiring the certification of the
audit departments and individual auditors by the Institute of Internal Auditors (an international
organization); and (iii) implementing some recommendations regarding our audit department from
a peer-review assessment. We also have modified the BCE’s organizational structure to strengthen
its technical areas, and we have ensured permanent constitution of the audit committee. An
updated IMF safeguards assessment in 2024 confirmed that the BCE has significantly strengthened
its safeguards since the previous 2019 assessment. We aligned the implementation of the “backing
rule” established in the COMYF with the 2023 reprofiling of the government’s debt held by the BCE,
deferring the requirement for full coverage of the first, second, and third balances to 2040. This will
ensure effective implementation of the backing rule consistent with the strengthening of the Central
Bank’s balance sheet, safeguarding dollarization.

27. The BCE enhanced its access to contingent liquidity lines. In 2023, the Latin American
Reserve Fund (FLAR) granted the BCE access to a contingent credit line of up to US$230 million. In
2022, the Federal Reserve Bank of New York (FRBNY) granted the BCE access to a Foreign and
International Monetary Authorities (FIMA) Repo Facility of US$1 billion for exclusive central banking
operations. This facility allows the BCE to access liquid resources for potential needs through
securities repurchase operations (repo), which are part of our institution's investment portfolio.
Additionally, the BCE renewed its contingent liquidity facility with the Bank for International
Settlements (BIS) of up to US$840 million as a precautionary measure in case of dollar liquidity
shortages. In June 2025, the BIS granted a new contingent liquidity line up to US$1.5 billion which
strengthens the management of Ecuador’s international reserves and provides additional liquidity
buffers for the BCE. This facility could also be activated by the liquidity funds of financial institutions
when proper legal reforms have been implemented by the Deposit Insurance Corporation (COSEDE).

28. The BCE reached an all-time high of US$ 1.7 billion of letters of credit. Since June 2021,
the BCE has reported a significant increase in the amount of letters of credit, which increased from
US$966 million in June 2021 to a historical maximum of US$1.7 billion in June 2025. Letters of credit
represent a critical financial instrument for foreign trade operations, especially for fuel imports, as
they facilitate payment management and help reduce pressures on national treasury and
international reserves.

29. The BCE completed the base year change project of Ecuador’s national accounts. With
the TA from the IMF and the Economic Commission for Latin America and the Caribbean (ECLAC),
the BCE concluded and disseminated in December 2023 the update of Ecuador’s Annual and
Quarterly National Accounts, consisting in changing the fixed base methodology to a moving base
with reference year 2018. This project enabled the inclusion of a broader source of statistical

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indicators and reflects the country's most recent economic structure. The new methodology follows
the latest international statistical practices and standards for national accounts, facilitating the
development of economic research, and supporting well-informed decision-making in the public
and private sectors with improved data. The IMF has also provided TA on the calculation of the
demand components of the Quarterly National Accounts. In early 2025, we released the new 2018-
23 Input-Output Matrices. We will continue working with IMF TA to further improve our
macroeconomic statistics. In June 2025, with the technical support of international organizations, the
BCE released the Bioeconomy Satellite Account which is a statistical tool aimed at recognizing the
strategic value of biological resources for economic and environmental development. This Satellite
Account constitutes a statistical milestone for the country and the region.

30. The BCE reported net profits and strengthened its equity. As a result of the higher levels
of international reserves, the BCE reported accumulated net profits of US$1.6 billion between 2021
and 2024, and the BCE’s equity increased from US$1.6 billion to US$2.8 billion. As part of the
strengthening of the bank’s equity, the BCE increased its general reserve fund to US$500 million,
reaching 500 percent of the authorized and paid-in capital, in compliance with the requirements
established in the COMYF. This progress has enhanced the bank’s buffers to deal with potential
future financial losses. After an unprecedented strengthening of the bank’s equity, the BCE was able
to transfer US$1.1 billion in profits to the MEF between 2021 and 2024.

E. Enhancing the Resilience of our Financial System and Developing the

Domestic Capital Market

31. Ecuador’s 2023 Financial System Stability Assessment (FSSA) comprehensively

assessed the health and resilience of our financial system. The assessment covered solvency and
liquidity risks, financial sector oversight, macroprudential policies, safety nets, and crisis
preparedness. The FSSA also analyzed the quality of the oversight framework of payment systems,
the preconditions for capital market development, and access to finance. Key recommendations
included: (i) strengthening financial sector oversight and coordination among agencies involved; (ii)
enhancing the prudential framework governing capital and liquidity; and (iii) fostering financial
deepening and capital market development. We are gradually implementing the recommendations
of this comprehensive assessment to ensure our prudential regulatory framework and financial
system oversight meet international standards and best practices, supporting financial stability and
efficient financial intermediation.

32. We are increasing coordination and information sharing between all the agencies
involved in financial sector oversight. To this effect, we have established a Financial Stability
Committee (FSC) in line with best international practices, comprising the BCE, the MEF, the Financial
Policy and Regulation Board (JPRF), the Monetary Policy and Regulation Board (JPRM), the
Superintendency of Banks (SB), the Superintendency of Popular and Solidarity Economy (SEPS), the
Superintendency of Companies (SCVS), and the Deposit Insurance Corporation (COSEDE) (end-
September 2024 structural benchmark, met). The Committee aims to facilitate coordination and
information exchange among the agencies involved, providing a holistic perspective to financial

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sector surveillance, and supporting prompt policy responses to financial sector vulnerabilities. We
also established an inter-institutional group within the FSC, comprising the BCE, MEF, JPRF, JPRM,
SB, SEPS, and COSEDE, to coordinate bank resolution reforms and strategies (structural benchmark
for end-January 2025, met). With TA from the IMF and the WB, we are working to strengthen the
resolution framework. To enhance the resilience in our financial system, between December 2024
and May 2025 we have issued key new regulations to improve the governance and provisioning
frameworks for cooperatives.

33. We are enhancing the prudential framework on capital and liquidity. We have prepared
the methodologies to identify the systemically important financial institutions, and in November
2024 we enacted macroprudential regulations on capital buffers, including surcharges on
systemically important institutions and countercyclical capital buffer (end-November 2024
structural benchmark, met). These regulations are expected to enhance the loss absorption of
banks and credit cooperatives and support financial stability. In addition, we have started
implementing the FSSA recommendations on liquidity, including the phased implementation of the
Liquidity Coverage Ratio (LCR) for banks, expected to be achieved by 2028. We are also working to
improve data requirements on liquidity and to expand the implementation of the LCR to the largest
credit cooperatives. On emergency liquidity assistance, COSEDE issued a new operative manual for
the Liquidity Fund’s trust fund in 2024. We have also intensified supervision, including the
implementation of action plans on a group of weak institutions. An insolvent medium-sized credit
cooperative and a small bank were liquidated in December 2024 and April 2025, respectively. During
the first half of 2025, the IMF provided TA to regulatory and supervisory institutions to improve our
stress testing toolkit and to enhance our emergency liquidity assistance framework. While we are
still relying on regulatory forbearance, we are cognizant that it will need to be phased out at an
appropriate pace.

34. We are committed to fostering financial sector development and inclusion. Banks and
credit cooperatives are subject to ceilings on lending rates differentiated by credit types and, in the
case of commercial loans, also by the size of the borrower firms. The 2023 FSSA noted that the caps
on lending rates in the higher interest rate environment have led to margin compression, distortions
in credit supply, and restrictions to financial inclusion. A recent revision in the rule to update the
interest rate caps on commercial and corporate loans led to some relief in these segments, and we
are assessing their effects. Further reforms to support financial sector intermediation will help lower
borrowing costs, increase access to credit, and help unlock the economy’s growth potential. To this
objective, and in line with our financial inclusion strategy, we carried out a study of the system of
interest rates (end-March 2025 structural benchmark, not met, implemented with delay in May
2025). The study sets the basis for the implementation of a gradual reform to the interest rate cap
system, with the objective of alleviating unwarranted credit constraints, enhancing financial
inclusion, and supporting economic growth, while preserving financial stability. The Financial
Stability Committee reviewed the recommendations of the study, and the Financial Board will work
towards adopting a new interest rate methodology that is simpler, more flexible, and attuned to
market conditions. We also plan to monitor and assess the impact of the new methodology on a
continuous basis to ensure it contributes to a more efficient and inclusive financial intermediation. In

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parallel, our public bank CFN (Corporación Financiera Nacional) has continued to work on facilitating
access to credit for micro, small, and medium-sized enterprises, with support from the WB, IDB, and
other development partners.

35. We will continue working on developing domestic capital markets to allow financial
deepening and diversifying financing sources for the government and the private sector. At
present, the primary placements of government securities with private domestic stakeholders take
place through the Guayaquil and Quito Stock Exchanges. We have started to standardize
government securities and develop a domestic yield curve. We will issue a new regulation for
domestic market auctions for bonds and treasury notes, including procedures, auction format, and
rules for participation, bidding, and allocation (proposed structural benchmark for end-November
2025). To foster capital market development, we are also taking actions to improve the domestic
capital market infrastructure. Building on these reforms, we intend to begin regular auctions of
government securities as market conditions allow. We expect these reforms to help develop a
deeper domestic capital market to channel resources to the government and the private sector,
contributing to increase investment, productivity, and growth.

36. We have started to make important investments in BCE’s central securities depository
and payment system to strengthen the domestic capital market and promote digital
payments nationwide. To achieve these objectives, the BCE has signed a contract to implement a
new platform for the BCE’s central securities depository (DCV) to modernize the compensation,
liquidation, and custody functions in line with international standards (end-January 2025 structural
benchmark, implemented with delay). We will also work on enhancing the payments system by
improving the real time gross settlement (RTGS) system at the BCE. The improvements to the
payment infrastructure managed by the BCE will facilitate payments at the national level through
interoperability between the different payment networks, reducing transaction costs, mitigating the
risks related to the use of cash, encouraging the development of digital commerce, and promoting
the revitalization of economic activity. In December 2024, the Monetary Board approved a
regulation on payment systems and fintech activities, and in May 2025 the BCE approved a
resolution establishing the timeline to implement interoperability among participants of the
payment system for digital transfers.

F. Strengthening the Business Environment, Competitiveness, and Private

Sector-led Growth

37. We are committed to restoring the competitiveness of the economy and raising the
living standards for all Ecuadorians. To this end, we are taking important strides in improving
transparency and economic governance, fighting crime and corruption, addressing bottlenecks for
investment and employment, and making Ecuador a preferred destination for businesses worldwide,
supported by our international trade agreements. A decree issued in June 2024 announced a
National Policy aimed at making competitiveness-enhancing regulatory improvements. We will
further facilitate environmentally sustainable investment in the mining sector, which in recent years
has already increased production and exports. We are also implementing measures to boost

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investment in hydrocarbon sectors and electricity supply. We are working closely with development
partners, including the IMF, the WB and the IDB, to carry out an agenda of structural reforms that
help unlock Ecuador’s growth potential.

38. We have concluded important trade agreements to foster trade integration and
investments. In 2024, the National Assembly ratified trade agreements with Costa Rica and China.
As a result, 84 percent of Ecuadorian products exported to Costa Rica will be exempted from tariffs.
Other products will also benefit from gradual tariff reductions over the next five to fifteen years.
With China as Ecuador’s second-largest trading partner and the largest market for its non-
petroleum exports, the benefits of the new trade agreement should be significant. The agreement
will allow 99.6 percent of Ecuadorian exports to China to benefit from immediate or gradual tariff
reductions. These trade deals will also increase the potential for productive FDI inflows. Ecuador is
currently in the process of finalizing agreements with South Korea and Canada, and we are
negotiating with other countries such as the United Arab Emirates. We are also working to deepen
our trade relations with the USA.

39. We are enhancing our financial integrity and our efforts against organized crime and
related illicit activities by strengthening our Anti-Money Laundering and Combating the
Financing of Terrorism (AML/CFT) framework. We have adopted new AML/CFT legislation to
strengthen the AML/CFT framework, incorporating reforms in line with Financial Action Task Force
(FATF) standards (end-February 2025 structural benchmark, met). Such legislation was originally
developed with IMF’s technical support. We will issue necessary regulations to implement the new
AML/CFT legislation to ensure its effective entering into force in line with the FATF standards. We
are also working to further enhance the governance and independence of the UAFE and enhance its
capabilities in producing comprehensive strategic and operational financial intelligence that will be
proactively disseminated to law enforcement agencies for further investigation in financial crimes.
More broadly, we are taking other measures to tackle illicit financial flows. Notably, we have
launched a Joint Investigation Unit to formally align efforts across key public institutions in the fight
against money laundering, tax fraud, and other illegal activities that help finance organized crime. To
support these efforts, we will approve, with IMF technical support, and publish a summarized version
of an AML/CFT Strategic Action Plan, establishing actionable policy priorities to mitigate money
laundering and terrorist financing risks, such as those identified in the National Risk Assessment
approved in 2024, including measures focused on tackling organized crime-related illicit financial
flows (end-September 2025 structural benchmark).

