| Date - Field | Ecuador - Economy - overview |
2009 January
Economy - overview | Ecuador is substantially dependent on its petroleum resources, which have accounted for more than half of the country's export earnings and one-fourth of public sector revenues in recent years. In 1999/2000, Ecuador suffered a severe economic crisis, with GDP contracted by more than 6%, with a significant increase in poverty. The banking system also collapsed, and Ecuador defaulted on its external debt later that year. In March 2000, Congress approved a series of structural reforms that also provided for the adoption of the US dollar as legal tender. Dollarization stabilized the economy, and positive growth returned in the years that followed, helped by high oil prices, remittances, and increased non-traditional exports. From 2002-06 the economy grew 5.5%, the highest five-year average in 25 years. The poverty rate declined but remained high at 38% in 2006. In 2006 the government imposed a windfall revenue tax on foreign oil companies, leading to the suspension of free trade negotiations with the US. These measures led to a drop in petroleum production in 2007. President Rafael CORREA raised the specter of debt default and followed through on those threats in December 2008. He also decreed a higher windfall revenue tax on private oil companies, then renegotiated their contracts to overcome the debilitating effect of the tax. This generated economic uncertainty; private investment has dropped and economic growth has slowed significantly. |
2008 January
Economy - overview | Ecuador is substantially dependent on its petroleum resources, which have accounted for more than half of the country's export earnings and one-fourth of public sector revenues in recent years. In the late 1990s, Ecuador suffered its worst economic crisis, with natural disasters and sharp declines in world petroleum prices driving Ecuador's economy into free fall in 1999. Real GDP contracted by more than 6%, with poverty worsening significantly. The banking system also collapsed, and Ecuador defaulted on its external debt later that year. In March 2000, with inflation rising at an annual rate of 80%, Congress approved a series of structural reforms that also provided the framework for the adoption of the US dollar as legal tender. Dollarization stabilized the economy, and positive growth returned in the years that followed. However, the government of Alfredo PALACIO (2005-07) reversed economic reforms that reduced Ecuador's vulnerability to petroleum price swings and financial crises, and in 2006, seized the assets of Occidental Petroleum for alleged contract violations and increased taxes on other foreign oil companies. PALACIO's successor and former Economy Minister, Rafael CORREA, has repeatedly raised the specter of another debt default, rejected a partially negotiated free trade agreement with the US, and decreed additional tax hikes on private oil companies. Consequently, foreign direct investment remains below 2001-04 levels, and economic growth has slowed significantly. |
2007 January
Economy - overview | Ecuador has substantial petroleum resources, which have accounted for 40% of the country's export earnings and one-third of central government budget revenues in recent years. Consequently, fluctuations in world market prices can have a substantial domestic impact. In the late 1990s, Ecuador suffered its worst economic crisis, with natural disasters and sharp declines in world petroleum prices driving Ecuador's economy into free fall in 1999. Real GDP contracted by more than 6%, with poverty worsening significantly. The banking system also collapsed, and Ecuador defaulted on its external debt later that year. The currency depreciated by some 70% in 1999, and, on the brink of hyperinflation, the MAHAUD government announced it would dollarize the economy. A coup, however, ousted MAHAUD from office in January 2000, and after a short-lived junta failed to garner military support, Vice President Gustavo NOBOA took over the presidency. In March 2000, Congress approved a series of structural reforms that also provided the framework for the adoption of the US dollar as legal tender. Dollarization stabilized the economy, and growth returned to its pre-crisis levels in the years that followed. Under the administration of Lucio GUTIERREZ - January 2003 to April 2005 - Ecuador benefited from higher world petroleum prices. However, the government under Alfredo PALACIO has reversed economic reforms that reduced Ecuador's vulnerability to petroleum price swings and financial crises, allowing the central government greater access to oil windfalls and disbursing surplus retirement funds. |
2006 January
