Although the world’s capital markets breathed a sigh of relief following the victory of Guillermo Lasso on Sunday, he says he will not raise the country’s VAT tax from the current 12 percent.
The International Monetary Fund has been pressuring current President Lenin Moreno to increase the tax, one of Latin America’s lowest, as a condition for granting new loans. Lasso says he will use other mechanisms to reduce the country’s debt of $62 billion, which amounts to more than half of Ecuador’s GDP.
Ecuador’s country risk, an economic calculation made by JP Morgan, fell 345 points, from 1 169 to 824 following Lasso’s victory. A report by JP Morgan issued after the election said Lasso’s win was an “economic positive” and indicated a “balanced approach going forward.”
Lasso received congratulations from Kristalina Georgieva, IMF director, who said she looked forward to a “constructive” relationship with the new government. “The IMF is committed to helping Ecuador face the pandemic, strengthen the economy and build a better future for its entire population,” she said in a statement Monday.
The European Union also sent congratulations to Lasso and said it looked forward to strengthening ties with the new administration in Quito. “The EU continues to be a committed partner of Ecuador and will work to continue developing a long association with the new government,” said Peter Stano, spokesman for the European External Action Service.