Poverty and inequality continue to be Ecuador's main challenges. In 2009, as a result of the global crisis, GDP growth dropped to 0.4%, recovering in 2010 to 3.6%. Inflation has remained relatively low since dollarization in 2001. Read More »
During much of the 1990s, Ecuador experienced significant political instability, recurring economic crises and financial volatility that led to the adoption of the U.S. dollar as the official currency in 2001.
Current President Rafael Correa Delgado took office in January 2007 with a promise to lead major constitutional reforms, strengthen the role of government in the economy and improve government planning capacity.
Between 2001 and 2008, economic growth averaged 5%. Due to the effects of the global crisis, GDP growth declined to 1% in 2009. Nevertheless, in 2010 the economy began to recover, with a growth rate of 3.3%, reaching 8% in 2011 (the third highest rate in the region).
Growth continues to rely heavily on public investment, which in turn depends on oil prices. Public investment has increased, from 21% of GDP in 2006 to nearly 40% in 2011. A large share of resources is allocated to programs and projects for investment in infrastructure and social sectors.
Economic growth in Ecuador has been inclusive, which has directly reduced poverty and inequality levels and increased the middle class. Between 2006 and 2012, income poverty (using the national poverty line) decreased from 37.6% to 27.3% whereas extreme poverty declined from 16.9% to 11.2%.
Inequality in Ecuador declined faster than the average for the region: the Gini coefficient fell from 54 to 47 between 2006 and 2011 compared with a decline from 54 to 52 for the region as a whole. The middle class increased from 20% to 26% of the population between 2006 and 2009. Growth among the poorest citizens surpassed that of the average for the total population: between 2000 and 2011, the highest growth in income occurred in the lowest two quintiles of the population (income rose 8.8% for the poorest 40% of the population compared with 5.8% for the average for the total population).
Despite these results, significant challenges remain in terms of the sustainability of these achievements in reducing poverty and inequality and in ensuring sustainable, inclusive growth. More than half of the Ecuadorean population continues to live in poverty or is vulnerable to again falling below the poverty line.
In Ecuador, the World Bank finances several projects through donations and provides technical assistance in social and environmental issues. Projects include:
The Chimborazo Development Investment Project aims to increase production and market access of rural families living in the Chambo and Chanchan-Chimbo river basins within Chimborazo Province through investments in irrigation and road improvement.
The project Growing with Our Guaguas (Children) is implemented in 10 cantons of Chimborazo Province. The goal of the project is to contribute to reducing chronic malnutrition among children under age five by improving the understanding and expectations of families and communities with respect to the adequate growth of children and the empowerment of parents to access basic health care services.
Public Sector Financial Management Project (SIGEF)
The development objective of the Public Sector Financial Management Project was to increase the effectiveness financial management through greater transparency, efficiency and tax savings. The creation of a Single Treasury Account has been a significant reform that enhances the positive impacts of the Project.
JSDF Grant: Law and Justice for the Poor (TF051227)
The Grant Agreement was signed between the Republic of Ecuador and the World Bank aiming at the preparation of "Draft Access to Justice and Equity." These initiatives have a significant social dimension to benefit the most vulnerable groups of the population.
Public Sector Financial Management Project
The project aims to develop the capacities of the representatives of the country's poorest communities and local NGOs, to carry out social audits. The project was implemented in 20 districts of the provinces of Esmeraldas, Manabi, Carchi, Imbabura, Tungurahua, Chimborazo, Loja, and Morona Santiago. The national counterpart organization was the Commission for Civic Control of Corruption — CCCC.
Ecuador : Lending By Volume (Millions Of US Dollars)
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