The US financial corporation Fitch Group downgraded Ecuador’s long-term foreign currency issuer default (IDR) rating from B to B-.
“The long-term reduction of the IDR in foreign currency to B- reflects evidence of greater fiscal financing restrictions amid a steady deterioration of Ecuador’s key metrics, including growing public debt and interest charges, as well as a lower economic growth relative to the median B “, says a document published by the North American corporation.
The company notes that in 2018, Lenin Moreno’s government financing needs are estimated at $ 11.7 million, so the regime turned to international financial markets in January for $ 3 billion, and received approximately $ 1, 1 billion bilateral and multilateral sources (including the future sale of oil to China).
In the domestic market, it took advantage of the pockets of liquidity of public sector entities and other sources for an additional $ 1,800 million. For this reason, Fitch estimates that the country requires another $ 5.8 billion to close its financial gap this year.
“While Fitch believes that the sovereign can close the gap through a combination of multilateral and bilateral financing along with the refinancing of domestic debt and some accumulation of arrears in suppliers, the prospects for 2019 and 2020 are more uncertain,” continues the statement publication.
The corporation estimates that the Ecuador / PBI government debt will increase to 51.3% in 2018, almost double the level when Fitch raised the country’s rating to B in 2013. In addition, it considers that the interest charge has risen sharply and is expected that government interest / income will approach 10% in 2020, almost double the level of 2016. (I)