Lasso considers that the reform of the stock market is one of the biggest projects he is working on. Investors fear that the free-market measures will end with a change of command in December 2023.
Ecuadorian President Guillermo Lasso plans to issue at least six new decree laws and seek major changes to the country’s stock market before leaving office in early December 2023.
Lasso rules by decree ahead of snap elections on August 20 that were sparked by his legal dissolution of Congress in May. The president must present the decrees to Ecuador’s Constitutional Court, which reviews the bills in the absence of lawmakers.
Capital market reform is “a big project that we are working on,” Lasso said in an interview with Bloomberg TV’s Shery Ahn in New York, adding that the goal is to modernize the system and make it more attractive to foreign investors.
He said he also plans to issue a decree authorizing the government to sell land to shrimp farms to increase revenue.
So far, the constitutional court has allowed only a decree modifying tax deductions to enter into force. Another on free zones was rejected because it was not considered urgent.
Lasso is in New York to discuss duty-free access to US markets for Ecuadorian exports (IDEA Law), as well as to seek emergency funds to deal with the imminent effects of the El Niño weather phenomenon.
Major El Niño systems in the 1980s and 1990s caused severe economic disruption after heavy rains destroyed key roads.
Ecuador is currently better prepared than in decades past to deal with the phenomenon, so it will not seek loans from the bond market or from China for emergency financing, but instead will turn to lenders such as the World Bank, Lasso said.
During his trip, he will meet with US lawmakers as Ecuador seeks to join Caribbean countries in gaining duty-free access to the US market for more than 90% of its products.
“Regarding the relationship with China and the United States, we are an example of pragmatism,” said Lasso, whose government signed a free trade agreement with China earlier this year.
upcoming election
Ecuador will elect a president and congress on August 20 after Lasso made the historic decision to dissolve the National Assembly. The new officials will serve until mid-2025, when Lasso’s term would have ended.
Lasso will not seek the presidency in the early elections and his party will not participate either.
Left-wing candidate Luisa González, one of the lawmakers Lasso fired, leads the polls, followed by former centrist vice president Otto Sonnenholzner.
Polls show he hasn’t garnered enough support so far to win in the first round, so a second ballot is likely in October.
González is close to former socialist president Rafael Correa, who has maintained influence in Ecuador’s politics since leaving office despite being found guilty of corruption.
Correa faces arrest if he returns to Ecuador from his current home in Belgium, his wife’s native country.
“Ecuador is risking its stability in the electoral process,” said Lasso. “What I hope happens, it is good that the reform processes continue to strengthen the economy and, above all, divert that ghost of the moratorium that does so much damage to the country.”
Amid Lasso’s declining political fortunes, Ecuador’s bonds have underperformed and are currently trading at very low levels.
Investors fear that the next administration will not follow through with market-friendly reforms that they believe will allow the economy to grow enough for the serial defaulter to cope with a bond repayment schedule that will become much more onerous in 2026.
Correa refused to pay bonds in 2008, even though Ecuador had the means to pay its debt at the time.
In May, Ecuador completed a tailored debt transaction led by Credit Suisse Group AG in which it issued “blue bonds” for efforts to protect the Galapagos Islands and their surrounding waters.
Ecuador exchanged $1.6 billion of face value denominated bonds for new financing of $656 million. As a result, the country cut more than $1.13 billion of its total debt.
The Administration is working on other debt-for-nature deals, but has little time to complete any of these complicated transactions before Lasso’s abbreviated presidency ends.
The government does not expect to issue any more agreements before Lasso leaves office, but is working on a manual to shorten the terms from the two years that the Galapagos took to six months, he said. Bloomberg
President @LassoGuillermo of #Ecuador coming up @BloombergTV on his plans for capital market reform and trade before he leaves office w/@skueffner @CarolinaBGP @crayton_h @miliojose211 @shaq_omari https://t.co/wEBwpq3JdV pic.twitter.com/w6weyTy3cT
— Shery Ahn (@SheryAhnNews) July 20, 2023