IMF loan deal requires payment on IESS debt

Among the conditions Ecuador agreed to for a $4 billion loan from the International Monetary Fund (IMF) was making a substantial payment on the debt to the Social Security Institute (IESS). Under terms released by the IMF, the government is required to pay all arrears from 2022 and 2023, or about $700 million.

Social Security hospitals around the country have suffered from inadequate funding since 2014.

In total, the debt to IESS is estimated at $4.5 billion, dating back to 2014. The majority of the debt, according to IESS management, is owed to the system’s health care services.

In addition to payment to IESS, the IMF insisted that the government catch up on payments to private health providers, some of whom have gone five years without payment.

Former president Rafael Correa stopped government funding to the Social Security system in 2014, claiming it should be funded by its members, similar to the arrangement in other countries. Former presidents Lenin Moreno and Guillermo Lasso, who succeeded Correa, promised to restore funding but neither did, citing a lack of funds.

David Pico, a member of the IESS Board of Directors from 2005 to 2009, applauded IMF for insisting the IESS debt be paid. “It’s time the debt is settled and for the medical sector of IESS to be restored to full health,” he said. “Members of the system have suffered due to the lack of funding. Medicines are not available and private contractors are refusing to accept referrals.”

According to Pico, Correa added hundreds of thousands of non-paying members to IESS before he cut funding. “This was the time when oil prices collapsed, and the government was looking to cut spending.”