Ecuador will use its donation of one billion dollars from the International Monetary Fund to cover public spending expenses and to shore up its international reserves, the Central Bank said Tuesday.
The donation is part of $650 billion that the IMF is distributing to member nations to insure global liquidity during the Covid-19 pandemic, most of it going to developing countries. IMF Managing Director Kristalina Georgieva said the payout is essential to the maintain basic services in countries that have seen their economies ravaged by recession. “This is the largest single allocation in IMF history,” she said. “We believe it is required to reestablish confidence in national economies and help maintain the world economy during this unprecedented crisis.”
The IMF money will be transferred to countries on August 23.
According to Ecuador Central Bank President Guillermo Avellán, the payment is entirely free with no conditions attached. “This is an investment on the part of the IMF to keep governments and the world economy from collapsing,” he said. “The IMF board of governors believes the funds will provide an economic bridge to the end of the pandemic that will maintain local services and protect the international economy against unprecedented stresses.”
Former Ecuador Finance Minister Mauricio Pozo said the injection of IMF cash, plus the recent increase in the price of oil, will add about one percent to the country’s Gross Domestic Product (GDP). “It will go a long way in covering the fiscal deficit, which is more than a billion dollars, and take pressure off the government budget.”