- International Monetary Fund (IMF) staff and the Ecuadorian authorities have reached staff level agreement on a set of comprehensive policies and reforms needed to complete the second review under the Extended Fund Facility (EFF) arrangement.
- Program performance has been strong. The authorities met all end-December 2024 quantitative performance criteria and indicative targets for the second review. They have also made substantial progress on the implementation of their ambitious structural reform agenda supported by the program.
- 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 boost private investment and job-rich growth.
Washington, DC: An International Monetary Fund (IMF) team led by Ms. Patrizia Tumbarello held discussions with the Ecuadorian authorities in Quito, Ecuador, and in Washington DC, during May 19-June 10, 2025 on the Second Review of the country's 48-month Extended Fund Facility (EFF) Arrangement.
Upon the conclusion of the discussions, Ms. Tumbarello issued the following statement: "We are pleased to announce that IMF staff have reached a staff-level agreement with the Ecuadorian authorities on the second review under the EFF arrangement, subject to approval by the IMF Executive Board and confirmation of international partners' financial commitments, with Board consideration expected in coming weeks. This staff-level agreement also includes a proposed augmentation of SDR735 million (or US$1 billion) in financial assistance. The arrangement was approved by the Executive Board on May 31, 2024, for an original amount of SDR 3 billion (about US$4 billion and 430 percent of quota). The authorities' revised program will also catalyze additional financial support from multilateral partners.
"Ecuador's four-year EFF arrangement continues to support the authorities' strong economic program. The authorities made significant progress in the implementation of their economic program supported by the EFF arrangement. In 2024, the country faced a large recession with economic activity contracting by 2 percent, including due to severe security and energy crises. Despite the challenging circumstances and a relatively short policy horizon before general elections, the authorities were able to mobilize non-oil revenue and implement significant reforms, including a landmark three-percentage-point increase in the VAT rate and the liberalization of domestic gasoline prices. The authorities met all quantitative performance criteria for end-December 2024, most with wide margins, and advanced their structural reform agenda, achieving progress on fiscal, governance, and financial sector structural benchmarks. The current account balance posted a record surplus and reserve buffers improved. Preliminary data suggest that the quantitative performance criteria for end-April 2025 also appear within reach. Ecuador faces additional challenges due to the recent global oil price shock and tighter external financing conditions. Despite the headwinds, the authorities have committed to further decisive policy reforms to strengthen the fiscal and external positions; the sovereign spread has declined substantially in recent weeks. The staff-level agreement supports the authorities' additional reform efforts to further strengthen fiscal sustainability, private sector investment, and job-rich growth, including in the areas of taxation, mining, energy, and capital markets. These efforts build on the ongoing comprehensive-ambitious reforms supported by the EFF arrangement.
"The authorities' policy actions and reforms are helping to safeguard dollarization, enhance macroeconomic and financial stability, strengthen fiscal sustainability, and protect vulnerable groups, and are expected to foster a stronger and more inclusive economy.
"The staff team is grateful to the authorities for the excellent collaboration throughout and engaging discussions."
