(Bloomberg) -- Ecuador’s government reached a $4.2 billion agreement with the International Monetary Fund, as the OPEC member tries to curb government spending and revive sluggish growth.
Including the IMF package, the country is set to receive more than $10 billion in loans from multilateral lenders, President Lenin Moreno said Wednesday, in a brief televised address.
“Thanks to the firm decisions I have made, we are not what today is Venezuela,” Moreno said.
Moreno has tried to rein in spending, including a 10 percent cut to staff at state-owned companies, including the oil companies Petroamazonas and Petroecuador. The nation’s growth rates slowed sharply after oil prices crashed in 2014-2015.
Ecuador had to pay 10.75 percent on the $1 billion of dollar bonds it sold last month, one of the steepest yields for a sovereign since the global financial crisis, as the nation had difficulty in accessing credit.
The staff-level agreement requires the approval of the IMF’s directors. The other lenders are the World Bank, Inter-American Development Bank, the Andean Development Corporation, the European Investment Bank, the Latin American Reserve Fund and the French Development Agency, Moreno said.
The government’s 2028 benchmark bonds have rallied this month amid speculation that an IMF deal would be reached, sending yields down 17 basis points to 9.68 percent. The economy will grow 0.6 percent this year, according to analysts surveyed by Bloomberg, down from 1.1 percent last year.
To contact the reporter on this story: Stephan Kueffner in Quito at skueffner1@bloomberg.net
To contact the editors responsible for this story: Matthew Bristow at mbristow5@bloomberg.net, Robert Jameson
©2019 Bloomberg L.P.
Advertisement