Economy - overview | Ecuador has substantial petroleum resources, which have accounted for 40% of the country's export earnings and one-fourth of central government budget revenues in recent years. Consequently, fluctuations in world market prices can have a substantial domestic impact. In the late 1990s, Ecuador suffered its worst economic crisis, with natural disasters and sharp declines in world petroleum prices driving Ecuador's economy into free fall in 1999. Real GDP contracted by more than 6%, with poverty worsening significantly. The banking system also collapsed, and Ecuador defaulted on its external debt later that year. The currency depreciated by some 70% in 1999, and, on the brink of hyperinflation, the MAHAUD government announced it would dollarize the economy. A coup, however, ousted MAHAUD from office in January 2000, and after a short-lived junta failed to garner military support, Vice President Gustavo NOBOA took over the presidency. In March 2000, Congress approved a series of structural reforms that also provided the framework for the adoption of the US dollar as legal tender. Dollarization stabilized the economy, and growth returned to its pre-crisis levels in the years that followed. Under the administration of Lucio GUTIERREZ - January 2003 to April 2005 - Ecuador benefited from higher world petroleum prices, but the government has made little progress on economic reforms necessary to reduce Ecuador's vulnerability to petroleum price swings and financial crises. |
2005 January
Economy - overview | Ecuador has substantial petroleum resources, which have accounted for 40% of the country's export earnings and one-fourth of central government budget revenues in recent years. Consequently, fluctuations in world market prices can have a substantial domestic impact. In the late 1990s, Ecuador suffered its worst economic crisis, with natural disasters and sharp declines in world petroleum prices driving Ecuador's economy into free fall in 1999. Real GDP contracted by more than 6%, with poverty worsening significantly. The banking system also collapsed, and Ecuador defaulted on its external debt later that year. The currency depreciated by some 70% in 1999, and, on the brink of hyperinflation, the MAHAUD government announced it would dollarize the economy. A coup, however, ousted MAHAUD from office in January 2000, and after a short-lived junta failed to garner military support, Vice President Gustavo NOBOA took over the presidency. In March 2000, Congress approved a series of structural reforms that also provided the framework for the adoption of the US dollar as legal tender. Dollarization stabilized the economy, and growth returned to its pre-crisis levels in the years that followed. Under the administration of Lucio GUTIERREZ - January 2003 to April 2005 - Ecuador benefited from higher world petroleum prices, but the government has made little progress on economic reforms necessary to reduce Ecuador's vulnerability to petroleum price swings and financial crises. |
2004 January
Economy - overview | Ecuador has substantial petroleum resources, which have accounted for 40% of the country's export earnings and one-fourth of public sector revenues in recent years. Consequently, fluctuations in world market prices can have a substantial domestic impact. In the late 1990s, Ecuador suffered its worst economic crisis, with natural disasters and sharp declines in world petroleum prices driving Ecuador's economy into free fall in 1999. Real GDP contracted by more than 6%, with poverty worsening significantly. The banking system also collapsed, and Ecuador defaulted on its external debt later that year. The currency depreciated by some 70% in 1999, and, on the brink of hyperinflation, the MAHAUD government announced it would dollarize the economy. A coup, however, ousted MAHAUD from office in January 2000, and after a short-lived junta failed to garner military support, Vice President Gustavo NOBOA took over the presidency. In March 2000, Congress approved a series of structural reforms that also provided the framework for the adoption of the US dollar as legal tender. Dollarization stabilized the economy, and growth returned to its pre-crisis levels in the years that followed. Under the administration of Lucio GUTIERREZ, who took office in January 2003, Ecuador benefited from higher world petroleum prices, but the government has made little progress on fiscal reforms and reforms of state-owned enterprises necessary to reduce Ecuador's vulnerability to petroleum price swings and financial crises. The government is using oil revenues to pay off Ecuador's massive foreign debt and has secured a new standby agreement with the IMF. |
2003 January
