The long wait for capital market reform in Ecuador could be coming to an end, creating the potential for new investment flows to the country even as it sorts out the remaining holdouts from its last default.
The reform has been on the agenda since 2008, almost as long as President Rafael Correa has been in the presidency. Different bills have been submitted by lawmakers and the executive, but most simply faded away.
That changed on March 12, when lawmakers voted to approve the most recent bill, submitted in mid-2013, and sent it to Correa. The president has to act by early April, signing the bill, vetoing it or possibly sending it back to Congress with suggestions.
“This is could be a first step to attracting foreign investment,” said Ramiro Crespo, executive president of Analytica Securities. “As a dollarized economy, investors would not have to worry about exchange rate fluctuations.”
The law, if approved as passed by Congress, calls for the state to pass a series of regulations within 180 days and change a number of existing laws, including the tax law.
On that point, it would eliminate the current 5% currency export tax for investments that remain in country for at least one year, as well as the value added tax on brokerage services.