Q: Ecuador issued a 10.75% yield on a $1bn, 10-year bond placement in January. Despite the ongoing reduction of the fiscal deficit, that is a higher level than the 7.875% the country paid in 2018 on a similar note. What can Ecuador do to gain a better status in the financial markets?
A: I believe the recent bond issuance is a clear signal that Ecuador is quickly gaining back the confidence of investors. Investment funds and other investors put in 220 orders for more than $3bn. We received orders from respected investors that had already taken part in previous bonds, which shows the long-term support the country has among international investors. The yield of 10.75% is 25 basis points lower than our initial request, which again shows it was well received.
All of this happened despite a challenging external environment for emerging markets, particularly for Ecuador, where oil prices have fallen to $52 a barrel; there is a stable, though high, country risk; and there is a slight downgrade in the country’s credit rating. The road to reforming our economy is long, but we are taking steps in the right direction. On top of that, we have to [emphasise] the trust we received from international institutions through bigger credit lines, technical assistance and local partnerships. It wasn’t easy to change the economic model that isolated the country, but we are pulling it off with responsible and careful policies.
Q: Are you going to negotiate a bailout package with the IMF?
A: We re-established relations with the IMF after more than 10 years. The IMF offered its permanent technical support with regards to public finances. For the country, every financing option is open, including financing from the IMF. If we ever decide to negotiate with the IMF, it will be within a framework of sustainability and feasibility for the country. At the moment, we are focusing on re-establishing a trustful relationship through a continuous and deep dialogue.
Q: China offered a $3.5bn credit line in December. Are you going to accept it?
A: The $3.5bn offered is part of the co-operation between the two countries. Whether or not we accept it will depend on the conditions attached by China. We will always look for the best conditions for Ecuador. China’s lending policy entails [access] for its companies to local activities. But Ecuador’s government will always accept investment only under the best possible conditions.
Q: What are your economic targets for 2019?
Ecuador’s economy is recovering. We had to bring order to the public finances, and today we are moving towards a healthy, balanced, growing economy. We are aiming at a GDP of $113.1bn in 2019, which would mean real annual growth of 1.43%, a fiscal deficit of $3.6bn (3.18% of GDP) and an overall public debt of $54.9bn.