Ecuador may use financing from the International Monetary Fund (IMF) to balance its budget, as the South American country seeks to reduce a swollen fiscal deficit and its international debt, the finance minister admitted on Friday.
The country will seek the funds if it can come to an agreement with the organization to back President Lenin Moreno’s “prosperity plan”, which includes support for the poor, the minister said, after Moreno met with IMF chief Christine Lagarde at the World Economic Forum.
“If we can find the necessary convergence between Ecuador’s plan and what the international markets hope for on their side, we can reach a deal with the IMF, which would give a new view for the future for Ecuador,” Finance Minister Richard Martinez said in a statement from Davos.
The IMF applauded Ecuador’s recent reduction of its fiscal deficit. The country lowered the figure from 6 percent of gross domestic product at the start of 2018 to 3.3 percent of GDP by the end of the year, via public spending reductions and a revision of gas subsidies.
“I stressed my support for President Moreno’s reform efforts and for his strong focus on protecting the poorest members of Ecuador’s society as the government advances its policy agenda,” Lagarde said.
Moreno has said that the current deficit and debt figures were cause by the “excesses” of his predecessor Rafael Correa, who endorsed Moreno’s campaign.
Moreno has denounced what he says are over-the-top costs and design flaws in five key oil projects built over the last decade, citing studies backed by the United Nations.
Correa says the government is trying to hide its efforts to privatize the oil industry.