Ecuador ‘desperately’ needs economic reform, IMF says; Ecuador heads UN Security Council; U.S. Consul acknowledges U.S. role in Ecuador drug trade

In a report released Monday, the International Monetary Fund (IMF) said Ecuador must increase the pace of economic reform and reduce its reliance on oil and other natural resources to fund its budget. The report said earlier efforts to achieve fiscal security were abandoned by the government after the Covid-19 pandemic and should resume immediately.

“Fiscal sustainability is essential and the government must follow through on earlier plans to restructure debt and strengthen its capacity in fiscal accounting to meet budgetary needs.”

Ecuador’s UN Ambassador José De la Gasca

The report said that public accounts “deteriorated rapidly” in 2023 as a result of lower oil prices, reversing the positive trend of 2022 when prices were higher. “The current situation, in which the country has a $5 billion budget shortfall, illustrates the danger of relying heavy on oil revenues,” it says. “The market is unpredictable, and it is irresponsible to assume oil prices will sustain current spending levels.”

The IMF urged the government to “resume efforts to reduce fuel subsidies” and explore ways to expand the tax base and increase collections.

An unfortunate result of Ecuador’s fiscal crisis, the IMF said, is that it has made borrowing from international markets extremely expensive. “Access to debt markets has not been restored following the Covid pandemic due to political uncertainty, civil unrest and large fiscal vulnerabilities, including the dependence revenues from non-renewable resources,” the IMF said.

It noted that Ecuador’s “country risk” in international markets has reached near-record highs. “Securing funding from loaning sources is currently very difficult or prohibitively expensive.”

In its conclusion, the IMF urged the government of Daniel Noboa to push “fiscal and structural reforms and learn from the mistakes of past governments.”

U.S. Consul acknowledges U.S. role in Ecuador drug trade
The United States is working with the government of President Daniel Noboa to develop and strengthen programs to combat drug trafficking and related violence, U.S. Consul General Erik Martini said Tuesday in Cuenca. “The U.S. is a drug consuming nation, and since we are part of the problem that Ecuador faces, we feel an obligation to help find solutions,” he said.

Speaking to U.S. citizens Tuesday morning at the Abraham Lincoln Cultural Center, Martini acknowledged the difficulty Ecuador faces in fighting international drug traffickers, noting that the country does not grow or produce illegal drugs. “The drugs come in form surrounding countries to Ecuadorian ports where they shipped out. Although much of the shipments go to the U.S., most are headed to Europe.”

Martini said the U.S. has enjoyed friendly relations with Ecuador since 1825, when it established the consulate in Guayaquil. “It is one of our longest and best relationships in Latin America,” he said.

Martini was in Cuenca with members of the consular staff who offered passport, notary and other services to U.S. expats. He urged U.S. citizens to make themselves aware of consular services at the consulate’s website.

Ecuador leads UN Security Council
In his first act as president of the United Nations Security Council, Ecuador’s UN Ambassador José De la Gasca presented a proposal to hold a series of workshops to address the threat of transnational organized crime and illicit arms trafficking. The motion was supported by all 15 members of the Council.

In other action Monday, the Council voted to impose an arms embargo against Al Shabaab in Somalia and to increase funding for the assistance mission in Sudan.

As part of its rotating leadership arrangement, Ecuador will hold the presidency of the Security Council for one month, until the first week of January.