LatAm News Ecuador

Bancoagrícola's Vice President of Finance, Alexander Pinilla, affirmed that the liquidity of the Salvadoran financial system remained positive in the first half of 2022. In this sense, Pinilla said that deposits in the Salvadoran financial system would continue to grow in the second half of 2022; however, he indicated that the growth rate of deposits would slow down. In this context, in the second quarter of 2022, Bancoagrícola's total deposits increased to USD 16.5 billion, while loans reached USD 15.5 billion.

Argentina's Minister of Economy, Sergio Massa, managed to close his first month in office with a debt placement of ARS 212,236 million. On Monday, in the second tender of August, the Secretary of Finance offered a bid for four securities maturing in 2022 and 2023. In this tender, the Treasury issued a Liquidity Bill (LELITE) maturing on September 30th, 2022; in addition, two discount bills (LEDE) maturing on December 16th, 2022, and January 31th, 2023, and an inflation-adjusted bill (CER) maturing on June 16th, 2023.

On Tuesday, Bolivia's President Luis Arce announced that he had approved the acquisition of USD 1,142 million in debt. According to studies, the country's external and internal indebtedness is currently at least 78.8% of the Gross Domestic Product (GDP). In detail, about 12 decrees were authorized by the Bolivian government to acquire debt contracts with the CAF, IDB, Fonplata, ICO, Eximba, KfW, and IFAD; to boost employment, health, water and sanitation, irrigation, climate change, roads, and energy projects, and to strengthen the State's statistical system and other public investment projects.

Costa Rica Report highlights

Although one of the "leitmotifs" of former President Alvarado Quesada was to leave the "house in order," this has been questioned by various political sectors, including the new President and economist, Rodrigo Chaves.

Administration of Rodrigo Chaves announced on June 22nd, 2022, the modification of the fiscal rule. This occurred after the National Child Welfare Agency (PANI) authorities raised alerts due to the restrictions to urgently allocate resources to private organizations that care for vulnerable minors since they denounced that they would run out of money to operate after June 30th.

On Monday, the Presidents of the nations that make up the Andean Community (CAN) - Colombia, Ecuador, Peru, and Bolivia - said they would like Venezuela, Chile, and Argentina to join the group. "If we manage to integrate Chile, Venezuela, and Argentina... I think this would change things significantly, and our voice would be heard more clearly on the world stage," said the Colombian President, Gustavo Petro. "I would like to express how important it would be for the Andean Community, and the benefits for its members, for Chile and Venezuela to rejoin," said the Peruvian President, Pedro Castillo.

The preparation of the General State Budget for 2023 will begin in September, and the Ministry of Finance already has a few starting points. One of them is the price of oil, one of the primary sources of income for the State's budget. According to the International Monetary Fund (IMF), the price of Ecuadorian oil will average USD 75.3 per barrel in 2023. With that price, the budget's oil revenues would fall by around USD 500 million compared to 2022, warned the former Minister of Finance, Fausto Ortiz.

In the last three months, the Government of Daniel Noboa has had to "scrape the pot" and risk taking unpopular tax measures, in order to reduce somewhat the millionaire deficit of resources inherited from the Government of Guillermo Lasso. Thus, so far in Noboa's administration, measures have been implemented that would leave between USD 2,000 million and USD 2,500 million additional to the fiscal treasury in 2024. In spite of this, budgetary tensions still persist, because Ecuador needs loans for about USD 10.2 billion in 2024, says the US risk rating agency Fitch Ratings. Daniel Noboa: "Ecuador is at its worst moment" In a report on Ecuador, published on 14 February, Fitch Ratings says that the VAT hike will ease fiscal tensions, but only in 2024, as 2025 and 2026 are still years with high financing needs. Noboa has managed to reduce tensions for 2024 with measures implemented through three laws of an urgent economic nature: The Economic Efficiency and Employment Generation Law, approved with a majority in the plenary of the National Assembly. The Energy Competitiveness Law, approved with a majority in the plenary of the National Assembly. And the controversial Law to face the internal armed conflict, which was approved by tacit consent in the Assembly.

