NewsWhy did Ecuador's country risk reach its highest level in two years?

    Why did Ecuador’s country risk reach its highest level in two years?

    The indicator has had a sustained rise since February 5, when Lasso had an electoral setback.

    Ecuador started this week with the country risk index at 1,949 points, after reaching 1,950 last Friday, according to data published by the Central Bank of the South American country (ECB).

    This indicator, close to 2,000, is the highest figure since September 2020, when the index reached 2,852 units. Last year, the highest peak was 1,945 points.

    Although on Tuesday it fell to 1,885 points -according to the ECB-, the index, which measures the debt payment possibilities that a country may have, has had a sustained rise in Ecuador since last February 5when local elections and a constitutional referendum promoted by the Executive of Guillermo Lasso were held.

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    On that day, the president had an electoral setback, because the citizens rejected the referendum questions and favored candidates with a progressive tendency for the provincial prefectures and mayors.

    That February 5, according to ECB data, Ecuador’s country risk was 1,120 points, the next day it climbed to 1,415 units and has been increasing ever since.

    At the time, US investment banks JP Morgan and Morgan Stanley said the election results had fueled fears in international markets of an early termination of Lasso’s term.

    political tension

    The increase in the country risk index has also coincided with the process with which they seek to carry out a political trial against Lasso in the National Assembly.

    On February 28, the indicator was at 1,765 points; the next day it rose almost 100 points, climbing to 1,859 units. On that day, the Specialized Occasional Commission for Truth, Justice and the Fight against Corruption of Parliament approved a report recommending the political trial against Lasso.

    The report received the green light later, on March 4, in plenary session of Congress. However, the document is not binding, so on Thursday of last week a group of parliamentarians from various benches formally submitted the request for impeachment against the president.

    That day, the country risk was at 1,890 points and the next day, Friday, March 17, it rose to 1,950.

    The impeachment petition moves forward. On Monday, the Legislative Administration Council (CAL) of the National Assembly of Ecuador qualified and decided to admit the request for processing; with this, the process continues in the Constitutional Court, to later return to Parliament.

    oil situation

    Added to this situation is the oil issue. The second week of March there was a drop in the international price of oilin the midst of the banking crisis in the US after the closure of Silicon Valley Bank and Signature Bank.

    The price of intermediate oil from Texas (WTI), which serves as a reference for Ecuador, was at 76.68 dollars per barrel on March 10, the day the bankruptcy of Silicon Valley Bank was announced.

    Five days later, WTI was trading at $67.61 per barrel and on Tuesday at $69.67.

    Corruption, tensions and impeachment: The perfect storm that hits Lasso in Ecuador

    To the drop in the price of a barrel of oil is also added the drop in productiondue to various factors, including the 6.5 earthquake that occurred in Ecuador last Saturday.

    On Sunday, one day after the earthquake, the state-owned Petroecuador reported that as a result there was an electrical failure in the National Interconnected System (SNI) that damaged the Auca, Shushufindi, Indilana, Lago Agrio, Libertador and Palo Azul fields, located in the provinces of Sucumbios and Orellana.

    That, explained the oil company, caused them to stop extracting around 17,400 barrels of oil per day.

    The oil industry has also seen its production decrease, the state company added, due to “the strong winter storm with electrical storms”, as well as “failures in the pumping plants, theft of cables or sabotage”.

    Likewise, Petroecuador declared a state of force majeure in the Eden Yuturi field and its areas of direct influence due to the paralysis of the El Eden Kichwa community, which expresses its concern about the environmental impact of oil activity in its territory. This has generated the daily loss of 4,900 barrels of oil.

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    Source: RT

    This post is posted by Awutar staff members. Awutar is a global multimedia website. Our Email: [email protected]


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