100 Days to Celebrate
President Daniel Noboa can celebrate his first 100 days in office with an 80% acceptance of his mandate—the highest level of popularity enjoyed by an Ecuadorian president. He moved fast on the right track to partially contain the dangerous insecurity and violence situation of last January and to launch an opportune referendum to continue fighting organized crime. This referendum stands a chance of success given his high approval ratings.
Despite showing inexperience in some areas, for instance, the impasse with Russia that has dearly cost the flower export sector, he has honored his background as a savvy businessman, persistently approaching investor groups in Spain, the US and Canada. In his recent visit to the mining fair in Toronto, he signed agreements for possible future mining projects for $4.8 billion. Although there is a long way to go before these agreements can actually turn into projects, they are evidence of a renewed interest from investors, one that was not present three months ago.
The President has also been successful in maintaining a difficult alliance in Congress with the Correistas and Social Christians, overcoming differences through the approval of the four urgent economic bills sent by the Executive. As a result, fiscal revenue could increase by $1.6b this year and by a similar amount next year.
The government has also approached the IMF, seeking to sign two agreements. The first is an extended fund facility agreement (SAF), which could open the door to a new line of $1b (RSF). The above-mentioned tax reforms pave the way for these agreements, but a solid economic plan including reduction of expenditures should be the base for negotiations. Along these lines, President Noboa has announced actions to reduce or eliminate the subsidy on gasoline (extra and eco), but said diesel and cooking gas will not be part of this strategy.
The government is expecting to raise $4.7b from external disbursements in 2024. In 2023, it received $1.7b from multilateral institutions and $300m from banks. Thus, between the IMF and other multilateral organizations, it needs to increase disbursements by $2.7b this year.
President Noboa has hard work ahead if he wants to achieve his goals for this year and increase his chances to run and win re-election in 2025. Despite his high level of popularity, there are some clouds in paradise. Leftist groups represented by union leaders recently presented demands of unconstitutionality against the increase in the VAT. Similar groups have also registered at the Electoral Council to campaign against the referendum. And the elimination of subsidies might bring protests, as well.
In this context, we hope Noboa does not fall into the trap of complacency and that he continues to work to successfully, not only to overcome the intentions of the opposition, but also to maintain the support of the fickle Ecuadorian electorate.
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