S&P Global Ratings raises Ecuador's credit rating to B on fiscal improvement

S&P Global Ratings has elevated Ecuador's long-term credit rating to B with a stable outlook, a significant upgrade from its previous B- rating, which had been in place for six years. The decision, announced by the Ministry of Economic and Productive Development, acknowledges Ecuador's improved fiscal management and debt handling.

The rating agency highlighted the economic and fiscal advancements made in recent years, alongside increased political stability and a resurgence of foreign confidence. This renewed confidence allowed Ecuador to re-enter international capital markets earlier this year. S&P noted that Ecuador's continued implementation of challenging fiscal measures, access to official and capital market financing, and an improved external position have strengthened its payment capacity.

President Daniel Noboa's administration has pursued unpopular reforms to reduce the fiscal deficit, guided by a $5 billion International Monetary Fund (IMF) credit program. These measures include a three-percentage-point increase in the value-added tax (VAT) and the removal of diesel subsidies, which previously led to social protests. The president has also streamlined government operations by reducing the number of ministries from twenty to ten.

Despite these improvements, S&P acknowledges that Ecuador faces challenges in boosting its economic growth agenda, including the potential impacts of the El Niño phenomenon. The agency forecasts a slowdown in economic growth to around 1.5% in 2026 due to climate risks, but expects a recovery to approximately 2.5% annual growth over the subsequent three to four years. The Ministry of Economic Development also pointed to a growing non-oil trade surplus, with non-traditional exports increasing by 17.5% between January and May of this year. This improved credit rating is expected to facilitate access to international financing on better terms for public works.