Rising Oil Prices Will Narrow Ecuador's Fiscal Deficit, But Financing Risks Remain Elevated

  • Fitch Solutions expects Ecuador’s fiscal deficit will narrow to 3.5% of GDP in 2021, from an estimated 6.7% in 2020, as rising global energy demand will drive a rebound in revenues.
  • Expenditures will continue to fall in 2021 as the government seeks to rein in the deficit through reducing transfers and delaying investment.
  • However, the agency notes the risk that the next President, who will take office in May, abandons the current government’s austerity regime and reform agenda, which would drive the deficit wider and exacerbate the government’s financing challenges.

(Source: Fitch Solutions)