Ecuador Released From Corrective Actions by IMF After Review

(Bloomberg) -- The International Monetary Fund's executive board decided that Ecuador needs no further remedial action after a noncomplying purchase led to scrutiny of the country's financial data.

The deficiencies in the past, which contributed to Ecuador incorrectly estimating its fiscal deficit starting as far back as 2012, stemmed from a lack of engagement between Ecuador and the IMF, according to a statement from the fund. Since then, the country's authorities have reaffirmed a commitment to meet international standards on data transparency.

“In view of the strong and proactive commitment by Ecuador to provide timely and accurate data to the IMF in the future, the Executive Board decided not to require further remedial action in connection with the breach of obligations,” IMF director Kristalina Georgieva said, according to the statement.

Prior to the Covid-19 crisis, which has hit Ecuador hardest in Latin America, the country already had a $4.2 billion extended fund facility agreement with the IMF to put its debt on a sustainable path. The health crisis overwhelmed the existing deal so a new one is being negotiated to take into account the evolving health and economic crises compounded by the collapse of the price of oil, Ecuador's leading export.

The IMF also approved $643 million in financing for Ecuador so it can meet urgent balance of payment needs stemming from the outbreak and to support the country's most affected sectors, including health care and social protection systems.

A Friday night statement from Ecuador's Economy Ministry said the five-year loan has an interest rate of 1.05% and a three-year grace period. Ecuador will use the money to manage the complex health, humanitarian and economic situation that has arisen, the statement says.