Overview

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Context
Strategy
Results

Thanks to the boom in oil prices between 2004 and 2014, Ecuador experienced a period of growth and poverty reduction. Nevertheless, the 2014 decline in oil prices revealed the country’s lack of macroeconomic cushions and limited private investment.
In the absence of fiscal savings, Ecuador has attempted to adapt its economy to a challenging global context with support from international organizations, including the World Bank Group. In this context, the country is promoting a reform program to ensure fiscal sustainability, strengthen the foundations of dollarization, encourage private investment and guarantee social protection for the most vulnerable groups.
The discussion and implementation of these reforms have faced some challenges, however, including the Covid-19 pandemic and the precipitous decline in oil prices. These last two shocks will trigger a significant economic downturn and an increase in poverty, despite government efforts to reprioritize public spending and mobilize external financing to respond to the health emergency and protect the most vulnerable groups.
In this context, it is crucial to maintain coordinated efforts to save lives, contain the economic and social costs of the Covid-19 crisis and establish the foundations for a rapid, effective recovery.
Fiscal consolidation and private sector development are pivotal for achieving macroeconomic stability. It is necessary to maintain and create new job opportunities to reduce poverty and make families more resilient to external and natural disaster shocks. Additionally, safeguarding social protection mechanisms is indispensable for the most vulnerable sectors.

Last Updated: Apr 29, 2020
On June 11, 2019, the World Bank Board of Directors approved the 2019-2023 Country Partnership Framework (CPF) with Ecuador. This document establishes
a funding and technical assistance program to support the country’s development and growth efforts.
Prepared with the Government of Ecuador and taking into account consultations with different civil society and private sector groups, the CPF addresses the need to support macroeconomic stabilization, protect the most vulnerable sectors and reactivate sustainable growth. To this end, the CPF prioritizes three work areas:
Supporting fundamentals for inclusive growth;
Boosting human capital development and protecting vulnerable populations; and
Enhancing institutional and environmental sustainability.
Each area has results indicators. To achieve them, the World Bank, the International Finance Corporation (IFC, a WBG institution that supports the private sector) and the Multilateral Investment Guarantee Agency (MIGA, a WBG institution that offers insurance against political and investment risks) will collaborate to increase impact.
The work areas and objectives established in the 2019-2023 CPF are interrelated and complementary. Developing a human capital with skills adapted to labor market needs, coupled with policies based on evidence and recent information, will drive inclusive growth as well as improve the country’s resilience to disasters and macroeconomic shocks.
Additionally, more efficient spending and the adoption of international transparency standards in public management will contribute to the sustainability and protection of social services. The simultaneous progress in the two first areas will facilitate the country’s access to financial markets and will establish the foundations for strengthening institutions as the country advances down its road to development. Nine investment projects comprise the current portfolio, which totals USD 1.628 billion. These projects focus on increasing access to better quality services and to improving infrastructure in transportation, water, sanitation
and education, as well as making the social protection and public health systems more effective.
Projects currently being designed will be submitted to the World Bank’s Board of Directors before June 30, 2020. These total USD 800 million and focus on macroeconomic policies and improving the social and financial inclusion of vulnerable populations.
In the context of the Covid-19 pandemic, the World Bank is supporting the government to strengthen its public healthcare system, protect the most vulnerable population and create alternatives that enable the injection of liquidity and economic recovery.
Through the technical assistance program, the World Bank finances studies on key aspects of development, including: (i) spending efficiency, (ii) transparency of production sectors, (iii) the labor market; and (iv) human capital development.

Last Updated: Apr 29, 2020
Strengthening of shared prosperity
Results achieved in the Country Partnership Framework
The World Bank Group and the Government of Ecuador resumed dialogue in 2014. The World Bank prepares analytical studies and lending operations in specific areas in the country. It also prioritizes investments in strategic sectors for development, such as education, transportation, water and sanitation. The analytical studies focus on improving social services and legal frameworks and providing evidence-based information in key areas to continue efforts to reduce poverty and inequalities.
Increased access to better quality services in education and social protection
Trust funds financed several advisory and technical assistance services in areas such as combating malnutrition, inclusion of disabled persons and improving the efficiency of the social protection system. Additionally, with a view to building the country’s capacity to produce timely, relevant data for decision-making, the World Bank, together with the National Statistics and Census Institute (INEC) and SENPLADES, prepared The Poverty Report, 2006 – 2014 and the Poverty and Consumption Inequality Map 2014.
Integration of reforms in water supply, sanitation, transportation and risk management
In 2016, the World Bank published a poverty assessment associated with water and sanitation services. To this end, it provided technical assistance to the National Statistics and Census Institute to publish water, sanitation and hygiene indicators for the first time in Ecuador.
With respect to transportation, the World Bank mobilized resources to build institutional capacities at the national and sub-national levels to compile and produce statistics on traffic accidents through the National Transit Agency.
It also supported the National Risk Management Secretariat to develop a national disaster response strategy and a methodology to create sector programs in disaster risk management that address a variety of dangers and risks.
Investment projects in Ecuador
From July 2013 to June 2015, the World Bank portfolio included three operations (USD 407.5 million) requested by the sub-national governments of Manta, Quito and Guayaquil. In 2016, the Bank approved another operation for the Ibarra government[1] (USD 52.5 million). These operations cover the sectors of transportation, water and sanitation. The World Bank expanded its participation in the agricultural sector[2] to improve incomes of small- and medium-holder farmers through support to the more productive, efficient use of land and water from a climate perspective. In 2016, it approved an investment operation to raise enrolment and permanence of students in public technical and technological institutes designed and implemented in collaboration with employers, and to strengthen institutional management of technical and technological tertiary education (USD 90.5 million). The World Bank also mobilized an emergency response loan (USD 150 million) to provide aid following the earthquake that affected Ecuador in April 2016. World Bank support focused on reconstruction while other multilateral development banks, such as IDB and CAF, provided support for the initial recovery and immediate response, together with United Nations agencies.
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[1] Transport Infrastructure Project in Ibarra, Ecuador (P147280) to improve mobility of Ibarra and the use of recreational spaces around Yahuarcocha Lagoon.
[2] Project to Modernize Sustainable Family Agriculture in Ecuador (P151963).

Last Updated: Apr 29, 2020