A painful wait
The grand finale for the debt renegotiation was expected for August 20, but has been postponed until the end of the month in anticipation of a green light on a new IMF program.
This new program might not be a short-term stand-by given that the current administration is requesting the inclusion of objectives not yet achieved from the old program. If this agreement is signed by the end of this month or mid-September, a first disbursement might come before October, provided the government closes the financing gap for 2020, which we estimate at $2.2 billion. Ecuador also aims to receive $750 million that could come from the IMF’s emergency line as only $623 million has been disbursed so far.
In the meanwhile, the political scenario into the elections of 2021 is starting to heat up with the announcement of old and new candidates. CREO has confirmed that Guillermo Lasso will run for president accompanied by Alfredo Borrero, a prestigious physician from Cuenca whose capacity to add votes for CREO is not clear yet. Democracia Si – unsurprisingly – has appointed Gustavo Larrea, the brains behind the dismantling of Correismo carried out initially by President Moreno.
And Union por la Esperanza (Union for Hope) has nominated Marco Arauz, a third-level former public servant, as president and Rafael Correa for vice-president. Whether Correa might run or not awaits the decision of the cassation jury, which might confirm or revoke his sentence to eight years of prison for bribery.
By next Sunday, all other political parties and movements must appoint their candidates through primary elections. Of these, the indigenous groups and the Social Christian Party are the two most important. The two arms of the indigenous groups are proposing Leonidas Iza, the most violent leader of October’s riots, and Yaku Perez, an activist against mining. The former might be quicker to seal a pact with Correa or his candidate in the second round as the groups do not stand a chance of winning the elections alone. The name appointed by the Social Christian Party on the other hand, will be important to determine whether this group is a serious contender for Lasso to represent the rightist political spectrum.
It is too soon to forecast anything in this political scenario as over 80% of voters are still undecided, and over 70% of Ecuadorians distrust politicians. But we fear that if external funds do not come soon enough, social protests already underway for unpaid salaries to public sector officers and arrears in transfers to local governments might increase in the coming months. This is undesirable from any point of view and would be the perfect breeding ground for the spread of the "Correa-21" virus – probably more threatening than Covid-19.
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