Ecuador 

Ecuador country policy

Policy established 16 March 1999

• The country ceiling is 30 mln euro
• Early warning signal 30 mln euro
• Private buyers: SIF facility, FX generating buyers only

Country class: 7

Ecuador country facts

Atradius Dutch State Business Economic Research
Country Report last updated 20 May 2011

Country: ECUADOR 

Political Situation

Fragile Democracy

Head of state
President Rafael Correa.

Form of government
Left-wing government of the Alianza Pais.

Internal Economic Situation
Poor Performance

General situation
Rather weak performance due to low private investments (incl. FDI) and moderate exportgrowth; especially (public sector) consumption due to high oil prices is underpinning a GDP-growth exceeding 3% p.a. in 2011-’12. All productive sectors are suffering: oil (loss of output by the inefficient state-owned Petroecuador and withdrawal of foreign private oil companies from Ecuador) and non-oil (industry, services, agriculture: weak  competitive position since US$ was introduced). The investment climate will remain bad due to the erratic and poorly executed state intervention. Thanks to dollarisation and subsidised utilities and petrol prices, inflation remains under control: appr. 4% p.a. High corruption (127st of 178 on the TI Index).
 
External Economic Situation:Fragile Liquidity

Main sources of foreign exchange
Oil (60%), bananas (9%), coffee, cocoa, shrimps, tuna.

Main foreign markets
United States (45%), Latin America (32%), EU (18%).

Main expenses of foreign exchange
Intermediate goods (31%), capital goods (27%).

Balance of payments  
So far current account deficits are being financed by capital imports (mainly bi-/multilateral) as commercial credits have dried up after the 2008-default. Stepped up public sector spending has triggered a fall in foreign reserves to a critical level end 2010. After the dollarisation in 2000, cumulative real effective appreciation that has weakened the competitive position.