Overview

  • Thanks to the boom in oil prices, between 2007 and 2014, Ecuador experienced a period of growth and poverty reduction. This bonanza hid some structural problems — such as an inefficient public sector, major macroeconomic imbalances, a lack of stabilization mechanisms and limited private investment — which became evident when prices fell. The World Bank recently published a Systematic Country Diagnostic that examines these issues.

    Since 2014, Ecuador has been trying to balance and adapt its economy to a challenging international context characterized by low oil prices, the appreciation of the dollar and increasing external financing costs. To address the absence of fiscal savings, the government began a process of rationalizing public investment and current expenditures. It also mobilized different sources of external financing and applied temporary measures to increase non-oil public revenue. While these policies have mitigated the impact of low oil prices, government liabilities continue to rise.

    These measures resulted in an economic growth rate of  2.4 per cent in 2017 following a recession; a reduction in the fiscal deficit from a high of 7.3 percent of GDP in 2016 to 4.5 percent in 2017.  Despite economic fluctuations, the poverty rate and the Gini coefficient have remained relatively stable —at around 22.5 percent and 0.47, respectively— since 2014.

    The 2018-2020 Country Prosperity Plan recognizes that Ecuador’s economy still does not “enjoy good health” and proposes responsible, transparent and disciplined management. To that end, it calls for stimulating private investment to return to the path of sustainable growth, which will also enable continued poverty reduction. As the Plan states, it is essential to improve the effectiveness and progressiveness of fiscal policy to achieve a consolidation that guarantees macroeconomic stability, protects the most vulnerable population and preserves the confidence of the private sector. It will also be decisive to have a more efficient public sector to improve the provision of public services and create mechanisms that protect the country from fluctuations in oil prices. In a context in which public investment can no longer drive growth, it is crucial to systematically promote an investment climate that fosters increased private participation and facilitates capital mobility and the work of emerging sectors.

    Last Updated: Sep 26, 2018

  • On March 15, 2016, the World Bank Executive Board approved the Country Engagement Note (CEN) for Ecuador. This document establishes the action framework agreed upon by the Government of Ecuador and the World Bank Group. The CEN will be in effect until June 2017.

    The CEN prioritizes two work pillars:

    • Maintenance of the advances made in basic service delivery and strengthening of safety nets; and
    • Promotion of economic diversification.

    A crosscutting theme is the mitigation of climate change and environmental threats.

    Through these pillars, the World Bank supports government efforts to maintain social services for the most vulnerable populations, improve access to and quality of infrastructure and identify ways to promote economic diversification that is consistent with government demand.

    In Ecuador, the World Bank has a portfolio of eight financing projects totaling US$ 958.50 million: Transformation of the Tertiary Technical and Technological Institutes; Transport Infrastructure Improvement of Ibarra; Supporting Education Reform in Targeted Circuits; Guayaquil Wastewater Management; Sustainable Family Farming Modernization  in Ecuador; Manta Public Services Improvement; Emergency Recovery Loan; and Quito Metro Line One.

    Additionally, the World Bank has provided grants and technical assistance to support different government sectors and agencies.

    World-Bank financed projects of the Government of Ecuador are briefly described below:

    The Project for Transformation of the Tertiary Technical and Technological Institutes seeks to increase access, permanence and graduation rates of public technical and technological programs designed and implemented in collaboration with employers. Additionally, it works to strengthen the management of institutions of technical and technological education.

    The Project for Sustainable Family Farming Modernization aims to improve irrigation management and incomes of farm families in Ecuador by optimizing land productivity. The project is jointly funded by the Spanish Agency for International Development Cooperation.

    The Project Supporting Education Reform in Targeted Circuits works to promote enrolment in basic education and to improve attendance rates in secondary school in selected areas of the provinces of Pichincha, Los Ríos, Guayas and Bolívar.

    Last Updated: Sep 26, 2018

  • Key achievements of recently concluded projects include:

    Investments for the Development of Chimborazo

    The project rehabilitated 55 irrigation systems, which benefited approximately 8,000 families. Users with good agricultural practices have increased their income by 30%, as compared with farmers who do not employ those practices.

    Additionally, 50 kilometers of roads were improved, enabling access to health and education services and transport of agricultural production. This resulted in a 50% reduction in transport time and a 55% savings in the maintenance of vehicles traveling those roads.

    Promoting the Competitiveness of Ecuadorian Industries and Value Chains through the Strengthening of Supply of and Demand for Industrial Services

    This advisory work for the Ministry of Industries and Productivity included two activities: the analysis of the supply of and demand for industrial services in Ecuador, with an emphasis on services to knowledge-intensive firms and on the design of a comprehensive plan of action to strengthen supply of and demand for industrial services, particularly services to companies.

    This support included a review of selected good practices in international industrial and service policies and a comparative analysis of different policy alternatives to promote industrial competitiveness through services to knowledge-intensive firms.

     

    Last Updated: Sep 26, 2018

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LENDING

Ecuador: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

ECUADOR +5932 294-3600
Calle 12 de Octubre 1830 y Cordero, World Trade Center, Torre B, piso 13. Quito
cmedina1@worldbank.org
USA +1 202 473-1000
1818 H Street NW, Washington, DC 20433
cmedina1@worldbank.org