Global Macro Service > Research Briefings > Ecuador

IMF programme: bitter but necessary medicine

Ecuador has reached an agreement with the IMF on a $4.2bn extended fund facility and another $6bn in financing from several multilateral institutions. This should be sufficient to cover the country’s financing needs over the next two years, but at the cost of an accelerated pace of fiscal consolidation.

The details of the IMF programme are not yet public but assuming fiscal targets of 1% of GDP primary surplus by 2020 and 1.5% by 2021, GDP growth is likely to be capped at just 1% over the next three years. This would set the debt-to-GDP ratio on a downwards trajectory before the end of the three-year programme.

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