40. We remain committed to bringing more accountability and transparency to the public
sector. To this end, we have issued our first holistic policy on public sector integrity (“National Policy
of Public Integrity 2030”), covering SOEs. This policy has several strategic lines, including
transparency in public spending and conflict of interests. In December 2024, we also approved the
2024-28 National Integrity and Anti-Corruption Plan, aimed at strengthening institutional capacity,
increasing transparency, and fostering citizen participation in the fight against corruption. The
recently approved AML/CFT law introduced an enhanced asset and interest declaration framework.
To prevent and manage conflict of interests, in 2022 a Draft Law to Prevent Conflict of Interests in

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Public Administration (prepared by the General Comptroller together with the Anti-Corruption
Secretariat) was submitted to the National Assembly to advance public sector integrity and reduce
vulnerabilities to corruption. Once in force, the law would expand the asset declarations of politically
exposed persons (PEPs) to ensure it continues detecting and enforcing against illicit enrichment
while also becoming a fundamental tool to detect and prevent potential conflicts of interest in the
public sector. It would also encourage transparency, by mandating online public access to relevant
information on the assets, incomes, liabilities, and interests in the declarations.

41. SERCOP has continued to require information on the Ultimate Beneficial Ownership
(UBO) of companies awarded public procurement contracts. This information must now be
submitted by state suppliers through an electronic form, which should facilitate its continuous
publication on SERCOP’s website. Within the SOCE, SERCOP maintains an updated section featuring
the UBO information for the most recent public contracts, accessible for public consultation. The SRI
is developing a Registry for Ultimate Beneficiaries, with new regulations issued in September 2024.
This registry will serve to have a central repository of UBO information and cross-reference
information with SERCOP and the Superintendency of Companies. In December 2024, SERCOP and
other institutions approved the National Integrity Strategy for Public Procurement (ENICOP), a multi-
sector initiative with public and private participation, to strengthen transparency and integrity in
public procurement.

42. In another major transparency milestone, financial audits of the national oil company
are under way; and we have unveiled plans to audit also two electricity SOEs. In January 2024,
we hired an independent top-tier audit firm, with support from the IDB. The audits, as envisaged
during the EFF-supported program that concluded in 2022, covered the 2019 and 2020 financial
statements of Petroecuador and Petroamazonas, and the 2021 financial statement of the now
merged entity (Petroecuador). We have completed and shared with IMF staff the 2019 and 2020
audit results (end-March 2025 structural benchmark, met). We are working to complete the audit
of the 2021 financial statements of Petroecuador and will share the results with IMF staff (proposed
structural benchmark for end-September 2025). We will gradually address any issues identified in
the audits going forward. Similarly, to continue advancing our transparency agenda, we have
announced our plans to hire top-tier firms to continue auditing Petroecuador as well as CNEL and
CELEC.

43. To foster private sector-led growth, we have developed a new framework for PPPs and
we are aiming to start new PPP projects soon. A law approved by the National Assembly in
December 2023 laid out this new framework, complemented with regulations issued in February
2024. PPP projects in the pipeline prioritize sectors such as road infrastructure and renewable
energies. A fiscal risk unit within the MEF will evaluate the viability of PPP projects, including
quantification of risks to the public sector’s balance sheet, and propose ways to mitigate them.
These risks will be clearly presented in our fiscal risk statements, which will be annexed to the annual
budgets.

44. We are also working to give a jump-start investments in new environmentally

sustainable projects in mining and hydrocarbons. Our government created in 2024 an

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interinstitutional committee to devise near-term actions aimed at fighting illegal mining and
updating the mining cadaster. We expect to reopen the cadaster by end-2025. We will implement
the regulation for the opening of the mining cadaster (proposed structural benchmark for end-
June 2026), to help unlock the high potential for private investments in new environmentally
sustainable mining projects. Furthermore, a June 2024 decree issued a new regulatory framework for
natural gas projects. In 2025, we have launched an ambitious multi-year plan to mobilize
investments in the hydrocarbon sector, including significant private sector participation.

45. We are working to urgently address the electricity challenges and increase renewable
energy generation over the longer term. Power shortages since late 2023 were largely associated
with extreme climate events, affecting hydroelectric power generation, and longstanding
underinvestment in the energy sector. It is therefore critical to undertake essential maintenance
work on existing plants, including through private investment. In October 2024, the National
Assembly approved an Organic Law to Promote Private Initiative in the Transition to Renewable
Energies, aiming to boost private sector participation in the energy sector. We will enact secondary
regulations under existing electricity laws to allow private entities to sell surplus electricity from self-
generation to the national grid (proposed structural benchmark for end-August 2025) to attract
private investment and foster energy security and economic growth. In October 2024, we reformed
the electricity prices paid by the large-scale mining sector. We will adopt a transparent and cost-
reflective pricing mechanism, with regular reviews, for medium and high voltage electricity tariffs, in
line with gradually reducing energy subsidies and enhancing fiscal sustainability (proposed
structural benchmark for end-August 2025). We continue making efforts to recover existing
generation plants, rent barges, and buy generators. In April 2025, we permanently expanded the
capacity of the Toachi Pilatón hydroelectric facility. For the longer term, we aim to diversify beyond
hydroelectric generation, as contemplated in our latest Electricity Master Plan and the 2025-2030
Investment Plan of the Electric and Mining Sectors. The government has developed 12 projects for
electricity generation through Non-Conventional Renewable Energies (NCRE)—solar, wind, and
hydroelectric—with support from the IDB. These generation projects will contribute 833 MW of
power, backed by private investments. Establishing a mechanism to cover commercial revenue risks,
coupled with the commitment from the state and an IDB guarantee, has sparked significant interest
among private investors and international development financial institutions in participating in
upcoming bidding processes for electric generation and transmission projects. We have already
approved environmental licenses for several renewable energy projects. The long-delayed wind
project Villonaco III is set to begin construction. Other plans for geothermal projects and the
development of nuclear energy, as well as to urgently strengthen our electricity transmission system,
are also underway. With the IDB’s support, we have started to execute a plan to strengthen
electricity interconnection with Peru.

46. We have implemented measures to support migrants, entrepreneurs, and the

modernization of the public sector. In February 2025, we created a mechanism to care for, protect,
and facilitate the reintegration of Ecuadorian migrants. In March 2025, an organic law to support
female entrepreneurs was published in the Official Gazette. Our government has also launched a
digital transformation project to modernize public services and improve transparency, by working

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with global tech firms in areas such as custom controls, the digitalization of civil services, and
healthcare processes.

47. We are strengthening our resilience to extreme weather events and natural disasters.
Policy action for our adaptation and mitigation priorities is a macroeconomic imperative for
Ecuador. The WB’s Country Climate and Development Reports (CCDR), published in September
2024, provides an insightful analysis of the challenges facing Ecuador. Our exposure to natural
disasters calls for preparation, for which the financial support of the international community would
be needed, including to protect populations in vulnerable areas. We have established an
institutional committee on climate finance within MEF, with the support of the IDB. We recently
expanded several protected areas, including the Galapagos marine reserve, for which in May 2023
we secured long-term financing for its protection as part of the world’s largest debt-for-nature swap
on record. In December 2024, we completed our second debt-for-nature swap to fund the Amazon
Biocorridor Program, a project aimed at conserving the Ecuadorian Amazon rainforest and its
biodiversity. We are interested in a potential Resilience and Sustainability Facility arrangement to
support our policy efforts to increase resilience to natural disasters.

G. Program Monitoring

48. Program implementation will be monitored through quantitative performance criteria,

indicative targets, and structural benchmarks. These are detailed in Tables 1 and 2, with
definitions and data requirements provided in the attached TMU. The EFF arrangement with the
Fund will be subject to triannual reviews during 2025 and shift to semiannual reviews during 2026-
28, with the third and fourth reviews occurring on or after August 15, 2025, and November 15, 2025,
respectively.

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Table 1. Ecuador: Quantitative Performance Criteria and Indicative Targets, 2024-26
INTERNATIONAL MONETARY FUND

End-Aug. End-Dec. End-Jun.

End-December 2024 End-April 2025 2025 2025 2026

Program 2/ Adj. 3/ Actual Status Program 2/ Adj. 3/ Actual Status Program Program IT
(US$ million, unless otherwise indicated)
Quantitative performance criteria
1. Nonoil primary balance of the budgetary central government (PGE) (floor) 1/ -2,295 -2,295 -1,801 Met -341 -341 312 Met -1,220 -1,964 -52
2. Overall balance of the PGE and CFDD (floor) 1/ -4,213 -4,215 -3,058 Met -1,041 -1,181 -796 Met -2,628 -3,795 -1091
3. Accumulation of NFPS deposits at the central bank (floor) 1/ 360 154 850 Met 0 -957 423 Met 0 557 200
4. Non-accumulation of external payments arrears by the NFPS (continuous performance criterion) 0 0 Met 0 0 Met 0 0 0
5. (No new) Central bank direct and indirect financing to the NFPS (continuous performance criterion) 0 0 Met 0 0 Met 0 0 0

Indicative targets
6. Overall balance of the NFPS (floor) 1/ -2,442 -2,444 -1,590 Met -89 -1,103 -1,147 217
7. Nonoil primary balance including fuel subsidies (NOPBS) of the NFPS (floor) 1/ -6,528 -6,526 -6,674 Not Met -1,151 -3,070 -5,151 -1,317
8. Change in the stock of NIR (floor) 1/ 65 -141 1 Met -34 -991 828 Met -579 147 315
9. Stock of PGE arrears to the domestic private sector (ceiling) 662 505 Met 600 660 Not Met 400 105 0
10. Number of families in the first three income deciles nationwide covered by cash transfer programs (floor) 1,212,984 1,214,638 Met 1,228,660 1,248,805 Met 1,244,336 1,260,012 1,279,012
Sources: Ministry of Economy and Finance and IMF staff estimates.
Note: Aggregates and adjustors as defined in the Technical Memorandum of Understanding (TMU).
1/ Cumulative from January 1.
2/ Staff report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
3/ Adjusted for oil prices and disbursements from multilateral institutions.

82
 Table 2. Ecuador: Structural Benchmarks
Reform Area Structural Conditionality Objectives Due Date Status

Structural Benchmarks

Public Financial 1. Publish an updated Medium-Term Fiscal Framework Strengthen fiscal planning and End-October Met
Management (MTFF) in line with program targets. management. 2024

Public Financial 2. Publish a Medium-Term Debt Management Strategy Strengthen fiscal planning and End-October Met
Management in line with program targets. management. 2024

Public Financial 3. Implement an automatized process for budgetary Strengthen financial management, End-March 2025 Not met.
Management central government (PGE) payments, including arrears’ increase transparency, and reduce Reset to end-
payments. accumulation of payment arrears. July 2025
Domestic 4. Share with Fund staff an updated plan to clear and Strengthen the monitoring and End-November Met
Arrears prevent the resurgence of domestic arrears of the reduce accumulation of payment 2024
budgetary central government (PGE), including arrears.
obligations to the private sector and intra-public sector
claims.

Tax Reform 5. Prepare and share with the Fund a plan to mobilize Inform future efforts to broaden the Mid-November Met
nonoil fiscal revenues, including by streamlining tax base and streamline tax 2024
inefficient tax expenditures and replacing transitory expenditures.
revenue measures with permanent high-quality ones.
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Fiscal Strategy 6. Enact regulation on revenue and/or expenditure Ensure fiscal consolidation. December 6, Met
measures to ensure that the 2025 fiscal plan is in line 2024
with program and MTFF commitments.

Social Safety 7. Share with the Fund a plan to complete the social Enhance the social safety net. End-October Met
Net registry to cover families in the lowest three deciles of 2024
the income distribution throughout the country.

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Table 2. Ecuador: Structural Benchmarks (continued)

ECUADOR
INTERNATIONAL MONETARY FUND

Reform Area Structural Conditionality Objectives Due Date Status

Governance 8. Establish an updated agreement between the MEF Improve expenditure control. End-March 2025 Not met.
and IESS on the transfer of healthcare obligations Reset to end-
(including both internal and external providers), August 2025
building on the December 2022 agreement. The
updated agreement should include a decision about
the 2022 healthcare audits.

Governance 9. Establish a timeline to operationalize the National Strengthen anticorruption End-December Met
Control Subsystem (SNC) to increase transparency in framework and improve 2024
procurement. expenditure control.

Governance 10. Prepare and share with the Fund the conceptual Increase transparency and efficiency End-July 2025
and operational framework for an upgraded Official in procurement and improve
System of Public Procurement (Sistema Oficial de expenditure control.
Contratación Pública del Ecuador, SOCE).

Transparency 11. Initiate the tender process to select an auditor to Improve the quality and reliability End-December Met
and Governance undertake the 2023 and 2024 healthcare audits (based of fiscal data. 2024
on the updated MEF/IESS agreement).

