IDB Provides $200m to Support Ecuador’s Reforms, Private Investment and Growth Agenda

The reform program comes at a critical moment as Ecuador works to spur job creation, attract foreign investment, and reinforce public finances amid complex global and domestic economic challenges.

Ecuador will move forward with a new package of economic policy reforms designed to boost growth, improve public-sector efficiency, and strengthen the business environment, supported by $200 million in financing from the Inter-American Development Bank (IDB). The program aims to stimulate private investment in key strategic sectors — notably energy and tourism — while modernizing fiscal management and enhancing long-term economic resilience.

The reform program comes at a critical moment as Ecuador works to spur job creation, attract foreign investment, and reinforce public finances amid complex global and domestic economic challenges.

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Strengthening Fiscal Policy and Tax System Efficiency

A major pillar of the program focuses on modernizing Ecuador’s tax administration. The reforms aim to:

• Improve the efficiency of tax collection and compliance

• Reduce tax evasion and avoidance

• Expand the use of electronic payment systems, including digital tax payment tools and partial debits

• Strengthen oversight mechanisms to improve accountability and transparency

A more efficient and digitalized tax system will not only increase public revenues but also simplify procedures for citizens and businesses, reducing costs and improving the investment climate.

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Improving Public Spending Quality and Budgeting Tools

The IDB-backed program supports Ecuador’s efforts to strengthen fiscal responsibility through better planning, monitoring, and evaluation of government spending. Measures include:

• Implementing thematic budget classifiers for gender equality, social inclusion, and climate change, ensuring spending aligns with national priorities

• Introducing results-based management tools for key social programs, including the fight against chronic child malnutrition, one of the country’s most urgent development challenges

• Conducting public expenditure reviews to optimize the use of public funds

• Establishing clear criteria for prioritizing public investment projects, improving transparency and long-term planning

These reforms seek to create a more targeted, fair, and effective use of public resources — essential for fiscal sustainability and social wellbeing.

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Boosting Private Investment in Strategic Sectors

To accelerate growth, the program strengthens strategic planning and coordination between the public and private sectors through the country’s national growth agenda. The reforms aim to:

• Promote greater private investment in energy, including renewable energy projects and modernization of existing infrastructure

• Expand and enhance the use of the Tourism Development Fund, increasing predictability of public financing for tourism promotion

• Stimulate investment in tourism infrastructure and services to boost Ecuador’s global competitiveness

• Generate new jobs across tourism value chains, rural communities, and local enterprises

Tourism and energy are among the sectors with the highest potential for attracting foreign investment and generating sustainable economic opportunities.

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Part of a Broader Policy Program

This credit is the first of two Programmatic Policy-Based Loans (PBP) approved by the IDB’s Executive Board. While financially independent, the operations are technically linked to support Ecuador through sequential and comprehensive reforms.

The loan terms are favorable, featuring:

• 20-year amortization period

• 5.5-year grace period

• Interest rate based on SOFR

These conditions provide Ecuador with long-term fiscal space to implement reforms while maintaining macroeconomic stability.

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A Step Forward for Economic Reform and Sustainable Growth

With IDB support, Ecuador is taking important steps toward building a more dynamic, inclusive, and resilient economy. By modernizing the tax system, improving public spending efficiency, and incentivizing investment in high-potential sectors, the program aims to drive productivity, expand formal employment, and build a stronger foundation for sustainable development.