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Overview

The year 2020 was a difficult one for Ecuador. The COVID-19 health crisis triggered a deep recession that led to a rebound in poverty. This crisis amplified the macroeconomic imbalances that the country had been working to correct since the oil price boom ended. It also forced the government to restructure its debt with bondholders. Finally, the crisis also revealed structural weaknesses such as the lack of macroeconomic buffers, a high level of informality, a poorly prepared healthcare system and large gaps in public service access.

The incoming government administration has the opportunity to consolidate the changes that the country needs to return to a path of growth and shared prosperity. Its first challenge will be to enlist the support of the population, the private sector and political actors to work together to overcome the immediate effects of the crisis and to lay the foundations for an inclusive, sustainable recovery.

Just over a year after the onset of the pandemic, Ecuador needs to address the immediate challenges associated with the health crisis, such as containing the new waves of infections, accelerating the vaccination campaign, promoting economic recovery and protecting the most vulnerable groups. Overcoming these problems is critical for containing the social and economic crisis from continuing and reducing the risk of social unrest, which could undermine the possibility of establishing the necessary agreements to address more structural challenges.

Despite having made an effort to balance its economy, Ecuador still needs to rebalance its public finances to avoid an unsustainable debt increase while strengthening confidence in macroeconomic stability and dollarization. In a difficult external context, growth and the creation of quality jobs could be favored by systematically improving the investment environment.

Additionally, Ecuador needs to make its public policies more efficient to protect the most vulnerable population and improve access to economic opportunities. This requires addressing long-standing challenges such as reducing child malnutrition rates, developing higher quality public

services, and improving the efficiency and gradual increase of spending on health, education and social protection. These efforts require evidence-based decision-making, improved management of public resources and coordination between the different levels of government and sectors.

Last Updated: Apr 01, 2021

LENDING

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

*Amounts include IBRD and IDA commitments
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ECUADOR +5932 294-3600
6 de Diciembre Av. and Boussingault T6 Building, 13th Floor.
USA +1 202 473-1000
1818 H Street NW, Washington, DC 20433