Ecuador’s risk premium surpassed 2,000 points for the first time in nearly three years, just two weeks before the extraordinary general elections scheduled for August 20 and a referendum to halt oil operations at a specific site.
On August 2, the Central Bank of Ecuador reported a value of 2,018 points, the highest figure since conservative President Guillermo Lasso took office.
The country’s risk index measures the extra cost the state pays to finance itself on international markets compared to the U.S. 10-year sovereign bond.
The risk premium began to rise in June 2022 amid indigenous-led protests against living costs and Lasso’s economic policies, resulting in promises of more social investment from the government.
Political events also contributed to the rise, notably during the political trial conducted by the opposition in the National Assembly against Lasso.
The situation was resolved with Lasso’s “cross-death” constitutional maneuver to dissolve the majority-opposition Assembly and call extraordinary elections.
The current president is not seeking re-election, and the winner will complete the interrupted 2021-2025 term.
Alongside the elections, a referendum to halt oil extraction from Block 43-ITT will also be voted on, producing 55,000 barrels of crude daily (around 11% of national production) in Yasuní National Park.
Oil production and exportation are major economic pillars for Ecuador, accounting for about 8.5% of the country’s GDP, or nearly US$10 billion, in 2022.