Transparency 12. Complete the audits of the 2019 and 2020 financial Enhance transparency and End-March 2025 Met
and Governance statements of Petroecuador and Petroamazonas and governance in the oil sector.
share the results with Fund staff.
 Table 2. Ecuador: Structural Benchmarks (continued)
Reform Area Structural Conditionality Objectives Due Date Status

Anti-Money 13. Enact new AML/CFT legislation to strengthen the Mitigate the risk of illicit flows End-February Met
Laundering AML/CFT framework in line with FATF standards. including those related to 2025
Framework organized crimes.
Anti-Money 14. The National AML/CFT Coordination Committee to Mitigate the risk of illicit flows, End-September
Laundering approve and publish a summarized version of an including those related to 2025
Framework AML/CFT Strategic Action Plan, establishing actionable organized crimes.
policy priorities to mitigate money laundering, including
by organized crime, and terrorist financing risks
identified in the National Risk Assessment approved in
2024.

Financial Sector 15. Establish a Financial Stability Committee in line with Enhance coordination among End-September Met
best international practices, comprising the BCE, MEF, agencies involved in financial 2024
JPRF, JPRM, SB, SEPS, SCVS, and COSEDE. sector oversight.

Financial Sector 16. Establish an inter-institutional group within the Strengthen financial sector End-January 2025 Met
Financial Stability Committee, comprising BCE, MEF, resolution framework.
JPRF, JPRM, SB, SEPS, and COSEDE to coordinate
resolution reforms and strategies.
Financial Sector 17. Issue macroprudential regulations on bank capital Strengthen financial sector buffers. End-November Met
INTERNATIONAL MONETARY FUND

buffers, including surcharges on systemically important 2024

institutions and a countercyclical capital buffer.

Financial Sector 18. Prepare and share with Fund staff a study of the Foster financial sector deepening End-March 2025 Not met.
system of interest rates, including recommendations to and improve economy’s growth Implemented
improve credit allocation, financial inclusion, and potential. with delay
economic growth, while preserving financial stability.

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 Table 2. Ecuador: Structural Benchmarks (continued)

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86

Reform Area Structural Conditionality Objectives Due Date Status

INTERNATIONAL MONETARY FUND

Domestic 19. Sign a contract to implement a new platform for the Foster domestic capital market End-January 2025 Not met.
Capital Market BCE’s central securities depository (DCV) to modernize development. Implemented
Development the compensation, liquidation, and custody functions in with delay
line with international standards.

Domestic 20. Issue regulation for domestic market auctions for Foster domestic capital market End-November Proposed
Capital Market bonds and treasury notes, including procedures, auction development. 2025
Development format, and rules for participation, bidding, and
allocation.

Mining Sector 21. Implement the regulation for the opening of the Enhance transparency and attract End-June 2026 Proposed
mining cadaster. private investment.

Mining Sector 22. Develop a new fiscal regime for the mining sector to Enhance transparency and attract End-December Proposed
enhance its efficiency and revenue potential (informed private investment. 2025
by IMF technical assistance).

Oil Sector 23. Complete the audit of the 2021 financial statements Enhance transparency and End-September Proposed
Transparency of Petroecuador and share the results with IMF staff. governance in the oil sector. 2025
and
Governance.

Electricity Sector 24. Enact secondary regulations under existing Attract private investment. Foster End-August 2025 Proposed
electricity laws to allow private entities to sell surplus energy security and economic
electricity from self-generation to the national grid. growth.
 Table 2. Ecuador: Structural Benchmarks (concluded)
Reform Area Structural Conditionality Objectives Due Date Status
Electricity Sector 25. Adopt a transparent and cost-reflective pricing Attract private investment. Foster End-August 2025 Proposed
mechanism, with regular reviews, for medium and high energy security, fiscal
voltage electricity tariffs, in line with gradually reducing sustainability, and economic
energy subsidies and enhancing fiscal sustainability. growth.
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Attachment II. Technical Memorandum of Understanding

1. This Technical Memorandum of Understanding (TMU) sets out the definitions of the
performance criteria (PCs) and indicative targets (ITs) that will be applied under the Extended
Fund Facility, as specified in the Memorandum of Economic and Financial Policies (MEFP) and
its attached tables. It also describes the methods to be used in assessing the program’s
performance and the information requirements to ensure adequate monitoring of the targets.

2. Any variable that is mentioned herein for the purpose of monitoring a PC or IT and
that is not explicitly defined, is defined in accordance with the Fund's standard statistical
methodology, such as the Government Finance Statistics and the Balance of Payments
Manual. For any variable or definition that is omitted from the TMU but is relevant for program
targets, the authorities of Ecuador shall consult with the Fund staff on the appropriate treatment to
reach an understanding based on the Fund's standard statistical methodology. All references to
“days” indicate “calendar days”, unless stated otherwise.

3. Program exchange rates. For the purposes of the program, the exchange rates of the U.S.
dollar for the duration of the program are those that prevailed on April 23, 2024, as shown in
Table 1.

Table 1. Ecuador: Program Exchange Rates

US Dollar to Euro 0.94

US Dollar to Renminbi 7.11
US Dollar to Yen 154.82
US Dollar to SDR 1.31
US Dollar to British Pound 0.80
US Dollar to South Korean Won 1,380.60
US Dollar to Swiss Franc 0.91
US Dollar to Canadian Dollar 1.37
US Dollar to Danish Krone 6.99
US Dollar to Swedish Krone 10.87
US Dollar to Norwegian Krone 10.99
US Dollar to Australian Dollar 1.55
US Dollar to Mexican Peso 17.00
US Dollar to Colombian Peso 3,924.82
US Dollar to Gold prices (US$/ounce) 2,313.00
Source: Haver, as of April 23, 2024.

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Table 2. Ecuador: Quantitative Performance Criteria and Indicative Targets, 2024-26

End-Aug. End-Dec. End-Jun.

End-December 2024 End-April 2025 2025 2025 2026

Program 2/ Adj. 3/ Actual Status Program 2/ Adj. 3/ Actual Status Program Program IT
(US$ million, unless otherwise indicated)
Quantitative performance criteria
1. Nonoil primary balance of the budgetary central government (PGE) (floor) 1/ -2,295 -2,295 -1,801 Met -341 -341 312 Met -1,220 -1,964 -52
2. Overall balance of the PGE and CFDD (floor) 1/ -4,213 -4,215 -3,058 Met -1,041 -1,181 -796 Met -2,628 -3,795 -1091
3. Accumulation of NFPS deposits at the central bank (floor) 1/ 360 154 850 Met 0 -957 423 Met 0 557 200
4. Non-accumulation of external payments arrears by the NFPS (continuous performance criterion) 0 0 Met 0 0 Met 0 0 0
5. (No new) Central bank direct and indirect financing to the NFPS (continuous performance criterion) 0 0 Met 0 0 Met 0 0 0

Indicative targets
6. Overall balance of the NFPS (floor) 1/ -2,442 -2,444 -1,590 Met -89 -1,103 -1,147 217
7. Nonoil primary balance including fuel subsidies (NOPBS) of the NFPS (floor) 1/ -6,528 -6,526 -6,674 Not Met -1,151 -3,070 -5,151 -1,317
8. Change in the stock of NIR (floor) 1/ 65 -141 1 Met -34 -991 828 Met -579 147 315
9. Stock of PGE arrears to the domestic private sector (ceiling) 662 505 Met 600 660 Not Met 400 105 0
10. Number of families in the first three income deciles nationwide covered by cash transfer programs (floor) 1,212,984 1,214,638 Met 1,228,660 1,248,805 Met 1,244,336 1,260,012 1,279,012
Sources: Ministry of Economy and Finance and IMF staff estimates.
Note: Aggregates and adjustors as defined in the Technical Memorandum of Understanding (TMU).
1/ Cumulative from January 1.
2/ Staff report for the 2024 Article IV Consultation and First EFF Review (Country Report No. 24/357).
3/ Adjusted for oil prices and disbursements from multilateral institutions.

4. In addition to the performance criteria listed in Table 2 above, the arrangement will
include the performance criteria standard to all Fund arrangements, namely:

• no imposition or intensification of restrictions on the making of payments and transfers for

current international transactions;

• no imposition or intensification of import restrictions for balance of payments reasons;

• no introduction or modification of multiple currency practices;

• no conclusion of bilateral payments agreements that are inconsistent with Article VIII of the IMF
Articles of Agreement.

These four performance criteria will be monitored continuously.

• QUANTITATIVE PERFORMANCE CRITERIA: DEFINITION

OF VARIABLES
A. Floor on the Non-oil Primary Balance of the Budgetary Central
Government

Definitions

5. The budgetary central government consists of the Presupuesto General del Estado
(PGE). Revenues and expenditures related to social security, public banks, state-owned enterprises
(SOEs), and decentralized autonomous governments are not considered part of the PGE.

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6. The non-oil primary balance of the PGE is defined as the total revenues of the PGE
excluding oil revenues and interest revenue, minus total non-oil expenditure of the PGE excluding
interest expense.

7. Non-oil primary revenues are recorded on a cash basis. Revenues explicitly included are:

• Tax revenues (ingresos tributarios); and

• Other revenues (otros ingresos), including transfers, dividends, administrative fees, proceeds
from asset monetization, and other.

8. Non-oil primary expenditures are recorded on an accrual basis. Expenditures explicitly

included are:

• Wages and salaries (sueldos y salarios);

• Purchases of goods and services (compra de bienes y servicios);

• Transfers to international organizations, decentralized autonomous governments (GADs), IESS,

other social security institutions (ISSFA and ISSPOL), SOEs, and the private sector. Transfers to
private sector explicitly include the “account 99” (cuenta 99) expense items;

• Social assistance benefits;

• Employment-related social benefits; and

• Transactions in nonfinancial assets.

9. Estimated transfers to the IESS for healthcare expenses. PGE transfers to the IESS will
include US$337 million in accrued estimated expenses for 2024. This estimated amount will increase
every year in line with projected average annual CPI inflation and will be updated as soon as the
agreement on the treatment of future healthcare expenditures between MEF and IESS is operational.

10. Government-funded, public-private partnerships (PPPs) will be treated as traditional

public procurements. PGE obligations that are accrued on PPPs would be recorded transparently in
budget data and measured as part of the PGE deficit as they accrue. The accrued but not settled
obligations related to these PPPs will be transparently recorded either as public debt or as a
contingent liability of the government (e.g., public guarantees) depending on the nature of the
obligation.

11. Costs associated with divestment operations, with the liquidation of public entities, or
that are otherwise awarded as part of lawsuits shall be recorded as expense. Examples include
but are not limited to the cancellation of existing contracts, severance payments to workers, awards
related to unfair dismissal trials.

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12. All expenditures recorded as a credit in “Account 99” (due to the lack of corresponding
budget allocations) will be recorded in the year the obligation was accrued or, if information on the
year is not available, in the year the obligation is credited to the Account 99.

Monitoring

13. All fiscal data referred to above and needed for program monitoring purposes will be
provided to the Fund within 45 days from the end of each test date as shown in Table 2.
Preliminary monthly data will be provided with the lag of no more than 30 days after the end of
each month.

B. Floor on the Overall Balance of the Budgetary Central Government and

CFDD

Definitions

14. The budgetary central government and CFDD, for the purposes of the program,
consist of the PGE and the oil derivatives financing account, namely the Cuenta de
Financiamiento de Derivados Deficitarios (CFDD).

15. The overall balance of PGE and CFDD is defined as the net lending/borrowing (NLB) of the
PGE and CFDD, calculated as total revenues of the PGE and CFDD minus their total spending.

16. Total revenues are recorded on cash basis. Revenues explicitly included are:

• Revenues from oil exports;

• Revenues from the domestic sales of oil derivatives;

• Tax revenues (ingresos tributarios); and

• Other revenues (otros ingresos), including transfers, dividends, interest, administrative fees,
proceeds from asset monetization, and other;

17. Total expenditures are recorded on an accrual basis except for interest expense that is
recorded on a cash basis. Expenditures explicitly included are:

• Wages and salaries (sueldos y salarios);

• Purchases of goods and services (compra de bienes y servicios);

• Interest expenses (intereses);

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• Transfers to international organizations, local governments (GADs), IESS, other social security
institutions (ISSFA and ISSPOL), SOEs, and the private sector. Transfers to private sector explicitly
include the “account 99” (cuenta 99) expense items;

• Social assistance benefits;

• Employment-related social benefits; and

• Transactions in nonfinancial assets.

18. Estimated transfers to the IESS for healthcare expenses. PGE transfers to the IESS will
include US$337 million in accrued estimated expenses for 2024. This estimated amount will increase
every year in line with projected average annual CPI inflation and will be updated as soon as the
agreement on the treatment of future healthcare expenditures between MEF and IESS is operational.

19. Government-funded, PPPs will be treated as traditional public procurements. PGE

obligations that are accrued on public private partnerships would be recorded transparently in
budget data and measured as part of the PGE deficit as they accrue. The accrued but not settled
obligations related to these PPPs will be transparently recorded either as public debt or as a
contingent liability of the government (e.g., public guarantees) depending on the nature of the
obligation.

20. Costs associated with divestment operations, with the liquidation of public entities, or
that are otherwise awarded as part of lawsuits shall be recorded as expense. Examples include
but are not limited to the cancellation of existing contracts, severance payments to workers, awards
related to unfair dismissal trials.

