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Country risk below 1,500 points for the first time in more than a year

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Country risk below 1,500 points for the first time in more than a year

El Triunfo (Guayas), February 26, 2024.- The President of the Republic, Daniel Noboa, toured the facilities of the La Troncal housing complex and officially handed over the houses that benefit 200 families in the area. Photo: Eduardo Santillán / Presidency of Ecuador.

Ecuador’s risk premium began this Monday below the 1,500 point barriersomething that had not happened for more than a year, after reaching 2,141 units in December, its maximum peak since 2020.

The ‘country risk’ index, which measures the premium paid by the State to finance itself in international markets with respect to the 10-year term United States sovereign bond, It is currently at 1,497 points, something that has not happened since February 8, 2023, when it was at 1,499.

This value has decreased by 644 integers in just over two months with the economic reforms undertaken by the president of Ecuador, Daniel Noboa, who took office on November 23.

When he is about to complete his first hundred days of presidential mandate, Noboa has been characterized by declaring the “internal armed conflict” against organized crime to contain a wave of unprecedented violence and insecurity and by taking steps towards achieving fiscal stability, after register a deficit of about $4.8 billion last year, equivalent to about 5% of gross domestic product (GDP).

The Ecuadorian president managed to push through a measure to raise the value added tax (VAT) that will allow it to go from 12% to 15% starting in April, with which he hopes to raise about 1.3 billion dollars annually.

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In turn, Noboa has announced the implementation in the coming months of a targeted reduction in fuel subsidies, which last year represented a state expenditure of about 3.2 billion dollars by keeping public gasoline prices frozen. 85 octane, the most consumed, and diesel.

It has also raised the possibility of extending the deadline for the closure and dismantling of Block 43-ITT, one of Ecuador’s main oil fields, located in the Amazonian Yasuní National Park, whose cessation of exploitation was voted in a national plebiscite last year. .

Before taking office, Noboa, who won the presidential elections last year at the age of 35, was also emphatic in pointing out the need to make changes in the country’s economic policy to avoid following a course that, according to his criteria, could cause The country will go into ‘default’ (debt default) in 2026 or 2027.

In a recent assessment report on the credit agreement completed in December 2022, the International Monetary Fund (IMF) suggested that Ecuador deepen the reforms that remained incomplete during the program, specifically the progressive elimination of fuel subsidies and tax reform. . EFE

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