NEW YORK, Aug 28 (Reuters) – The International Monetary Fund said on Friday it had reached an employee-level agreement with Ecuador on a new $US 6.5 billion facility to help the South American country cope with the economic shock caused in part by the sharp drop in oil prices and the COVID-19 pandemic. “The IMF team and the Ecuadorian authorities have reached a staff-level agreement for the first review of Ecuador`s economic program, supported by a 27-month Extended Fund Facility (EFF). The arrangement is subject to the approval of IMF management and the Executive Board in the coming weeks, based on the implementation of prior measures by the authorities and compliance with all relevant Fund guidelines. At the end of the revision, Ecuador would have access to about $2 billion (DDS 1.42 billion). “I am pleased to inform you that the Ecuadorian authorities and the IMF team have reached an agreement at the staff level to support the authorities` economic policy with a new 27-month Fund of Funds (EFF), with requested access of DDS 4.6 billion ($6.5 billion). The EFF follows the Fund`s emergency assistance to Ecuador last May ($643 million) and the previous EFF, approved by the IMF Executive Board in March 2019 and abolished in May 2020. The goal of the 27-month agreement on the Expanded Fund (EFF) is to help Ecuadorian authorities stabilize the economy and protect the lives and livelihoods of their citizens, the IMF said. IMF staff and ecuadorian authorities have reached agreement at the staff level on the combined second and third revisions of the economic program, with the support of a three-year Extended Facility of Funds (EFF). The interviews took place in Quito from 12 to 26 August 2019 and in Washington, D.C from 11 to 15 November 2019. The deal, subject to approval by the IMF`s Executive Board, paves the way for the settlement of a $17.4 billion debt swap between Ecuador and its creditors, expected Monday. The deal “shows strong international diplomatic support for a country that has advanced an agenda of openness,” said Siobhan Morden, head of Latin American bond strategy at Amherst Pierpont Securities in New York. “The new EFF agreement will support Ecuador`s policy to expand the coverage of social assistance programmes, protect vulnerable populations, ensure the sustainability of public finances and public debt, and strengthen national institutions to lay the foundations for strong, sustainable and inclusive growth.

The agreement is subject to the agreement of IMF management and the Executive Board in the coming weeks, based on the authorities` implementation of previous measures, compliance with the IMF`s criteria to provide financing that goes beyond normal access, and commitments made by international partners, including bilateral creditors, on their financial commitments. “IMF staff and the Ecuadorian authorities have reached an agreement at the staff level on the second and third combined revisions of the economic program, with the support of a three-year Extended Facility of Funds (EFF). Subject to the approval of the Executive Board, Ecuador would have access to approximately $498 million (SDR 361.3 million). The board review is expected to take place on December 19. President Lenin Moreno, Correa`s vice president for six years, does not aspire to a second term. Ceyda Oner, Head of Mission for Ecuador: The immediate tasks are the stabilization of the economy and the protection of life and livelihoods. (Photo: MFI) Despite the difficulties, the Ecuadorian government has taken decisive action to mitigate the negative effects of the pandemic on households and businesses. These include the creation of a specific remittance programme, the extension of the social safety net to the most vulnerable and the temporary extension of unemployment insurance. .