WASHINGTON (Reuters) - The International Monetary Fund on Saturday confirmed it had approved $643 million in emergency assistance for Ecuador, but said the Andean country would need additional support from other external partners to respond to the coronavirus pandemic.
The outbreak of the novel coronavirus and plummeting oil prices and global demand were having a devastating effect on Ecuador, one of the largest oil exporters in Latin America, said IMF Managing Director Kristalina Georgieva.
The IMF said the emergency aid would help Ecuador finance much-needed health and social assistance spending, while helping to catalyze additional resources from other multilateral financial institutions such as the World Bank.
Ecuador has been among the hardest-hit countries in Latin America by the coronavirus, with 24,934 confirmed cases and 900 deaths, plus a further 1,357 deaths that were likely caused by the virus.
Ecuadorean authorities have taken decisive action to contain the virus and mitigate the socio-economic impact of the health crisis on households and firms, while prioritizing efforts to protect the poor and vulnerable, the IMF said.
Austerity measures imposed on April 16 by President Lenin Moreno have sparked fears of further social instability following a wave of street protests that erupted last October after Moreno decided to end a fuel subsidy.
“Protecting the poor and strengthening the social safety net are central priorities of the government at the time of this healthcare crisis,” Georgieva said.
She said Ecuadorean authorities were also committed to addressing risks to fiscal and debt sustainability, and had taken some “substantive initial steps”, including talks with private sector creditors on a debt operation.”
The coronavirus outbreak in Ecuador is boosting pressure on Moreno to default on $17 billion in debt and devote more resources toward fighting the pandemic.
Moreno is scrambling to cover expenses with $3 billion from multilateral agencies and China, but is still securing firm commitments from those creditors.
Georgieva said Ecuadorean authorities aimed to reach a quick, comprehensive debt restructuring agreement with private creditors, while securing additional medium-term debt relief and financing on favorable terms from official bilateral creditors and other stakeholders.
She underscored the importance of ensuring transparency about pandemic-related funding and said further support would be needed.
“Additional support from other external partners will be required and critical to close the remaining financing gap and ease budget constraints,” Georgieva said.
Ecuador this week cancelled a $4.2 billion structural lending program with the IMF and will renegotiate a similar program under the Fund’s Extended Fund Facility (EFF) in coming months.
Reporting by Andrea Shalal; Editing by Bernadette Baum