Source: Primicias

Ecuador Report highlights

The country experienced a wave of national strikes and protests, which started on June 13th and paralyzed the country for 18 days, and which were convoked by the Confederation of Indigenous Nationalities of Ecuador (CONAIE), led by Leonidas Iza. Among the ten demands made were the reduction of fuel prices, debt relief, fair prices, employment, a mining moratorium, a halt to privatization, price controls, improvements in health and education policies, and security.

In addition to the estimated losses of USD 1 billion, equivalent to one point of the GDP, the Lasso administration must comply with several requests from the CONAIE, which would cost an amount of similar magnitude, close to an additional USD 1 billion, putting pressure on this year's fiscal deficit.

The Foreign Ministry of Ecuador informed on Friday, February 16 that the Federal Service for Veterinary and Phytosanitary Control of Russia has lifted restrictions on five Ecuadorian banana exporters. In a video shared by the Foreign Ministry, Juan Fernando Holguin Flores, Ecuador's ambassador to Russia, said that this decision "is a sign of the importance of the dialogue that should exist at all times between two countries".

The day before, Ecuador's Ministry of Foreign Affairs announced that a mission of authorities would travel to Russia to discuss the suspension of the Ecuadorian companies. A suspension in the midst of a diplomatic impasse On February 2, the Russian phytosanitary authority asked Ecuador's Minister of Agriculture, Franklin Palacios, to suspend five banana exporters. Russia alleged systematic detection of the Megaselia scalaris fly, known as the cholera-carrying humpback fly, in Ecuadorian bananas. This is a pest "considered dangerous for Russia and the countries of the Eurasian Economic Union". This veto affected 25% of total exports of the fruit to Russia, which is the main destination of Ecuadorian bananas.

Source: Primicias

The Carnival of 2024 generated US$ 63 million in tourism spending in Ecuador, in the context of a challenging social situation for this sector due to the state of emergency that remains in force to address insecurity, according to the government balance. The figures presented by the Ministry of Tourism show a reduction of USD 31 million compared to 2023, when USD 94 million were moved during the four-day holiday, a figure that was then a record in seven years. This time, the national average occupancy rate was 41%, however, in several provinces the percentage rose, as for example in Napo where it reached 91%, exceeding last year's record by 22 percentage points, added the Ministry. While in provinces with traditional festivities such as Tungurahua an average occupancy rate of 59% was reached, Santa Elena 58%, Bolivar and Azuay 55%, he said. However, the figures differ with tourism associations that showed a higher occupancy.

Source: Primicias

The President of the Republic, Daniel Noboa, issued this Thursday, February 15, 2024, Executive Decree 166 to ratify the entire content of the trade agreement signed between Ecuador and China in May 2023.

The Executive takes into consideration that according to article 418 of the Constitution it corresponds to the President to sign -the signature took place in the government of Guillermo Lasso- or ratify treaties and other international instruments. And the decree details the process that this agreement went through:

On August 9, 2023 the Constitutional Court ruled that the trade agreement with China required legislative approval,

On October 12, 2023, it declared it constitutional and ordered the Presidency of the Republic to make this ruling known to the National Assembly "once it has been established", since at that time the cross death that dissolved the Legislative Function had been declared.

Source: Expreso

The country risk in Latin America is going up and down and Ecuador is among those that are going down and remains in the fourth place of the highest indicators. In a few weeks, since January 9, 2024 -when the internal armed conflict was declared- this indicator that measures the possibility of the country to pay its obligations has dropped 538 points.

The drop has been mainly due to the fiscal measures carried out by the Government and which obtained a tacit approval by the Assembly. Among them, the last tax reform that opens the possibility for the Government to raise the value added tax (VAT) to 13%, and with two points more on a temporary basis.

On Tuesday, February 13, Ecuador had a country risk of 1,526 points, but by February 12 the indicator was at 1,501 points.

On the same date, comparing the indicators of other countries, which are measured by the investment bank JP Morgan, Ecuador is in the fourth place of the worst risks in the region.

In first place is Venezuela with 22,652 points, followed by Argentina which rose to 2,032 points. Bolivia is in third place with 1,885 points and Ecuador is in fourth place with 1,501 points. This according to data from the Invenómica website, which publishes the figures for the region.