21. All expenditures recorded as a credit in “Account 99” (due to the lack of corresponding
budget allocations) will be recorded in the year the obligation was accrued or, if information on the
year is not available, in the year the obligation is credited to the account 99.

Monitoring

22. All fiscal data referred to above and needed for program monitoring purposes will be
provided to the Fund within 45 days from the end of each test date as shown in Table 2.
Preliminary monthly data will be provided with the lag of no more than 30 days after the end of
each month.

Adjustors

23. Adjustor on oil prices: The floor on the overall balance of the budgetary central
government and CFDD will be adjusted upward/downward by US$23.85 million at corresponding
test dates for each US$1 per barrel that the average Ecuador mix crude oil price is above/below the
program assumption defined in Table 3. This adjustor is capped at US$178.9 million at
corresponding test dates. For 2025 targets, the average price of Ecuador mix oil price will be

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calculated as the total value of crude oil exports divided by the total volume of oil exports over the
period between January 1, 2025, and each test date.

Table 3. Ecuador: Oil Price – Program Assumptions

Jun. 2025

Ecuador mix crude oil price (US$ per barrel) 60.08

Sources: Ministry of Finance and IMF staff estimates.

C. Floor on the Accumulation of Non-Financial Public Sector Deposits at

the Central Bank

Definitions

24. The Non-Financial Public Sector (NFPS, Sector Público No-Financiero) for the purposes
of the program consists of the PGE and CFDD, as defined above, Decentralized Autonomous
Governments (including municipal governments, provincial governments and parish boards),
Social Security Funds (including IESS, ISSFA, ISSPOL and BIESS), Non-Financial State-Owned
Enterprises (SOEs, detailed in Table 4), Development Bank of Ecuador (BEDE) as well as
accounts related to the payments to private operators of oil concessions (Ministerio de
Energía y Recursos Naturales no Renovables). The Central Bank of Ecuador falls outside of the
NFPS perimeter.

Table 4. Ecuador: Non-Financial Public Sector Corporations Covered Under the

Definition of NFPS
Empresa Pública de Hidrocarburos del Ecuador Petroecuador - PEC
Empresa Pública Flota Petrolera Ecuatoriana-EP FLOPEC
Empresa Nacional de Ferrocarriles del Ecuador – ENFE (*)
Empresa Pública Línea Aérea del Ecuador TAME (*)
Muestra de Empresas Públicas Menores (Empresas de Agua Potable)
(*) SOEs in liquidation process, which will be in fiscal data until the liquidation process is completed .

25. Deposits of the NFPS at the Central Bank of Ecuador (BCE) include all depository
liabilities (time and on-call deposits) at the BCE of the NFPS, as defined above.

Monitoring

26. The accumulation of NFPS deposits at the BCE at each test date will be measured as
the change in the stock of deposits between the beginning of the year and the last day of the
corresponding test date month as shown in Table 2.

27. NFPS deposits at the BCE data will be provided to the Fund at weekly frequency within
5 business days following the end of the week.

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Adjustors

28. Adjustor on external borrowing. The floor on the accumulation of NFPS deposits will be
adjusted upward/downward by the amount of NFPS borrowing from non-residents above/below
that envisioned under the program, as reported in Table 5, and net of issuances related to liability-
management operations that have no net impact on fiscal financing. External borrowing will
comprise issuance of international bonds and other borrowing with non-official external creditors.

Table 5. Ecuador: External Borrowing – Program Assumptions

(In millions of U.S. dollars)
Aug. 2025 Dec. 2025
Total external borrowing consistent with program targets 1/ 0.0 0.0

1/ Cumulative from January 1 of each year.

29. Adjustor on disbursements from the IMF and other multilateral institutions1. The floor
on the accumulation of NFPS deposits will be adjusted upward/downward by the amount of the
excess/shortfall in program loan disbursements from the IMF and other international financial
institutions (IFIs, comprising the IDB, World Bank, CAF, and FLAR), relative to the baseline projection
reported in Table 6. Program loan disbursements are defined as external loan disbursements
(excluding project financing disbursements and disbursements that are repaid within the same test
period) from official creditors that are freely usable for the financing of the NFPS budget operations.

Table 6. Ecuador: Program Loan Disbursements by Multilateral Creditors – Program

Assumptions
(In millions of U.S. dollars)
Aug. 2025 Dec. 2025

Expected disbursement of IMF credit 1/ 1,167 1,750

Expected disbursements of program loans by other IFIs 1/ 1,025 2,900

1/ Cumulative from January 1 of each year.

30. Adjustor on oil prices. The floor on the accumulation of NFPS deposits will be adjusted
upward/downward by US$11.93/US$23.85 million at corresponding test dates for each US$1 per
barrel that the average Ecuador mix crude oil price is above/below the program assumption defined
in Table 3. This adjustor is capped at US$178.9 million at corresponding test dates. For 2025 targets,
the average price of Ecuador mix oil price will be calculated as the total value of crude oil exports

1
Multilateral institutions refer to institutions with more than one official shareholder. This classification follows the
authorities’ definition which may not necessarily align with the creditor classification treatment for the purposes of
IMF policies.

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divided by the total volume of oil exports over the period between January 1, 2025, and each test
date.

D. Ceiling on External Payment Arrears by the Non-Financial Public Sector

Definitions

31. External debt is determined according to the residency criterion except in the case of the
debt securities for which the criterion is the place of issuance of the instrument.2 The term “debt”
will be understood to mean a current, i.e., not contingent, liability, created under a contractual
arrangement through the provision of value in the form of assets (including currency) or services
and which requires the obligor to make one or more payments in the form of assets (including
currency) or services, at some future point(s) in time; these payments will discharge the principal
and/or interest liabilities incurred under the contract. Debts can take several forms; the primary ones
being as follows:

• Loans, i.e., advances of money to the obligor by the lender made on the basis of an undertaking
that the obligor will repay the funds in the future (including deposits, bonds, debentures,
commercial loans and buyers’ credits) and temporary exchanges of assets that are equivalent to
fully collateralized loans under which the obligor is required to repay the funds and usually pay
interest, by repurchasing the collateral from the buyer in the future (such as repurchase
agreements and official swap arrangements);

• Suppliers’ credits, i.e., contracts where the supplier permits the obligor to defer payments until
sometime after the date on which the goods are delivered or services are provided; and

• Leases, i.e., arrangements under which property is provided which the lessee has the right to use
for one or more specified period(s) of time that are usually shorter than the total expected
service life of the property, while the lessor retains the title to the property. For the purpose of
the program, the debt is the present value (at the inception of the lease) of all lease payments
expected to be made during the period of the agreement excluding those payments that cover
the operation, repair or maintenance of the property.

32. Under the definition of debt set out above, arrears, penalties and judicially awarded
damages arising from the failure to make payment under a contractual obligation that
constitutes debt are debt. Failure to make payment on an obligation that is not considered debt
under this definition (e.g., payment on delivery) will not give rise to debt.

33. External payment arrears for program monitoring purposes are defined as (i) external debt
obligations (principal and interest) falling due after May 1, 2024 that have not been paid within

2 As defined in Guidelines on Public Debt Conditionality in Fund Arrangements, Decision No. 16919-(20/103).

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90 days of the due date, considering the grace periods specified in contractual agreements, as well
as (ii) payment arrears on goods delivered or services rendered by external entities.

Coverage

34. This performance criterion covers the NFPS. This performance criterion does not cover
(i) arrears on short-term trade credit or letters of credits; (ii) arrears on debt subject to renegotiation
or restructuring; and (iii) arrears resulting from the nonpayment of commercial claims that are the
subject of any litigation initiated prior to May 1, 2024.

Monitoring

35. This PC will be monitored on a continuous basis.

E. Ceiling on BCE Direct and Indirect Financing to the NFPS

Definitions

36. BCE direct financing to the NFPS and indirect financing to the NFPS through the public
banks includes overdraft transfers from the BCE to the entities of the NFPS as defined above,
advance distribution of unrealized profits from the BCE, the BCE acquisition of government debt on
the primary market or by purchase from public institutions, and the BCE lending to public banks for
the purpose of acquisition of government debt on the primary market or by purchase from public
institutions.

Monitoring

37. This PC will be monitored on a continuous basis. Monthly data on amortizations and
disbursements of BCE credit to NFPS and to publicly owned banks for the purpose of financing the
NFPS will be provided within five business days to the Fund.

INDICATIVE TARGETS (IT): DEFINITION OF VARIABLES

A. Floor on The Non-Oil Primary Balance Including Fuel Subsidies of the
Non-Financial Public Sector

Definitions

38. The Non-Financial Public Sector (NFPS) is defined as above.

39. The Non-oil Primary Balance of the NFPS is defined as primary non-oil revenues (ingresos
primarios no petroleros) minus primary non-oil spending (gastos primarios no petroleros).

40. Primary non-oil revenues are recorded on a cash basis and include the following items:

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• Tax revenues of the PGE and of GADs;

• Social security contributions; and

• Other revenues (otros ingresos), including administrative fees, sales of market and nonmarket
establishments, and other Transfers not elsewhere classified.

41. Primary non-oil revenues explicitly exclude interest, proceeds from the sale of financial
assets, revenues from the privatization of government-owned entities, revenues from oil exports,
and revenues from the domestic sales of oil derivatives.

42. Primary non-oil spending is recorded on accrual basis and comprises:

• Wages and salaries (sueldos y salarios);

• Purchases of goods and services (compra de bienes y servicios), excluding purchases of goods
and services and investments (“servicios petroleros”) of Petroecuador, CFDD and payments to
private oil companies (SHE);

• Grants;

• Social benefits, including social security benefits (beneficios de seguridad social), social
assistance, and employment related social benefits;

• Dividends paid by social security funds;

• Current and capital transfers, including “Account 99”; and

• Transactions in nonfinancial assets.

43. Petroleum product subsidies include, but are not limited to, subsidies for gasoline, diesel,
liquefied petroleum gas, and sectoral subsidies granted to specific industries (including for
consumption of jet fuel and fuel oil). Subsidies are defined as the difference between the distributor
sale price of the product and the cost of this product. The cost of the product is a weighted average
between the cost of imported petroleum derivative products and the cost of domestically produced
petroleum products, cost of transportation, storage, and commercialization. For the cost of
domestically produced petroleum products, the export price of Eastern crude (opportunity cost) is
considered as raw material, as well as the cost of refining. The import cost includes the price at FOB
value plus freight and insurance.

44. The non-oil primary balance of NFPS, including fuel subsidies, is defined as the non-oil
primary balance of the NFPS minus spending on subsidies on petroleum products.

45. Government-funded, PPPs will be treated as traditional public procurements. PGE

obligations that are accrued on public private partnerships would be recorded transparently in
budget data and measured as part of the PGE deficit as they accrue. The accrued but not settled

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obligations related to these PPPs will be transparently recorded either as public debt or as a
contingent liability of the government (e.g., public guarantees) depending on the nature of the
obligation.

46. Costs associated with divestment operations, with the liquidation of public entities, or
that are otherwise awarded as part of lawsuits shall be recorded as expense. Examples include
but are not limited to the cancellation of existing contracts, severance payments to workers, awards
related to unfair dismissal trials.

47. All expenditures recorded as a credit in “Account 99” (due to the lack of corresponding
budget allocations) will be recorded in the year the obligation was accrued or, if information on the
year is not available, in the year the obligation is credited to the Account 99.

Monitoring

48. All fiscal data referred to above and needed for program monitoring purposes will be
provided to the Fund within 60 days from the end of each test date as shown in Table 2. In
addition to revenue and expenditure data, the data submission would also include fuel subsidies
expenditures provided by Petroecuador, as well as below the line data. Preliminary monthly data will
be provided with the lag of no more than 45 days after the end of each month.

Adjustors

49. Adjustor on oil prices. The floor on the non-oil primary balance including fuel subsidies of
the NFPS will be adjusted downward/upward by US$23.85 million at corresponding test dates for
each US$1 per barrel that the average Ecuador mix crude oil price is above/below the program
assumption defined in the Table 3. This adjustor is capped at US$178.9 million at corresponding test
dates. For 2025 targets, the average price of Ecuador mix oil price will be calculated as the total
value of crude oil exports divided by the total volume of oil exports over the period between
January 1, 2025, and each test date.

B. Floor on the Overall Balance of the Non-Financial Public Sector

Definitions

50. The Non-Financial Public Sector (NFPS) is defined as above.

51. The overall balance of the NFPS is defined as the net lending/borrowing of the NFPS. It is
calculated as the non-oil primary balance of the NFPS defined above, plus the oil balance of the
NFPS, plus interest revenues of the NFPS, minus interest expenditures of the NFPS. NFPS revenues
and interest expenses are recorded on a cash basis, while NFPS primary expenditures are measured
on an accrual basis.

52. The oil balance of the NFPS will be defined as the (i) revenues from oil exports and
domestic sales of oil derivatives, minus (ii) expenditures on imports of oil derivatives (CFDD), (iii)

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payments to private oil companies (SHE), and (iv) goods and services expense and investments of
Petroecuador, including “servicios petroleros”.

