The World Bank In Ecuador

Ecuador is a country defined by striking geographical and cultural contrasts. The majestic Andes, the rich biodiversity of the Amazon, the Pacific coastline, and the Galapagos Islands converge with a deep indigenous heritage, colonial legacy, and aspirations for modern development.

The economy remains heavily reliant on oil, agricultural exports—such as bananas, cocoa, and shrimp—and tourism. This dependence makes Ecuador vulnerable to external shocks, including international price fluctuations and natural disasters. Since its adoption in 2000, dollarization has served as a key stabilizing mechanism against inflation.

Major challenges include widespread informal employment and pronounced regional inequalities, particularly between urban and rural areas. Climate vulnerability—manifested through droughts, extreme rainfall, and variability—poses increasing risks to agricultural productivity, water resources, and infrastructure.

Despite these challenges, Ecuador possesses notable strengths. It boasts extraordinary biodiversity, significant potential for renewable energy (hydroelectric, solar, and wind), internationally recognized agricultural sectors, and a young population characterized by resilience and adaptability.

Last Updated: Oct 10, 2025

Ecuador possesses significant economic potential, thanks to its comparative advantages in hydrocarbons, mining, agriculture, and tourism. However, between 2015 and 2024, average annual growth was just 1.1%. This modest performance is attributed to factors such as oil price volatility, the impact of COVID-19, climate-related disasters, fiscal vulnerabilities, fluctuations in electricity supply, and deteriorating security conditions. Structural issues—including rigid labor regulations, price distortions, trade and investment barriers, and educational gaps—continue to hinder development. As a result, one in four Ecuadorians lives in poverty, and one in ten in extreme poverty, a situation closely linked to a labor market where informality exceeds 50%.

Ecuador has made notable progress in fiscal management. In May 2024, the International Monetary Fund (IMF) approved an Extended Fund Facility (EFF) program aimed at stabilizing public finances. Following the second review in July 2025, IMF financing was increased from US$4 billion to US$5 billion. In this context, the fiscal deficit was reduced from 3.4% of GDP in 2023 to 1.3% in 2024. Revenue gains were driven by measures such as a VAT increase from 12% to 15%, temporary taxes on large corporations and banks, and a tax amnesty. The elimination of gasoline subsidies played a key role in reducing expenditures. Although the annualized deficit for the first half of 2025 stands at 2.9%, current measures are expected to bring it below 1% by year-end.

GDP is projected to rebound by 2.3% in 2025, following a 2.0% contraction in 2024. This recovery is supported by reduced political uncertainty, improved energy supply, and diminished fiscal risks. The external surplus is expected to narrow in the coming years due to rising imports, reflecting stronger domestic demand. Inflation is anticipated to remain low, consistent with the stability provided by the dollarization regime in place since 2000.

To accelerate growth, Ecuador must continue addressing fiscal imbalances and enhancing security. Key priorities include fostering private investment in competitive sectors, reducing barriers to private sector development, strengthening the insolvency framework, promoting competition and trade, and reforming labor regulations.

Last Updated: Oct 10, 2025

The World Bank’s current program with Ecuador comprises ten projects totaling US$2.8 billion. These initiatives aim to expand access to quality services and improve infrastructure in transportation, water and sanitation, and education. They also focus on strengthening national statistical capacity, promoting financial inclusion, empowering indigenous peoples and nationalities economically, and enhancing the effectiveness of social protection and public health systems.

In addition, the World Bank supports a broad technical assistance program in areas such as energy, macro-fiscal reforms, migration, financial inclusion, infrastructure, competitiveness, and sustainable transportation.

The International Finance Corporation (IFC) has a committed exposure of approximately US$617 million in Ecuador, distributed across 11 institutions and six sectors. Meanwhile, the Multilateral Investment Guarantee Agency (MIGA) maintains an exposure of US$19 million in the manufacturing sector.

The World Bank Group’s current Country Partnership Framework with Ecuador for 2019–2023 (extended to 2025) supports national development through three strategic pillars: inclusive growth, human capital development, and institutional and environmental sustainability. These pillars are interconnected and mutually reinforcing. Developing human capital with skills aligned to labor market demands, alongside policies informed by timely, evidence-based data, will not only foster inclusive growth but also enhance the country’s resilience to disasters and macroeconomic shocks.

Moreover, more efficient public spending and the adoption of international transparency standards in public administration will contribute to the sustainability and protection of social services. Progress in the first two pillars will also help Ecuador improve access to financial markets and lay the groundwork for institutional strengthening as the country advances on its development path.

Last Updated: Oct 10, 2025