Ecuador’s country risk falls to 1,141 points, the lowest level since February 2023

The country risk fell 73 points on April 17, in the context of the participation of the Minister of Economy in the spring meetings of the IMF.

Ecuador’s country risk fell 73 points and stood at 1,141 on Wednesday, April 17, 2024.

This drop in country risk occurred at a time when the Minister of Economy, Juan Carlos Vega, participated in the spring meetings of the International Monetary Fund (IMF) and the World Bank.

The meetings have been held in Washington, United States, since April 16.

At this event, Vega has also met with representatives of other multilaterals, such as with the president of the Inter-American Development Bank (IDB) , Ilan Goldfajn, and with investors.

Vega is also scheduled to meet with IMF director Kristalina Georgieva.

Thus, Ecuador’s country risk indicator continues its downward trend and reaches its lowest level since February 5, 2023, when the country risk was 1,120.

Country risk is an indicator that reflects the probability that a State will not pay its external debt, which is known in international markets as ” default.”

The higher the indicator, the more investors perceive there is a risk that the nation will not pay its debt to investors.

Countries with high country risk have fewer options to access international loans.

And although Ecuador’s country risk is the fourth highest in Latin America, after Venezuela (19,607), Argentina (1,270) and Bolivia (1,869), it has been falling.

When 2024 began, on January 1, Ecuador’s indicator was at 2,001 points.

The sustained drop in country risk began to be recorded since President Daniel Noboa announced his decision to increase the Value Added Tax (VAT) from 12% to 15%, when he presented, on January 12, the then bill for Confront Armed Conflict.

And later, on March 7, 2024, the IMF confirmed that the Government asked to negotiate a new credit program with the multilateral.

Why does country risk fall?

If a country implements measures to improve its financial situation, the perception in international markets improves and the country risk falls.

Another factor that usually influences Ecuador’s country risk to decrease is when the price of oil improves , because it is an important source of income for the country.

The price of WTI oil , which serves as a reference for the barrel of Ecuador, began the day on April 17, 2024 with an increase of 0.63% and stood at USD 83.2 in the morning.