Monitoring

53. All fiscal data referred to above and needed for program monitoring purposes will be
provided to the Fund with a lag of no more than 90 days after the end of each test date as
shown in Table 2 and preliminary data with the lag of no more than 60 days after the end of each
month. In addition to revenue and expenditure data, the data submission would also include below
the line data.

Adjustors

54. Adjustor on oil prices. The floor on the overall balance of the NFPS will be adjusted
upward/downward by US$23.85 million at corresponding test dates for each US$1 per barrel that
the average Ecuador mix crude oil price is above/below the program assumption defined in Table 3.
This adjustor is capped at US$178.9 million at corresponding test dates. For 2025 targets, the
average price of Ecuador mix oil price will be calculated as the total value of crude oil exports
divided by the total volume of oil exports over the period between January 1, 2025, and each test
date.

C. Floor on the Change in the Stock of Net International Reserves (NIR)

Definitions

55. Net International Reserves (NIR) of the central bank are computed under the program as
the US dollar value of the usable gross international reserve assets of the BCE minus (i) gross reserve
related liabilities of the BCE to nonresidents, and (ii) the reserve holdings of domestic banks and
deposits of other financial institutions held at the BCE. Non-U.S. dollar denominated foreign assets
and liabilities will be converted into U.S. dollar at the program exchange rates.

56. Usable gross international reserve assets comprise all readily available claims on non-
residents denominated in convertible foreign currencies and controlled by monetary authorities,
consistent with the Balance of Payments and International Investment Position Manual (Sixth
Edition). Specifically, they include: (i) currency and deposits; (ii) monetary gold; (iii) holdings of SDRs;
(iv) the reserve position in the IMF; (v) securities (including debt and equity securities); (vi) financial
derivatives; and (vii) other claims (loans and other financial instruments).

Specifically excluded from gross international reserves are:

• Any precious metals or metal deposits, other than monetary gold, held by the BCE;

• Assets in nonconvertible currencies and illiquid assets;

• Claims on residents; and

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• Any reserve assets that are pledged, collateralized or otherwise encumbered (in so far as those
assets are not already excluded from gross international reserve assets of the central bank),
including assets tied up in repurchase agreement transactions.

57. Gross reserve-related liabilities comprise:

• All short-term liabilities of the BCE vis-à-vis non-residents denominated in convertible foreign
currencies with an original maturity of one year or less;

• Short-term loans, securities, and other liabilities (excluding account payables) of the central
government with an original maturity of less than 30 days;

• The stock of IMF credit outstanding; and

• The nominal value of all derivative positions (including swaps, options, forwards, and futures) of
the BCE, implying the sale of foreign currency or other reserve assets.

The reserve holdings of domestic banks held at the BCE comprise:

• All liabilities of the BCE to other depository institutions (otras sociedades de depósitos, as
defined in the BCE’s Metodología: Información Estadística Mensual, 4th Edition of May 2017).

The deposits of other financial institutions at the BCE comprise:

• All liabilities of the BCE to other financial institutions (otras sociedades financieras, with the
exception of deposits of the BEDE and BIESS, including those held in trust funds (fideicomisos
BIESS y fideicomisos IESS).

Adjustors

58. Adjustor on external borrowing. The floor on net international reserves will be adjusted
upward/downward by the amount of borrowing from non-residents above/below what envisioned
under the program, as reported in Table 5 above and net of issuances related to liability-
management operations that have no net impact on the outstanding stock of NFPS debt. External
borrowing will comprise issuance of international bonds and other borrowing with non-official
external creditors.

59. Adjustor on disbursement from other multilateral institutions. The floor on net
international reserves will be adjusted downward/upward by the shortfall/excess in loan
disbursement by IFIs and grants, relative to the baseline projection reported in Table 6. Program
loan disbursements are defined as external loan disbursements (excluding project financing
disbursements) from official creditors that are freely usable for the financing of the NFPS budget
operations.

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60. Adjustor on oil prices. The floor on the net international reserves will be adjusted
upward/downward by US$11.93/US$23.85 million at corresponding test dates for each US$1 per
barrel that the average Ecuador mix crude oil price is above/below the program assumption defined
in the Table 3. This adjustor is capped at US$178.9 million at corresponding test dates. For 2025
targets, the average price of Ecuador mix oil price will be calculated as the total value of crude oil
exports divided by the total volume of oil exports over the period between January 1, 2025, and
each test date.

Monitoring

61. The change in net international reserves (NIR) will be measured as the cumulative
change in the stock of NIR between the beginning of the year and the last day of the
corresponding test date month as shown in Table 2.

62. Foreign exchange asset and liability data will be provided to the Fund at weekly
frequency within 5 business days following the end of the week.

D. Ceiling on the Stock of PGE Payment Arrears to the Domestic Private

Sector

Definitions

63. The PGE is defined as above.

64. Arrears are defined as other accounts payable included in the definition of PGE debt,
which are overdue for more than 90 days from the date of accrual. Stocks of “cartas de crédito”
are explicitly excluded from the definition of arrears for this IT.

Monitoring

65. Below the line fiscal data referring to PGE accounts payable needed for program
monitoring purposes will be provided to the Fund with a lag of no more than 60 days after the
end of each test date as shown in Table 2 and preliminary data with the lag of no more than 45 days
after the end of each month. The data will include a breakdown by economic sector of accounts
payable (e.g., health, education, infrastructure, etc.), with an “of which” detail for amounts overdue
by more than 90 days from the date of accrual.

E. Floor on Social Assistance Scheme Coverage

Definitions

66. Social assistance coverage of poor families for the purpose of the program is
computed as the sum of all active beneficiary family units in the three bottom deciles of the
income distribution that benefit from at least one social assistance programs. Poor beneficiary

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families are defined according to information in the RS2018. Coverage expansion will occur through
the following social assistance programs, that are in force on the date of issuance of the program:
Bono de Desarrollo Humano (BDH), BDH con Componente Variable (BDH-V), Bono Joaquin Gallegos
Lara, Pension Mis Mejores Años, Pensión Toda Una Vida, Bono para niños, niñas y adolescentes en
situación de Orfandad por muerte violenta de la madre o progenitora, Cobertura de Contingencias,
Bono para personas afectadas por eventos de origen natural o antrópico, and Bono 1000 Días, and
others monetary transfers that might set into place for strengthen the social protection net. The
level (size) of benefits, understood as number of family units, of any of the cash transfer programs in
the bottom three deciles of the income distribution should not be reduced (with respect to their
level on May 1, 2024).

Monitoring

67. Monthly data on (i) number of family units in the lowest three income deciles covered by
the social assistance protection programs, and (ii) monthly data on numbers of registries with
information updated and validated following RS2018 by income decile will be provided to the Fund
with a lag of no more than 30 days after the end of each month.

OTHER INFORMATION REQUIREMENTS

68. In addition to the data needed to monitor program conditionality, the authorities will also
provide to Fund staff the following data so as to ensure adequate monitoring of economic variables:

69. In accordance with IMF Government Finance Statistics Manual (GFSM) 2014 and Public
Sector Debt Guide for compilers and users total gross debt covers all liabilities that are debt
instruments. A debt instrument is defined as a financial claim that requires payment(s) of interest
and/or principal by the debtor to the creditor at a date, or dates, in the future. The following
instruments are considered debt instruments:

• Special drawing rights (SDRs);

• Currency and deposits;

• Debt securities;

• Loans;

• Insurance, pension, and standardized guarantee schemes; and

• Other accounts payable.

70. All liabilities included in the GFSM balance sheet are considered debt, except for liabilities in
the form of equity and investment fund shares and financial derivatives and employee stock options.
Equity and investment fund shares are not debt instruments because they do not require the

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payment of principal or interest. For the same reason, financial derivatives are not considered debt
liabilities because no principal is advanced that is required to be repaid, and no interest accrues on
any financial derivative instrument.

For the purpose of the program, Ecuador’s NFPS debt includes the following instruments:

• Deposit liabilities;

• Debt securities including short term liquidity instruments (held by nonresidents, and by
residents not included in the NFPS entities);

• Loans; and

• Other accounts payables.

71. Any liabilities issued by entities of the NFPS, held as an asset by other entity of the NFPS
should be netted out. Since the consolidation is done at the level of NFPS, central bank lending to
the government is included in the stock of NFPS debt.

Monitoring

72. The data on NFPS stock of debt in US$ will be provided to the Fund monthly with a lag of no
more than 90 days after the end of each month. The data submission will also include cross-
holdings among NFPS entities.

Daily

73. Daily monetary and financial data in the template agreed with Fund staff, no later than
1 business days after the end of the day. This template at least will include: (a) movements of
international reserves by inflows and outflows; (b) Main balance sheet accounts of financial
institutions, broken down by private banks, cooperatives and mutuals; and (c) Daily oil production.

Weekly

74. Consolidated balance sheets of the banking system, by main accounts, including deposits in
the banking system, available funds, credit to the private sector, and credit to the government.

75. BCE balance sheet. Financial Indicators: Deposits of banks at the BCE.

76. Weekly monetary data in the template agreed with Fund staff, no later than 5 business days
after the end of the week.

77. Weekly data on international reserves and foreign currency liquidity, in line with SDDS
requirements (see http://data.imf.org/?sk=2DFB3380-3603-4D2C-90BE-A04D8BBCE237), no later
than 5 business days after the end of the week.

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Monthly

78. Data on stocks and flows (above- and below the line), disaggregated by each subsector of
the NFPS (budgetary central government and CFDD, rest of the central government, subnational
governments, SOEs and social security) using the templates previously agreed with the IMF team.
One template with the detailed data on revenues and expenditures of each of the subsectors and
the consolidations between them, and the other template data by subsectors with a summary of
above the line data and the comparison with the below the line data for monitoring the statistical
discrepancy and data on stocks of financial assets and liabilities and the financing (below the line
data) also by subsectors.

79. NFPS financing data compiled based on the detailed information on financial assets and
liabilities, namely, deposits, loans, securities, equities, other accounts payable including oil related,
and their amortizations, disbursements, and arrears accumulation.

80. Data on amortizations and disbursements of credit from the BCE to NFPS and to publicly-
owned banks for the purpose of financing the NFPS will be provided within five business days from
the end of the month.

81. PGE cash flow data from the beginning to the end of the current fiscal year, with a lag of no
more than 60 days after the closing of each month. This will include expected monthly amortizations
and repayments on NFPS debt as defined above.

82. Data on social spending, including Bono de Desarrollo Humano (BDH), Bono de Desarrollo
Humano con Componente Variable (BDH-V), Personas con discapacidad, Pensión para Adultos
Mayores, Mis mejores años, Pensión Toda Una Vida, and Bonos Mis Primer 1000 Dias, Bono para
niños, niñas y adolescentes en situación de Orfandad por muerte violenta de la madre o
progenitora, Cobertura de Contingencias, Bono para personas afectadas por eventos de origen
natural o antrópico, as well as Bono Joaquin Gallegos Lara.

83. Data to determine the latest net SDR position at the end of each month. For the central
government, this would include total external liabilities with the SDR department. For the central
bank, this would include total SDR holdings. All reported data should be denominated in SDRs.

84. Provision of detailed information on collateralized debt and debt with similar arrangements,
such as repo transactions and other similar debt involving the pledge, sale/resale, or encumbrance
of assets within 2 weeks of signing new contracts. The information on collateralized debt and debt
with similar arrangements will include all contracts related to such debt; information on the escrow
accounts overseas that serve as collateral; and detailed information for each creditor on the stock of
debt, its terms (including on the amounts pledged, sold/resold, or encumbered, as well as any
related commitments or obligations to purchase related or unrelated goods and/or services from
the lender), and expected repayment schedules.

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85. Export price of Ecuador mix crude oil, with a lag of no more than 20 days after the closing of
each month.

Quarterly

86. Detailed balance of payments data, no later 90 days after the end of the quarter.

87. Detailed fiscal and debt data by the subsectors of NFPS, no later than 90 days after the end
of the quarter. This data includes: above and below the line data, summary of the statistical
discrepancy, calendar of amortization and payment of interest by instrument of debt stock at the
end of the quarter and stock of gross debt.