During the first year of the administration of the President of the Republic, Guillermo Lasso, 199 investment contracts have been signed, translating into USD 5,000 million for the national economy. This was highlighted on July 26th by President Lasso at the opening of the event "Open for Business: Let's meet with Investors (national and foreign)," which took place at the Samborondón Convention Center in Guayas. "During the first year, it was possible to reduce tariffs in about 667 items, which means savings for about USD 180 million, and the reduction of the Foreign Currency Outflow Tax (ISD) from 5% to 4.5%, according to with what was expressed by the President in the panel "The experience of investing in Ecuador and future challenges." Lasso also indicated that "actions have been undertaken to boost the competitiveness of the private sector through tax incentives." For his part, the Minister of Production promotes the competitiveness and productivity agenda in three pillars: Productive Ecuador (related to laying the foundations for competitiveness and lowering production costs), Ecuador is worth it (which implies expanding investment opportunities), and Ecuador innovates (trying to add value with innovation).

Source: La República

Ecuador Report highlights

Ecuador's Chief of Staff, Francisco Jiménez, confirmed having received a letter from the President of the Legislative Assembly, Virgilio Saquicela; but it did not establish a date for a meeting. "I saw him (Saquicela) by chance at the Municipality's solemn session. We commented on the letter. I told him that regardless of what had happened in the past, dialogue must always be the government's priority," expressed Jimenez. In this sense, the Chief of Staff pointed out that the government would analyze if these talks would be raised "on correct bases." "For now, it is only a letter of what would be intended between the Executive and the Legislative branches. We have to see how this table will be composed and that it is not just another obstructionist space," explained Jiménez, considering that the government could participate in this dialogue. Regarding the technical tables formed with the indigenous organizations, the Chief of Staff specified that what was signed in table 2 (public and private banks) on the cancellation of debts "is absolutely valid. It has all the seriousness of the case and has to be respected." Likewise, last Wednesday, the debates on fuel targeting resumed.

Source: Primicias

Ecuador's country risk stood at 1,488 points on Wednesday, July 13th, 2022. This indicator had not been so high since March 9th, 2021, when the country was in the presidential election campaign. Country risk measures the confidence of international investment banks in a country's ability to pay its foreign debt. The indicator reflects that the more points, the greater the probability that the government will default on its public debt. Since June 13th, 2022, when the national strike called for by the Confederation of Indigenous Nationalities (CONAIE) began, the indicator has increased sharply. Thus, between June 13th and July 13th, Ecuador's country risk increased by 585 points.

The new Director of the Internal Revenue Service, Francisco Briones, stated that there is still room to collect taxes from companies that evade paying. Part of the tasks entrusted to the new Director is to fight against tax evasion and the formalization of businesses to expand the taxpayer base. According to Briones, this will be done through the "efficient and real use of the information the SRI can access." When questioned regarding how much the State stops receiving due to evasion, the Director explained that according to estimates made by the Economic Commission for Latin America (ECLAC), the figure is around USD 7.5 billion.

El Salvador

El Salvador's banking sector assures that the country's financial liquidity remained positive in June

Argentina

Argentina's Ministry of Economy raises ARS 286,000 million in the local debt market

Bolivia

Arce authorizes USD 1,142 million in new foreign debt

Venezuela

Countries of the Andean Community press for Venezuela, Chile, and Argentina to join the bloc

Ecuador

The IMF suggests a price of USD 75 per barrel of oil for Ecuador's 2023 proforma budget

Weekly Review

Newsletters

From "scraping the pot" to VAT hike, these are Noboa's measures to finance 2024

Russia lifts veto on Ecuadorian banana exporters

Carnival 2024 holiday moved USD 31 million less in Ecuador than a year ago

Daniel Noboa issues decree to ratify trade agreement with China

Ecuador

Ecuador's country risk is still far from viable for debt issuance

Newsletters

Lasso's government has increased the economy by USD 5,000 million

Government examines conditions to resume dialogue with the Legislative Assembly

Lenín Moreno faces five investigations

Investment contracts generate expectations that jobs will be created

Ecuador

Ecuador's country risk increased to 1,488 points one month after the national strike

Ecuador

Briones: There is plenty of room to collect taxes from companies that evade paying

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