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IMF says Ecuador performing well on reforms, faces numerous challenges

The International Monetary Fund (IMF) said that Ecuador was meeting its targets for the expanded IMF loan program of $5 billion, but that it still needed to overcome challenges ranging from the volatility in oil prices to the domestic security issues that make capital market access difficult for this South American country.

IMF spokesperson Julie Kozack said at a regular briefing to the press that the Fund worked with Ecuadorean officials to determine the timeline of the next review to unlock additional loan funding. The program was increased by $1 billion with an immediate disbursement of $600 million in July.

Kozack stated that "Even though investors are now seeing Ecuador as less risky than before, it's still difficult for the country to gain access to international capital markets very soon." "The increased frequency of natural catastrophes, as well as a tense security situation, pose additional challenges to Ecuador."

She said that it is important that Ecuador reform its fuel subsidy program to better target them towards the most vulnerable citizens of the country.

Kozack stated that fuel subsidies are generally given to higher-income groups, and they can also lead to corruption and fuel theft. By reducing their scope, resources could be used for other important spending, such as more effective social safety networks. (Reporting and Editing by Bill Berkrot.)

(source: Reuters)