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ASSESSMENT OF FINANCIAL RISKS TO THE FUND
July 9, 2025

Approved By Prepared by the Finance and Strategy, Policy, and Review

Zuzana Murgasova Departments.
(FIN) and Bergljot
Barkbu (SPR)

CONTENTS

INTRODUCTION ______________________________________________________________________ 3

RECENT DEVELOPMENTS AND OUTLOOK __________________________________________ 4

A. Recent Developments________________________________________________________________ 4
B. Debt Situation and Outlook __________________________________________________________ 5

FINANCIAL IMPLICATIONS OF THE PROPOSED AUGMENTATION

FOR THE FUND _______________________________________________________________________ 5

CAPACITY TO REPAY _________________________________________________________________ 7

ASSESSMENT _________________________________________________________________________ 7

FIGURES
1. Debt Ratios for Exceptional Access Arrangements (at time of approval) ___________ 11
2. Approved GRA Exceptional Access Cases Since September 2008 __________________ 12
3. Projected Credit Outstanding Path Under Existing Arrangements and Proposed
Augmentation ________________________________________________________________________ 13
4. Credit Outstanding in the GRA Around Peak Borrowing ___________________________ 13
5. Peak Fund Exposure and Debt Service Ratios for Recent Exceptional Access Cases 14
6. Credit Concentration of Fund GRA Exposure _______________________________________ 15
7. Net Annual Repurchases ___________________________________________________________ 16
8. History of Augmentations (Distribution) ___________________________________________ 16
ECUADOR

TABLES
1. Proposed Access and Phasing Under the Extended Fund Facility _____________________________3
2. IMF Financial Arrangements and Fund Exposure, 1988-2038 _________________________________ 9
3. Capacity to Repay Indicators _______________________________________________________________ 10
4. Impact on GRA Finances ___________________________________________________________________ 10

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INTRODUCTION
1. The Ecuadorian authorities have requested augmentation of access under the
Extended Fund Facility (EFF) equivalent to around US$ 1.0 billion (SDR 750.4 million or 107.6
percent of quota). Ecuador is facing headwinds from a highly uncertain global environment, with
negative effects to Ecuadorian exports, remittances, fiscal revenues and financing prospects. Even
after accounting for the additional fiscal effort planned by the authorities, and additional financing
from other IFIs, Ecuador would continue facing a financing gap of US$ 1.0 billion in 2025-27 which is
proposed to be filled by an EFF augmentation of around US$ 1.0 billion.
2. The proposed augmentation would increase cumulative access under the EFF program
to SDR 3.75 billion (537.5 percent of quota). On May 31, 2024, the Executive Board approved
Ecuador’s request for a 48-month EFF-supported program with access equivalent to SDR 3 billion
(430 percent of quota, equivalent to US$ 4 billion). Access was frontloaded, with a first purchase of
SDR 752.9 million on program approval in May 2024 (108 percent of quota) and a second purchase
of SDR 375.9 million on completion of the first review in December 2024 (54 percent of quota).
Under the proposed augmentation, total access under the EFF would increase by SDR 750.4 million
(107.6 percent of quota) to SDR 3,750.4 million (537.5 percent of quota) (Table 1).

Table 1. Ecuador: Proposed Access and Phasing Under the Extended Fund Facility
1/
Original Amounts Amounts with Proposed Augmentation
Percent of quota Percent of quota
Availability Date SDR millions Purchase Cumulative Date SDR millions Purchase Cumulative

2024 May 752.9 107.9 107.9 May 752.9 107.9 107.9

November 375.9 53.9 161.8 November 375.9 53.9 161.8
2025 March 312.9 44.8 206.6 March 438.4 62.8 224.6
July 312.9 44.8 251.5 August2/ 438.4 62.8 287.5
November 312.9 44.8 296.3 November 438.4 62.8 350.3
2026 March 186.9 26.8 323.1 March 280.5 40.2 390.5
September 186.9 26.8 349.9 September 280.5 40.2 430.7
2027 March 186.9 26.8 376.7 March 280.3 40.2 470.9
September 186.9 26.8 403.5 September 280.3 40.2 511.1
2028 March 184.9 26.5 430.0 March 184.8 26.5 537.5
Total 3,000.0 430.0 3,750.4 537.5

Source: IMF staff estimates.

1/ After approval of the arrangement, all subsequent purchases will depend on the completion of a review and compliance with
performance.
2/ The availability date associated with the Third Review was moved from July to August 2025, upon the authorities' request.

3. This update focuses on the main economic developments since the approval of the EFF
in May 2024 and assesses the financial implications of the proposed augmentation for the
Fund. The program would continue to be subject to the General Resources Account (GRA)

INTERNATIONAL MONETARY FUND 3

ECUADOR

Exceptional Access (EA) Framework. This assessment is provided in accordance with the policy on EA
and based on the assumption that all four exceptional access criteria continue to be met. 1

RECENT DEVELOPMENTS AND OUTLOOK

A. Recent Developments

4. The economy experienced a significant downturn in 2024, while the fiscal position and
reserves position strengthened. Real GDP in 2024 fell by 2 percent, driven by lower investment
and domestic consumption, security challenges, and a severe electricity crisis in the second half of
the year. Despite the challenging environment, the authorities lowered the deficits of the budgetary
central government and nonfinancial public sector (NFPS) relative to 2023. Robust exports (including
for non-oil products), a compression in imports, and an increase in remittances led to a record
current account surplus of 5.7 percent of GDP; current account dynamics and higher multilateral
disbursements contributed to a recovery in gross international reserves (GIR) to US$ 6.9 billion as of
end-2024, from US$ 4.5 billion at end-2023.

5. Election in April 2025 lowered political uncertainty and the authorities advanced
implementation of their economic program. President Noboa was reelected in Presidential runoff
elections with 56 percent of the votes and parties allied to the president increased their seat
representation in the National Assembly. Despite the relatively short period before the elections, in
2024 the authorities implemented key reforms in line with the objectives of the EFF-supported
program, including a liberalization of domestic gasoline prices and a three-percentage points
increase in VAT. The first EFF review was successfully completed in December 2024. All quantitative
performance criteria for the second review have been met; the end-April indicative target (IT) on
arrears of the budgetary central government (PGE) was missed amid tight liquidity conditions, while
the IT on net reserves accumulation was met with large margin.

6. However, external risks have increased substantially since the first EFF review. While
real growth is anticipated to moderately recover to 1.7 percent in 2025 supported by stabilization in
electricity supply and reduction in election-related uncertainties, the economy faces considerable
risks due to a substantially worsened external backdrop. The highly uncertain global economic
outlook has negatively affected investors’ risk appetite and reduced viability of re-accessing markets
in 2025. At the time of the first EFF review, the program envisaged US$1.5 billion in external market
financing in 2025 and US$2 billion per year thereafter. Under the new baseline, re-access to
international capital markets is deferred by one year and reduced to US$ 1 billion in 2026, US$1.5
billion in 2027, raising US$2 billion per year from 2028.

1
For the original assessment, see Ecuador – Assessment of Financial Risks to the Fund (5/31/24). For the Exceptional
Access (EA) policy, please see paragraph 5 of Decision No 14064-(08/18), adopted 2/22/2008, as amended, and The
Acting Chair’s Summing Up of the Review of Access Policy Under the Credit Tranches and the Extended Fund Facility,
and Access Policy in Capital Account Crises—Modifications to the Supplemental Reserve Facility and Follow-Up
Issues Related to Exceptional Access Policy (3/5/03).

4 INTERNATIONAL MONETARY FUND

 ECUADOR

7. The emerging financing gap would be addressed through a mix of adjustment and
additional financing. The revised fiscal plan includes additional fiscal measures equivalent to
1.1 percent of GDP in 2025-27, on top of the 5.5 percent of GDP improvement in the non-oil primary
balance including fuel subsidies (NOPBS) during the program, which was projected at the time of
EFF approval. The remaining financing gap of US$ 1.0 billion over the 2025-27, stemming from the
shortfall in market financing, would be filled by the proposed augmentation.

B. Debt Situation and Outlook

8. Ecuador’s public debt declined in 2024, while projected external debt service ratios
remain broadly in line with comparable cases. Public debt as percent of GDP declined from 54.3
percent of GDP at end-2023 to 53.8 percent at end-2024, helped by the narrowing of the fiscal
deficits and debt-for-nature swap that generated liquidity and enhanced maturity profiles. Under
baseline projections, Ecuador’s total external debt service burden will peak at 10.9 percent of GDP in
2027. In terms of exports of goods and services, total external debt service would peak at 38.3
percent in 2027 and decline to 25.9 percent by 2034 (Table 3). The ratio of external debt service to
exports of goods and services at time of approval is just below the median for other recent GRA
exceptional access cases (Figure 1). Debt service due to the Fund in 2025-34 would average 1.0
percent of GDP per year, peaking in 2027-2028 at 1.3 percent of GDP (Table 3).

9. Ecuador’s public debt remains sustainable but not with high probability. 2 The fiscal and
debt projections assume successful implementation of the program fiscal plan. The primary balance
of the non-financial public sector (NFPS) would turn to surplus in 2025, stabilizing at about 2.4
percent of GDP starting in 2028. This fiscal adjustment is expected to contribute to a decline in the
public debt-to-GDP ratio to below 40 percent by 2031, the debt limit embedded in the organic
budget code. Downside risks to the fiscal and debt outlook stem from shortfalls in external financing
and implementation capacity of the fiscal program and further economic shocks (e.g., from lower oil
prices, a renewed electricity shortages or worsening of the security situation, as well as further
tightening of global financial conditions). Risk mitigating factors in the debt sustainability
assessment include the large share of multilateral and bilateral official debt, with comparatively low
rollover risk and long maturities; relatively low gross financing needs in the projections; and
implementation of fiscal measures so far under the program.

FINANCIAL IMPLICATIONS OF THE PROPOSED

AUGMENTATION FOR THE FUND
10. The IMF’s credit outstanding to Ecuador at end-May 2025 was SDR 6,375.2 million
(913.7 percent of quota). Disbursements under the current EFF thus far have totaled SDR 1,128.8
million (SDR 752.9 million upon approval in May 2024 and SDR 375.9 million on completion of the
first review in December 2024). Previous exposure to Ecuador originates from purchases of SDR 1.0

2
See the Sovereign Risk and Debt Sustainability Framework (SRDSF) included in this staff report.

INTERNATIONAL MONETARY FUND 5

ECUADOR

billion under the 2019 EFF arrangement, SDR 469.7 million under the 2020 RFI, and SDR 4.6 billion
under the 2020 EFF.

11. The proposed augmentation would significantly increase Ecuador’s access to Fund
resources and the Fund’s exposure, placing both above historical medians and close to the
upper range of comparable programs since 2008.

• The proposed augmentation of access of SDR 750.4 million (107.6 percent of quota) is nearly
equivalent to the 75th percentile of the distribution of the history of augmentations for SBA and
EFF programs, both in nominal terms and in percent of quota (Figure 8).

• Following the augmentation, Ecuador’s access under the EFF would increase to 537.5 percent of
quota (from 430 percent of quota at the time of EFF approval in May 2024), below the median
access (681 percent of quota) for other GRA exceptional access arrangements since 2008
(Figure 2).

• Upon approval of the second review, Fund exposure to Ecuador would increase to 953.1 percent
of quota and peak at 1,067.4 percent of quota in March 2026 (compared with an expected peak
of around 1,000 percent of quota in November 2025 before augmentation) assuming all
purchases and repurchases are made according to schedule (Figure 3). Peak exposure would be
above the median for comparators since 2008 and close to the 75th percentile (Figure 4).

12. Under the proposed augmentation, Ecuador’s annual scheduled net repurchases will
peak at SDR 1.2 billion in 2030. Given higher access under the augmentation, annual scheduled
net repurchases will be lower between 2026-2027 compared with the original program. However,
net repurchases will be higher from 2029 onwards relative to the original arrangement as the
additional access under the augmentation is repaid (Figure 7).

13. The proposed augmentation would slightly increase concentration of Fund credit.

• After the scheduled purchase upon the approval of the augmentation, Ecuador will remain the
Fund’s fifth largest GRA borrower, with credit outstanding that would account for 7.4 percent of
total Fund credit (Figure 6).

• Credit concentration, measured by the Fund’s exposure to the top five borrowers, would
increase slightly from 79.1 percent to 79.2 percent following the first purchase upon approval of
the proposed augmentation (Table 4). The Fund’s current level of precautionary balances (PBs)
would continue to exceed credit exposure to Ecuador. Fund GRA exposure to Ecuador after the
purchase upon approval of the proposed arrangement would amount to 26.3 percent of PBs
(Table 4), rising to 28.8 percent in March 2026 when credit to Ecuador peaks (assuming the level
of precautionary balances projected at end-April 2025, which is slightly above the medium-term
PB target of SDR 25 billion).

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 ECUADOR

14. The proposed augmentation would have a modest impact on the Fund’s liquidity
position. The Fund’s Forward Commitment Capacity (FCC), which stood at SDR 162.7 billion as of
May 31, 2025, would decrease by 0.5 percent following the approval of the proposed augmentation
(Table 4).

15. The proposed augmentation would marginally increase lending income for the Fund.
While lending income concentration risk would also be slightly higher under the augmentation, the
Fund’s burden sharing mechanism would remain sufficient to cover any arrears on charges and
surcharges. For FY26, total projected GRA charges and surcharges for Ecuador are SDR 377 million,
accounting for around 39 percent of the Fund’s symmetric burden-sharing capacity of SDR 960
million as of end-May 2025). 3

CAPACITY TO REPAY
16. Ecuador’s capacity to repay the Fund remains subject to significant risks, critically
depending on the implementation of envisaged policies and availability of external financing.

• Total obligations to the Fund relative to GIR will peak at 15.9 percent in 2025 and decline
steadily to 3.1 percent by 2034, while Fund obligations in percent of GDP and exports of goods
and services will peak at 1.3 and 4.6 percent in 2027. On an annual basis, total Fund credit
outstanding will peak in 2025, reaching 1,032.8 percent of quota, equivalent to 7.4 percent of
GDP, 98.7 percent of GIR, and 14.5 percent of total external debt (Table 3).

