(Reuters) -International Monetary Fund (IMF) staff and Ecuadorean authorities have reached a staff-level agreement to underpin a four-year, $4 billion extended fund facility, the IMF said in a statement on Thursday.
“Amid a challenging macroeconomic outlook, our objective has been and remains to support the authorities’ efforts to improve the living standards of all Ecuadoreans, with a focus on protecting the most vulnerable and promoting sustainable growth,” said IMF mission chief for Ecuador Varapat Chensavasdijai.
The deal is subject to executive board approval, the statement added, without specifying a date for a board discussion.
“The market was expecting an announcement of an IMF program for Ecuador,” said Shamaila Khan, head of fixed income for Emerging Markets and Asia Pacific at UBS Asset Management.
“The amount is a positive as well as the fact that it is an EFF program. Risk is, as with all IMF programs, being able to stick to the policies required.”
Ecuadorean officials had in the past week hinted that a deal with the Washington lender was near, boosting the price of the country’s international bonds.
Ecuador bonds had returned over 55% year to date at the index level, and on Thursday spreads to comparable U.S. debt narrowed by 48 basis points to 1,111 bps, on track to end the day at the tightest since February 2023 according to LSEG data.
(Reporting by Julia Symmes Cobb and Rodrigo CamposEditing by Marguerita Choy and Frances Kerry)
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