Ecuador’s President Daniel Noboa replaced finance minister Juan Carlos Vega, who secured a crucial IMF deal, alarming investors amid political instability. Luis Alberto Jaramillo now replaces Vega after a trade agreement with Canada. The change comes after a tight election prompted worries over fiscal policies and investor confidence.
Ecuador’s President Daniel Noboa has replaced Finance Minister Juan Carlos Vega, who was instrumental in securing the country’s recent deal with the International Monetary Fund (IMF). This change has raised concerns among investors, particularly following a tight presidential election that resulted in a run-off in April. Vega’s departure comes as financial markets respond negatively to the political uncertainty surrounding Noboa’s administration, particularly his socialist challenger, Luisa Gonzalez.
Luis Alberto Jaramillo has taken over the finance minister role after successfully negotiating a free-trade agreement with Canada. This cabinet reshuffle is viewed as Noboa’s most critical move since the election. Following Vega’s implementation of tax increases aimed at demonstrating fiscal responsibility, Ecuador secured a $4.4 billion financing arrangement with the IMF, which is vital for avoiding a fiscal crisis.
Under Vega’s leadership, Ecuador managed to secure about $14 billion in funding from multilateral banks, stabilizing government finances after initial concerns about salary payments to civil servants under Noboa’s new government. In his farewell message, Vega expressed confidence in the country’s fiscal direction, stating, “We now have an Ecuador with sustainable public finances.”
Despite recent positive bond returns prior to the election, market volatility has increased due to concerns about the possibility of the socialist party returning to power, reminiscent of Rafael Correa’s government, which defaulted on significant debt in 2008. Jaramillo, now in charge of the finance ministry, has a background in commerce within the Noboa family business and maintains a relatively low public profile.
The cabinet reshuffle in Ecuador, marked by the replacement of Finance Minister Juan Carlos Vega, reflects the growing tensions surrounding President Daniel Noboa’s administration and its economic policies. Investors are particularly wary of the implications this change will have on Ecuador’s economic stability, which had been bolstered by recent agreements with the IMF. Luis Alberto Jaramillo’s appointment signals a shift in strategy, but concerns persist about political risks.
Original Source: financialpost.com