• Ecuador’s peak Fund exposure in percent of quota will be above the median and close to the
75th percentile of the distribution of GRA EA cases (Figure 4). Most other metrics of Ecuador’s
peak Fund exposure and peak payments obligations are generally moderate compared to other
GRA exceptional access cases, except for international-reserve related indicators. Ecuador’s peak
Fund exposure in terms of GIR, at almost 100 percent in 2025, is the third highest of comparator
cases (below only that of Argentina’s 2025 EFF and Ecuador’s 2020 EFF, Figure 5). Peak Fund
exposure in terms of total external debt is above the median of comparators, while the peak in
terms of GDP is slightly below the median. With regards to peak repayments obligations, debt
service to the Fund in percent of exports of goods and services and in percent of total external
debt service is below the median of other GRA exceptional access cases (Figure 5).

ASSESSMENT
17. The proposed EFF augmentation would help Ecuador address the temporary shortfall
in external financing. Ecuador is facing headwinds from the highly uncertain global environment,
with negative effects to Ecuadorian exports, remittances, fiscal revenues and financing prospects.
Even after accounting for the additional fiscal effort planned by the authorities, and additional

3
Under the BSM, the Fund’s creditor and debtor members contribute temporary financing in equal amounts to cover
the amount of “deferred charges” (charges and surcharges overdue by six months of more). This is achieved through
increases in the rate of charge paid by debtor members and reductions in the rate of remuneration to creditor
members.

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ECUADOR

financing from other IFIs, Ecuador would continue facing a significant financing gap of US$ 1.0
billion in 2025-27. The proposed augmentation of SDR 750.4 million would help address the
financing shortfall, support the fiscal adjustment plan and safeguard deposit accumulation.

18. Ecuador’s capacity to repay the Fund remains subject to significant risks. Key downside
risks include (i) shortfalls in external financing, leading to a decline in government deposits and
potential payment arrears; (ii) further deterioration in the global economic backdrop, due to higher
trade barriers and deeper geoeconomic fragmentation, (iii) lower oil prices; (iv) further tightening in
global financial conditions, lower risk appetite, resulting in inability to regain market access
according to the revised timeline envisaged under the program; (v) a further deterioration in the
security situation; (vi) a renewed electricity crisis; (vii) extreme weather events, including floods or
droughts, disrupting economic activity; (viii) an increase in social discontent, hampering or slowing
reform efforts. The materialization of one or more of these risks could adversely affect economic
activity, sovereign spreads, fiscal and external balances and capacity to repay. Conversely, upside
risks include stronger-than-expected global growth and higher oil prices.

19. The proposed arrangement would have a modest impact on the Fund’s liquidity
position, while the Fund’s credit exposure to Ecuador would increase further. The Fund’s FCC
would fall by 0.5 percent following the approval of the proposed augmentation. After the scheduled
purchase upon the approval of the augmentation, Ecuador would remain the Fund’s fifth largest
GRA borrower, with credit outstanding that would account for 7.4 percent of total Fund credit.
Fund’s exposure to Ecuador will peak at a higher level relative to the original program: assuming all
proposed purchases and repurchases are made according to schedule, Ecuador’s GRA credit
outstanding would peak at 1,067.4 percent of quota in March 2026 (compared to an expected peak
of 1,000 percent in November 2025 at program approval).

20. Rigorous program implementation would be critical to mitigate financial risks to the
Fund. Ecuador’s capacity to repay the Fund depends critically on steadfast program implementation
and availability of external financing as the country faces tight liquidity conditions in the context of a
dollarization regime and substantial repayments to creditors, including the Fund. Credible reform
implementation is also key to regaining access to private international bond markets and mobilize
resources from other official creditors. In the event of financing plan shortfalls, alternative financing
sources and/or a contingency policy response would be required in line with the contingency plan
discussed with Fund staff. However, despite the authorities’ strong ownership, risks to policy
implementation remain high. If policy slippages—or reversals—were to materialize, the risks of
arrears to the Fund would not be insignificant given large scheduled repurchases over the coming
decade.

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Table 2. Ecuador: IMF Financial Arrangements and Fund Exposure, 1988-2038

(In millions of SDR)
Type of New Date of Date of Expiration Amount of New Amount Fund Exposure Fund Exposure
Year Arrangement Arrangement or Cancellation Arrangement Drawn (EFF 2024) 1/ 2/ (EFF + augmentation) 1/
1988 SBA 4-Jan-1988 28-Feb-1989 75.4 15.1 300.7 300.7 3/
1989 SBA 15-Sep-1989 28-Feb-1991 109.9 39.3 247.2 247.2
1990 186.0 186.0
1991 SBA 11-Dec-1991 10-Dec-1992 75.0 18.6 127.5 127.5
1992 72.6 72.6
1993 51.8 51.8
1994 SBA 11-May-1994 11-Dec-1995 173.9 98.9 135.7 135.7
1995 116.7 116.7
1996 100.9 100.9
1997 98.9 98.9
1998 49.5 49.5
1999 0.0 0.0
2000 SBA 19-Apr-2000 31-Dec-2001 226.7 226.7 113.3 113.3
2001 151.1 151.1
2002 226.7 226.7
2003 SBA 21-Mar-2003 20-Apr-2004 151.0 60.4 262.3 262.3
: : :
: : :
2011 0.0 0.0
2012 0.0 0.0
2013 0.0 0.0
2014 0.0 0.0
2015 0.0 0.0
2016 RFI 8-Jul-2016 8-Aug-2016 261.6 261.6 261.6 261.6
2017 261.6 261.6
2018 261.6 261.6
2019 EFF 11-Mar-2019 29-Apr-2020 3,035.0 1,011.7 1,240.6 1,240.6
RFI 1-May-2020 5-May-2020 469.7 469.7 4,419.5 4,419.5
2020
EFF 30-Sep-2020 16-Dec-2022 4,615.0 4,615.0 4,419.5 4,419.5
2021 4,889.4 4,889.4
2022 6,096.4 6,096.4
2023 5,924.7 5,924.7
2024 EFF 31-Mar-2024 30-May-2028 3,000.0 1,128.8 6,650.1 6,650.1 5/
2025 EFF 4/ 6,829.4 7,205.9
2026 6,407.4 6,971.1
2027 5,843.5 6,594.0
2028 5,027.8 5,778.2
2029 3,930.1 4,706.5
2030 2,800.7 3,506.7
2031 2,082.4 2,686.6
2032 1,455.8 1,898.4
2033 955.8 1,273.4
2034 518.6 747.6
2035 232.8 310.6
2036 93.0 116.3
2037 15.4 15.4
2038 0.0 0.0

Source: Finance Department.

1/ As of end-December, unless otherwise stated.
2/ Fund exposure is as of April 2024.
3/ Fund exposure in 1988 included outstanding credit from arrangements prior to 1988.
4/ 2024 EFF including the augmentation.
5/ Figures including transactions under the proposed program are in italics. Fund exposure is derived assuming that purchases
and disbursements are made as per the schedule in Table 1 and Ecuador remains current on all its scheduled repurchases and
repayments.

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ECUADOR

Table 3. Ecuador: Capacity to Repay Indicators1/

2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

Exposure and Repayments (In SDR millions)

GRA credit to Ecuador 7,206 6,971 6,594 5,778 4,707 3,507 2,687 1,935 1,310 748
(In percent of quota) 1,032.8 999.2 945.1 828.2 674.6 502.6 385.1 277.3 187.7 107.1
Charges due on GRA credit 400.6 426.3 410.9 379.8 318.3 248.0 178.1 125.4 89.0 66.8
Debt service due on GRA credit 1,160 1,222 1,349 1,380 1,390 1,448 998 877 714 629
Debt and Debt Service Ratios
In percent of GDP
Total external debt 51.3 50.8 49.1 47.8 46.4 44.5 42.6 40.9 42.8 40.5
External debt, public 39.9 39.1 37.9 36.2 34.0 31.7 29.3 26.7 24.2 21.7
GRA credit to Ecuador 7.4 7.0 6.4 5.4 4.2 3.0 2.2 1.5 1.0 0.5
Total external debt service 9.9 10.5 10.9 10.4 9.9 9.7 8.0 8.1 7.8 7.5
Debt service due on GRA credit 1.2 1.2 1.3 1.3 1.2 1.2 0.8 0.7 0.5 0.4
In percent of Gross International Reserves
Total external debt 682.4 578.8 466.1 388.9 348.6 313.3 296.1 284.6 297.8 281.6
External debt, public 531.0 446.2 359.1 294.7 255.3 223.2 204.0 185.9 168.0 151.1
GRA credit to Ecuador 98.7 79.5 60.3 43.6 31.4 21.0 15.2 10.4 6.8 3.7
Debt service due on GRA credit 15.9 13.9 12.3 10.4 9.3 8.7 5.6 4.7 3.7 3.1
In percent of Exports of Goods and Services
Total external debt service 32.8 36.9 38.3 36.1 34.1 33.1 27.9 28.2 27.1 25.9
Debt service due on GRA credit 3.9 4.3 4.6 4.5 4.3 4.2 2.8 2.4 1.8 1.6
In percent of Total External Debt
GRA credit to Ecuador 14.5 13.7 12.9 11.2 9.0 6.7 5.1 3.7 2.3 1.3
In percent of Total External Debt Service
Debt service due on GRA credit 12.0 11.6 11.9 12.3 12.5 12.7 10.1 8.4 6.8 6.0
In percent of Total Public External Debt
GRA credit to Ecuador 18.6 17.8 16.8 14.8 12.3 9.4 7.4 5.6 4.0 2.4

Source: Ecuadorian authorities, Finance Department, and IMF staff estimates.

1/ Assumes full drawings. Indicators based on the baseline macroeconomic scenario presented in the staff report.

Table 4. Ecuador: Impact on GRA Finances

(In millions of SDRs unless otherwise noted)
As of 05/30/2025

Initial Proposed
Arrangement 1/ Augmentation
Liquidity measures
Current one-year Forward Commitment Capacity (FCC) 2/ 163,937 162,672
Impact of approval on FCC 3/ -3,000.0 -750
(in percent of current one-year FCC) -1.8 -0.5

Prudential measures
Fund GRA credit outstanding to Ecuador upon approval 4/ 6,580 6,814
In percent of current precautionary balances 26.8 26.3
In percent of total GRA credit outstanding 7.1 7.4

Fund GRA credit outstanding to top five borrowers 64,273 72,445

In percent of current precautionary balances 261.7 279.7
In percent of total GRA credit outstanding 70.0 79.1
In percent of total GRA credit outstanding upon approval 4/ 70.2 79.2

ECU's GRA charges/surcharges in FY26 in percent of residual burden sharing capacity 34.5 5/ 39.3

Memorandum items
Fund's precautionary balances (projections for end-April 2025) 24,557 6/ 25,900
Fund's residual burden-sharing capacity 7/ 1,318 960

Sources: Finance Department, and IMF staff estimates.

10 INTERNATIONAL MONETARY FUND

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Table 4. Ecuador: Impact on GRA Finances (concluded)

1/ Shows initial impact of 2024 EFF arrangement on GRA Finances.

2/ The FCC is defined as the Fund's stock of usable resources less undrawn balances under existing arrangements, plus projected
repurchases during the coming 12 months, less repayments of borrowing due one year forward, less a prudential balance. The
FCC does not include resources under the New Arrangements to Borrow or the Bilateral Borrowings Agreements.
3/ A single country's negative impact on the FCC is defined as the country's sum of Fund credit and undrawn commitments
minus repurchases one-year forward.
4/ Projected credit outstanding for Ecuador at time of approval of the proposed arrangement, which includes the scheduled first
purchase.
5/ ECU’s GRA charges and surcharges are reflected as of FY25 under the initial arrangement.
6/ As of end-January 2024.
7/ Burden-sharing capacity is calculated based on the floor for remuneration which, under current policies, is 85 percent of the
SDR interest rate. Residual burden-sharing capacity is equal to the total burden-sharing capacity minus the portion being utilized
to offset deferred charges.

Figure 1. Debt Ratios for Exceptional Access Arrangements (at time of approval)1/ 2/
Total External Debt Public External Debt
(In percent of GDP) (In percent of GDP)

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Figure 1. Debt Ratios for Exceptional Access Arrangements (at time of approval) (concluded)
External Debt Service Total Public Debt
(In percent of Exports of Goods and Services) (In percent of GDP)

Source: Ecuadorian authorities and IMF staff estimates.

1/ Estimates as reported in relevant staff reports on the request or augmentation of SBAs or EFF arrangements approved since
September 2008. For Ecuador, ratios reflect end-2024 data for the original EFF program, and end-2025 data for the EFF under
augmentation.
2/ Asterisks indicate PRGT-eligible countries at the time of the program.

Figure 2. Approved GRA Exceptional Access Cases Since September 20081/

Source: Finance Department and IMF staff estimates.

1/ FCL arrangements as well as arrangements with relatively low access in SDRs are not included.

