IMF agrees with Ecuador on a credit for USD 4,000 million

The technical staff of the International Monetary Fund (IMF) and Ecuador “have reached an agreement” for a loan of about $4 billion over four years, the financial institution reported this Thursday in a statement.

The agreement, reached under the framework of the Extended IMF Facility (EFS), is still subject to approval by the IMF board.

The government of Ecuadorian President Daniel Noboa requested weeks ago the opening of negotiations with the IMF, in the midst of a war against criminal gangs linked to drug trafficking that, as he acknowledged, “costs money.”

To obtain resources, the Ecuadorian government will raise the Value Added Tax (VAT) from April, which will go from 12% to 15%, with the aim of raising about 1.3 billion dollars annually.

The agreement is announced just five days after a meeting in Washington between the director of the IMF, Kristalina Georgieva, and the Ecuadorian Minister of Economy, Juan Carlos Vega.

The Ecuadorian authorities “have developed a solid plan and have begun to take important policy measures to address the fiscal and liquidity situation,” says Varapat Chensavasdijai, head of the IMF mission in Ecuador, quoted in the note.

“IMF staff welcome the reform efforts made by the authorities to help strengthen fiscal sustainability, safeguard macroeconomic stability, and foster a stronger and more inclusive economy,” he adds. Source: news

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