MercoPress. South Atlantic News Agency

Ecuador and IMF reach agreement for disbursement of frozen US$ 6bn funds

The accord also includes fiscal targets for social protection, strengthening government finances for the government of president Guillermo Lasso.

Ecuador and the International Monetary Fund, IMF, finally reached a technical agreement involving 6 billion US dollars, according to the country's economy minister Simon Cueva. The accord must still be approved by the IMF governing board but will unblock “international funds”, which have been frozen for months.

The funds include US$ 1,5bn from the IMF plus US$ 4,5bn from other multilateral organizations such as the World Bank and the Inter American Development Bank, which will be delivered in the course of 2022.

The accord also includes fiscal targets for social protection, strengthening government finances and economic recovery for the conservative alliance government of president Guillermo Lasso.

“Resources included are US$ 800 million from the IMF in 2021 and another US$ 700 million in 2022, which will ensure we will have sufficient funds to finance the government and other state-owned companies”, Cueva said in a media conference in Quito.

Guillermo Avellan, Ecuadorean Central bank chair pointed out that negotiations with the IMF will allow the government to achieve several targets, among which he underlined sustainable growth which respects the environment and generates quality jobs for Ecuadoreans.

Besides, promote transparency of public resources in the government administration plus ordering finances, strengthening the dollarization process (Ecuador's official currency is the US dollar since 2000) and ensure bank and other institutions deposits belonging to citizens.

In 2020, under the administration of ex-president Lenin Moreno, IMF approved a 27-month credit for Ecuador, under the IMF Extended Service totalling some US$ 6,5bn, most of which has been disbursed.

Credit was conditioned to a plan of reforms including austerity and anti-corruption measures, with a fiscal deficit of US$ 4,8bn (4,65% of GDP), bringing poverty down to 48% of the population and unemployment and underemployment to 30%'