IMF board approves 3-yr, USD 4.2 billion fund for Ecuador

The executive board of the International Monetary Fund on Monday approved a USD 4.2 billion fund to support Ecuador over the next three years.

The arrangement was reached last month at staff level and required a final approval by the board.

It allows an immediate disbursement of USD 652 million.

The IMF has said the agreement is part of a broader effort by the international community that totals USD 10 billion and includes financial support of almost USD 6 billion over the next three years from the Development Bank of Latin America, the Inter-American Development Bank, the Latin American Reserve Fund and the World Bank.

"The aim is to reduce debt-to-GDP ratio through a combination of a wage bill realignment, a careful and gradual optimization of fuel subsidies, a reprioritization of capital and goods and services spending, and a tax reform," IMF managing director Christine Lagarde said after the board discussion.

Ecuador's government faces a fiscal deficit of USD 10 billion, which has caused delays in paying government employees and suppliers.

(with news agency inputs)