Overview

  • Between 2006 and 2014, GDP growth averaged 4.3 percent, driven by high oil prices and substantial external financing. This stimulus enabled increased social spending and important investments, especially in the energy and transportation sectors. During that period, poverty declined from 37.6 percent to 22.5 percent. The Gini coefficient fell from 0.54 to 0.47, given that income growth of the poorest population segment was higher than the average for the remainder of the population.

    These achievements are threatened by declining oil prices and the stronger U.S. dollar, however. This situation was exacerbated by the devastating April 16, 2016 earthquake on the northwest coast of Ecuador. Between 2014 and 2016, urban unemployment rose from 4.5 percent to 6.5 percent and urban underemployment increased from 11.7 percent to 18.8 percent. During this period, the poverty rate and the Gini coefficient remained largely unchanged.

    Given Ecuador’s lack of a local currency and limited fiscal savings, the government has been forced to reduce public investment and curb spending. Government officials have also mobilized different sources of external and domestic financing and have somewhat reduced spending.  Temporary measures were applied to increase non-oil public income and restrict imports. These measures have temporarily eased the effects of low oil prices and enabled the financing of post-earthquake reconstruction. However, they have also increased public debt.

    During this difficult period, Ecuador faces the challenge of building the necessary consensus to adapt its economic structure to the new international context, return to the path of sustainable growth with increased public-sector participation and protect key social advances made during the oil boom. The country must also gradually increase public spending and make it more efficient with a view to consolidating macroeconomic stability at the same time it protects the most vulnerable population and maintains private-sector confidence. In a context in which public investment cannot continue to drive growth, the country must systematically improve the investment climate by promoting increased private-sector investment and facilitating capital and labor mobility of emerging economic activities. A more robust, flexible private sector will allow the economy to be diversified, increase productivity and create quality jobs, which will in turn promote development and continue to reduce poverty.

    Last Updated: Apr 13, 2017

  • 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: Apr 13, 2017

  • 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: Oct 03, 2016

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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