IMF Approves Ecuador Fund Facility Review, Augmentation

• 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: 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 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."