Ecuador is at a turning point – opportunities include a willingness to change from Correa’s economic model, optimistic perspectives on the oil industry and better relationships with trade partners. Risks include lack of political coherence and a weakening of Moreno’s popularity, as well as the possibility of lower oil prices.
Specific topics in this Ecuador presentation are
• GDP growth at 1.5-2% in 2019; non-oil exports at 5-6%
• Oil sector prospects are good, with new exploration and higher private investment in 2019 (ITT). Expected increases in production will help the balance of trade.
• Fiscal accounts: Tax estimates are reasonable, and the government has sent signs of fiscal austerity, but only on the capital expenditure side. The government was shy in its approach to reducing fuel subsidies.
• Financing needs show a rising gap into 2019.
• Total public debt, $48.8 bn, is almost three quarters external, with half of that held by banks and multilaterals. Debt will continue to rise, but looks to be stabilizing at about 47% of GDP.
• Trends in the banking sector and liquidity measures show relatively stable credit and deposit levels.
• Deep labor, subsidy and governmental reform are not possible at this time, given President Moreno’s declining approval ratings because of allegations of corruption in parts of his government.
• The government has not discarded the IMF or China as possible sources of financing, and Finance Minister Martinez will visit China in December.
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