Perspectives 2019 2020 Public Sector

Citi Perspectives 65 An LM operation with a positive impact in Ecuador’s transformation process The LM operation has allowed the government to free up additional resources to pursue Ecuador’s structural reform agenda instead of earmarking them for debt servicing purposes. These funds have been redirected to strengthen the social safety net for Ecuador’s vulnerable population, prone to being most at disadvantage during the current period of economic adjustment. Ecuador’s first LM operation also sent a positive signal to international market participants: Ecuador is now pro-actively managing its short-term liabilities and can opportunistically launch transactions when the primary markets are strong. These factors contribute significantly in sustaining fiscal policies in the medium term that help optimize and predict government finances and ultimately support Ecuador’s economic stability in the long run. The incorporation of LM as part of a proactive debt management framework is in line with best practices of the market. The Government of Ecuador has now joined a group of countries in the region, such as Chile, Uruguay, Mexico and Colombia that have proactively managed their debt profile through capital market LM exercises. All of these countries have also experienced improved fundamentals and consistent upgrades in their sovereign rating over time that have in turn helped them access funding at a lower cost, reflecting a track record of improved debt management practice. Anna Corcuera Global Public Sector Banking, Citi Joyce Lam Liability Management, Citi The incorporation of LM as part of a proactive debt management framework is in line with best practices of the market.