12 INTERNATIONAL MONETARY FUND

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Figure 3. Projected Credit Outstanding Path Under Existing Arrangements and Proposed
Augmentation

1,200
8.0 RFI

7.0 1,000

6.0 Total Credit Outstanding (after

800
proposed augmentation)

Percent of quota
5.0
SDR Billions

EFFs 600
4.0 Total Credit Outstanding (under
original EFF)
3.0
400

2.0
200
1.0

0.0 0
Jan-2025

Jan-2026

Jan-2027

Jan-2028

Jan-2029

Jan-2030

Jan-2031

Jan-2032

Jan-2033

Jan-2034

Jan-2035

Jan-2036

Jan-2037

Jan-2038

Jan-2039
Source: Finance Department and IMF staff estimates.

Figure 4. Credit Outstanding in the GRA Around Peak Borrowing 1/ 2/

(In Percent of Quota)

Source: Finance Department and IMF staff estimates.

1/ Peak borrowing “t” is defined as the highest level of credit outstanding for a member. Repurchases and repayments are
assumed to be on an obligations basis.
2/ Based on quotas at the time of approval. Median credit outstanding at peak is 1,074 percent of quota; average is 1,351 percent
of quota.

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Figure 5. Peak Fund Exposure and Debt Service Ratios

for Recent Exceptional Access Cases1/ 2/

Peak Fund Exposure Ratios Peak Debt Service Ratios

In Percent of GDP Total External Debt Service in Percent of Exports of
Goods and Services

In Percent of Gross International Reserves 3/ Debt Service to the Fund in Percent of Exports of Goods
and Services

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Figure 5. Peak Fund Exposure and Debt Service Ratios

for Recent Exceptional Access Cases (concluded)

In Percent of Total External Debt 4/ Debt Service to the Fund in Percent of Total External
Debt Service

Source: Ecuadorian authorities, Finance Department, and IMF staff estimates.

1/ Estimates as reported in relevant staff reports on the request or augmentation of SBAs or EFF arrangements approved since
September 2008.
2/ Asterisks indicate PRGT-eligible countries at the time of the program.
3/ Excluding arrangements with members belonging to the euro area at the time of the approval of the arrangement: Greece,
Ireland, and Portugal.
4/ For arrangements of which total external debt (or debt service) ratio is not available, public external debt ratio is shown
instead.

Figure 6. Credit Concentration of Fund GRA Exposure1/

(As a percentage of total credit outstanding)

Source: Finance Department.

1/ Total credit outstanding refers to credit outstanding as of May 30, 2025, plus Ecuador’s first purchase under the proposed EFF
arrangement.

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Figure 7. Net Annual Repurchases

(In millions of SDRs)

Source: Finance Department, and IMF staff estimates.

Figure 8. History of Augmentations (Distribution)1/

(In millions of SDRS) (In percent of quota)
7000 700
MEX-1995
TUR-2001
TUR-2001
6000 600 TUR-2000
TUR-2000

ARG-2018
5000 500
YFR-2009
BRA-2003
RUS-1998 RUS-1998
4000 400
ARG-2001 MEX-1995
EGY-2024

3000 ARG-2001 300

RUS-1998 ARG-2001 URY-2002

RUS-1998
ARG-2001
2000 YFR-2009 PAK-2009 200

ECU-2025

ECU-2025
1000 100

0 0

Source: Finance Department, and IMF staff estimates.

1/ Includes EFF and SBA augmentations since 1990. The plots display the distribution of the dataset by showing the median
(central line inside the box), the interquartile range from the 25th to the 75th percentile (the box), the "whiskers" extending up to
1.5 times the interquartile range, and points beyond that marked as outliers.

16 INTERNATIONAL MONETARY FUND

 Statement by André Roncaglia, Executive Director for Ecuador,
Bernardo Acosta, Alternate Executive Director, and
Felipe Antunes, Alternate Executive Director
July 18, 2025

1. On behalf of the Ecuadorean authorities, we wish to express our sincere appreciation to

management and staff for their continued support to Ecuador’s economic policies and structural
reform agenda. We would like to recognize the mission team for their extreme dedication and
comprehensive report.

Program Performance

2. Program implementation has remained strong despite a challenging environment.

Ecuador faced two significant exogenous shocks in 2024: a severe security crisis and nationwide
power outages caused by an unprecedented drought. Nonetheless, all quantitative performance
criteria (QPCs) for the second review (end-December 2024) and those originally set for the third
review (end-April 2025) were met. Most indicative targets (ITs) for end-December 2024 and end-
April 2025 were also met. The authorities have made substantial progress in the implementation
of their wide-ranging structural reform agenda. The strong performance under the Extended Fund
Facility (EFF) arrangement –despite the security and electricity crises and in the lead-up to the
2025 general elections– demonstrates the authorities’ firm commitment to the program.

Recent Economic Developments and Outlook

3. Economic activity contracted in 2024, while inflation remained low and the external
sector improved markedly. As a result of the security and electricity crises, economic activity
contracted by 2 percent in 2024. Inflation stood at 0.5 percent at year-end. The current account
balance reached a surplus of 5.7 percent of GDP in 2024, supported by strong nonoil export
growth, declining imports, and robust remittance flows –well above the 2.1 percent of GDP surplus
projected at program approval and the 1.7 percent of GDP average from 2019 to 2023. That result,
along with disbursements from international financial institutions (IFIs), boosted gross
international reserves from $4.5 billion at end-2023 to $6.9 billion at end-2024, greatly exceeding
the $5.2 billion projected for end-2024 at program approval. For 2025, IMF staff project economic
growth of 1.7 percent, while the Central Bank of Ecuador forecasts 2.8 percent growth, with
continued low inflation and a strong external position supporting sustained international reserve
accumulation. Economic activity grew by 3.4 percent (y/y) in the first quarter of 2025.

4. The political landscape has become more conducive to program implementation.

President Noboa assumed office in November 2023 with limited legislative support and a short
policy horizon –as he was elected to conclude the term of his predecessor, in May 2025. Amid
severe liquidity needs, his administration requested the EFF arrangement in early 2024 and has
duly implemented it, showing its willingness and capacity to deliver a frontloaded fiscal
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adjustment. President Noboa’s reelection in April 2025 for a full four-year term, along with his
party’s legislative working majority, has significantly reduced domestic policy uncertainty and
improved prospects for sustained program implementation.

5. While shifts in global economic conditions in 2025 have created new challenges, the
authorities’ firm commitment to strengthening fiscal sustainability and key international
support have contained risks. In line with the sustained macroeconomic improvement and the
marked reduction in domestic risks to program implementation, sovereign debt spreads declined
by over 1,000 basis points following the April elections, reaching about 800 basis points in early
July. However, amid higher global policy uncertainty and tighter financial conditions for emerging
markets with weaker credit profiles, sovereign spreads have not declined sufficiently to allow
Ecuador to regain market access at conditions compatible with debt sustainability in 2025, as
projected at program approval. Consequently, a financing gap has opened, prompting the
authorities to adopt additional fiscal measures beyond the original program and to request an
augmentation of the EFF arrangement and further budget support from IFIs.

Fiscal Policy

6. Bold policies strengthened the fiscal position in 2024. The authorities took decisive fiscal
measures in 2024, including a VAT rate hike from 12 percent to 15 percent and the elimination of
gasoline subsidies, and achieved a fiscal consolidation of 2.2 percent of GDP. The strong fiscal
outcome enabled an accumulation of $850 million in fiscal buffers –well above the $360 million
target– and allowed for 75 percent more arrears clearance to the private sector than planned. Public
debt declined faster than expected to 53.8 percent of GDP and is on a firm downward path.

7. The fiscal strategy has been revised to address the financing gap and build further
buffers. The planned consolidation of the non-oil primary balance including fuel subsidies over
the program period has been increased from 5.5 percent of GDP to 6.6 percent of GDP. The
updated fiscal plan will increase public sector deposit buffers by $1.2 billion by 2028, exceeding
the proposed $1 billion EFF augmentation. The fiscal strategy will continue to focus on
strengthening permanent nonoil revenues, controlling current spending, and protecting priority
expenditures. In recent weeks, the authorities have already adopted additional fiscal measures,
including the elimination of diesel subsidies for the industrial tuna sector and new fees for the e-
commerce and mining sectors.

8. The expansion of the social safety net remains a priority amid fiscal consolidation.
The authorities have continued to increase the coverage of cash transfer programs in the lowest
three income deciles, exceeding the end-April program target by over 20,000 families. They also
elaborated a comprehensive plan to revamp the social registry to enhance targeting and coverage
of the existing cash transfer schemes. The government remains committed to shielding vulnerable
groups from the potential impact of fiscal measures.
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Financing Plan

9. Continued multilateral and bilateral support remains critical. The program is fully
financed, with firm financing commitments for the next 12 months and good prospects of adequate
financing for the remaining program period. In addition to an augmentation of the EFF
arrangement, the authorities have sought further budget support from other IFIs. They have also
assigned the highest priority and deployed maximum efforts to securing positive net financing
from all bilateral creditors over the course of the program. In pursuit of this goal, the Minister of
Finance of Ecuador met with key counterparts in China in mid-May. Furthermore, the President
and Minister of Finance of Ecuador met with the President of China and other Chinese officials in
Beijing in late-June. Chinese official and commercial financing will support priority investment
projects that are included in the budget and medium-term investment plans, crucial for boosting
economic growth and enhancing resilience. A joint working group has been established to monitor
progress. The authorities reaffirm their strong commitment to remaining current on debt
obligations and will continue to engage with all creditors in good faith.

10. Prospects for tapping international capital markets in 2026 are positive. Significant
improvements in fiscal sustainability and the supportive political environment have already
boosted market confidence. As the authorities implement their 2025 fiscal plan –which includes
high-quality fiscal measures– and bolster liquidity buffers, sovereign spreads will decline further.
Engagement with market participants is ongoing to prepare for a successful external debt issuance
in 2026.

Financial Sector Policy

11. The financial sector remains broadly stable, with improvements in key indicators.
Robust deposit growth, supported by external inflows and the clearance of government arrears,
has led to a modest recovery in credit growth and a meaningful decline in borrowing costs. Most
financial soundness indicators have improved for banks and cooperatives in recent months,
including those related to loan quality, provisioning, and capital ratios.

12. Financial sector oversight and supervision have been enhanced. With the purpose of
improving coordination among agencies involved in financial sector oversight and regulation, a
Financial Stability Committee was established in August 2024. Furthermore, an inter-institutional
group to strengthen the financial sector resolution framework was created within the Financial
Stability Committee in January 2025. Meanwhile, the supervisory authorities liquidated two
insolvent institutions –a small bank and a medium-sized cooperative–, while two troubled small
banks were recapitalized by new owners. These events were contained and did not pose systemic
risks. Temporary regulatory forbearance introduced in response to the electricity crisis has been
extended, with a commitment to resume proper loan classification and provisioning in due course.
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13. The reform agenda to mobilize domestic private and public financing continues to
advance. Recognizing that a complex system of caps on lending rates has led to distortions and
restrictions in the credit market, the authorities are committed to gradually phasing out financial
repression measures and enhancing market efficiency. With that objective, the Central Bank of
Ecuador completed a study on the system of lending interest rate caps, which includes
recommendations for designing a reform agenda. Furthermore, given that the domestic debt market
lacks liquidity and depth, the authorities have taken actions to improve the institutional and market
infrastructure to develop the domestic debt market, which will be crucial to mobilize more
domestic financing for public and private agents. The authorities remain committed to
implementing the 2023 Financial System Stability Assessment recommendations.

Structural Reforms

14. The governance and AML/CFT frameworks continue to be strengthened. Strong

actions have been taken to improve public procurement, including by approving a public
procurement law in June 2025 and taking key steps to upgrade the public procurement system.
These efforts will increase transparency, improve expenditure control, and mitigate vulnerabilities
to corruption. The authorities also completed the 2019 and 2020 financial audits of the state-owned
oil company, another milestone to improving transparency, accountability, and efficiency of state-
owned enterprises. Furthermore, the National Assembly unanimously approved a new AML/CFT
law in line with FATF standards. The authorities are committed to effectively implementing it and
developing the AML/CFT Strategic Action Plan with IMF technical assistance. Combatting money
laundering and organized crime financing remains a top priority.

15. The structural reform agenda has been expanded to meaningfully boost growth. With
real GDP per capita stagnant since 2014, the authorities are determined to advance critical
structural reforms that –building upon the macroeconomic stability gains– can unlock the
economy’s growth potential. Six new structural benchmarks have been added, focusing on
generating an enabling environment to attract private investments in high potential sectors, like
mining and energy. Continued IMF technical assistance, in addition to support from other
development partners, will be critical for the success of this agenda.

Concluding Remarks

16. Macroeconomic stability has improved significantly, and the domestic outlook is
favorable for continued strong program implementation. Recent and forthcoming actions
confirm the authorities’ commitment to durably strengthen fiscal sustainability, safeguard
macroeconomic stability, and buttress job-rich potential growth. While shifts in global economic
conditions require a recalibration of the EFF arrangement, the favorable domestic political
environment, ambitious reform agenda, and the authorities’ track record and firm commitment
offer strong prospects for regaining market access in 2026. The authorities deeply value the Fund’s
ongoing financial, policy, and technical support.