Economy - overview | Ecuador has substantial oil resources and rich agricultural areas. Because the country exports primary products such as oil, bananas, and shrimp, fluctuations in world market prices can have a substantial domestic impact. Ecuador joined the World Trade Organization (WTrO) in 1996, but has failed to comply with many of its accession commitments. The aftermath of El Nino and depressed oil market of 1997-98 drove Ecuador's economy into a free-fall in 1999. The beginning of 1999 saw the banking sector collapse, which helped precipitate an unprecedented default on external loans later that year. Continued economic instability drove a 70% depreciation of the currency throughout 1999, which forced a desperate government to "dollarize" the currency regime in 2000. The move stabilized the currency, but did not stave off the ouster of the government. Gustavo NOBOA, who assumed the presidency in January 2000, has managed to pass substantial economic reforms and mend relations with international financial institutions. Ecuador completed its first standby agreement since 1986 when the IMF Board approved a 10 December 2001 disbursement of $96 million, the final installment of a $300 million standby credit agreement. In February 2003, newly installed president Lucio GUTIERREZ faced a budget gap and massive foreign debt. He has pledged to use oil revenues to pay off debt and is seeking additional IMF support. |
2002 January
Economy - overview | Ecuador has substantial oil resources and rich agricultural areas. Because the country exports primary products such as oil, bananas, and shrimp, fluctuations in world market prices can have a substantial domestic impact. Ecuador joined the World Trade Organization in 1996, but has failed to comply with many of its accession commitments. The aftermath of El Nino and depressed oil market of 1997-98 drove Ecuador's economy into a free-fall in 1999. The beginning of 1999 saw the banking sector collapse, which helped precipitate an unprecedented default on external loans later that year. Continued economic instability drove a 70% depreciation of the currency throughout 1999, which forced a desperate government to "dollarize" the currency regime in 2000. The move stabilized the currency, but did not stave off the ouster of the government. Gustavo NOBOA, who assumed the presidency in January 2000, has managed to pass substantial economic reforms and mend relations with international financial institutions. Ecuador completed its first standby agreement since 1986 when the IMF Board approved a 10 December 2001 disbursement of $96 million, the final installment of a $300 million standby credit agreement. |
2001 January
Economy - overview | Ecuador has substantial oil resources and rich agricultural areas. Because the country exports primary products such as oil, bananas, and shrimp, fluctuations in world market prices can have a substantial domestic impact. Ecuador joined the World Trade Organization in 1996, but has failed to comply with many of its accession commitments. In recent years, growth has been uneven due to ill-conceived fiscal stabilization measures. The aftermath of El Nino and depressed oil market of 1997-98 drove Ecuador's economy into a free-fall in 1999. The beginning of 1999 saw the banking sector collapse, which helped precipitate an unprecedented default on external loans later that year. Continued economic instability drove a 70% depreciation of the currency throughout 1999, which eventually forced a desperate government to "dollarize" the currency regime in 2000. The move stabilized the currency, but did not stave off the ouster of the government. The new president, Gustavo NOBOA has yet to complete negotiations for a long sought IMF accord. He will find it difficult to push through the reforms necessary to make "dollarization" work in the long run. |
2000 January
Economy - overview | Ecuador has substantial oil resources and rich agricultural areas. Because the country exports primary products such as oil, bananas, and shrimp, fluctuations in world market prices can have a substantial domestic impact. Ecuador joined the World Trade Organization in 1996, but has failed to comply with many of its accession commitments. In recent years, growth has been uneven due to ill-conceived fiscal stabilization measures. The aftermath of El Nino and depressed oil market of 1997-98 drove Ecuador's economy into a free-fall in 1999. The beginning of 1999 saw the banking sector collapse, which helped precipitate an unprecedented default on external loans later that year. Continued economic instability drove a 70% depreciation of the currency throughout 1999, which eventually forced a desperate government to dollarize the currency regime in 2000. The move stabilized the currency, but did not stave off the ouster of the government. The new president, Gustavo NOBOA has yet to complete negotiations for a long sought IMF accord. He will find it difficult to push through the reforms necessary to make dollarization work in the long-run. |
|
|
|
This page was last updated on 7 July, 2009 |
|
|
Home 
Fields
World Records
World Dictionary
Geographic Names
Fields History
Chiefs of State
Intl. Organizations
Intl. Environmental Agree.
Other References
Notes and Definitions
