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IMF Country Report No. 21/229

ECUADOR

SELECTED ISSUES

October 2021

This paper on Ecuador was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on September 20, 2021.

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Title page

ECUADOR

SELECTED ISSUES

September 20, 2021

Approved By

Western Hemisphere Department

Contents

• RAISING ECUADOR’S GROWTH POTENTIAL IN A POST-PANDEMIC WORLD

• A. Introduction

• B. Pre-pandemic Growth Performance

• C. The Impact of COVID-19 Pandemic

• D. Reform Options to Boost Long-term Growth

• FIGURE

• 1. Pre-Pandemic Bottlenecks and Vulnerabilities

• TABLES

• 1. Growth Dividend from Structural Reforms

• 2. Potential Growth Decomposition Pre-and Post-Covid

• REFERENCES

• LABOR MARKET DISPARITIES IN TIMES OF COVID-19: EMERGING SCARS AND POLICY OPTIONS

• A. Backdrop

• B. Impact of COVID-19 and Households Adjustment Mechanisms

• C. A Primer on Pandemic Scars one Year into COVID-19

• D. Policy Implications and Possible Extension

• FIGURES

• 1. Disparity in Adequate Employment and Labor Force in Times of COVID-19

• 2. Adjusting to School Closure: Gender and Skill Dimensions

• 3. Cash Transfers—Coverage and Payouts

• REFERENCES

• DETERMINANTS OF DEPOSIT RATES IN FULLY DOLLARIZED ECONOMIES: THE CASE OF ECUADOR

• A. Introduction

• B. Fundamentals of Deposit Rates

• C. Deposit Interest Rates and Market Share

• D. Conclusion

• FIGURE

• 1. Credit by Economic Segment

• TABLES

• 1. OLS Regressions of Deposit Rates

• 2. Comparison of Regulations

• REFERENCES

• ORIGIN, FUNCTIONING AND CONSEQUENCES OF CENTRAL BANK BALANCE SHEET EXPANSION IN ECUADOR

• A. Mechanism and Illustration of Central Balance Sheet Expansion in Ecuador

• B. Stress Test Analysis

• C. Conclusion

• BOX

• 1. Ecuador’s Original Four Balance Rule

• FIGURES

• 1. BCE as a Reserve Bank

• 2. BCE’s Balance Sheet Artificially Expanded

• 3. Results of the Stress Test—Heat Map

• REFERENCES

• NATURAL DISASTERS, CLIMATE-RELATED PHYSICAL AND TRANSITION RISKS IN ECUADOR

• A. The Current Landscape

• B. Institutional Setup and Current Policies

• C. The Road Ahead and Recommended Policy Actions

• FIGURES

• 1. Natural Disasters in Ecuador

• 2. Primary Energy Consumption by Fuel

• 3. Electricity Generation

• TABLES

• 1. Natural Disasters Since 2000 and their Frequency

• 2. Greenhouse Gas Emissions-Per Capita

• REFERENCES

• SAVINGS AND INVESMENT DYNAMICS AND CLIMATE CHANGE

• A. Introduction

• B. Conclusions and Policy Implications

• REFERENCES

• THE DISTRIBUTIONAL IMPACT OF CLIMATE, EMPLOYMENT, AND SOCIAL VULNERABILITIES

• FIGURES

• 1. Climate, Employment, and Social Vulnerabilities by Province

• 2. Scatter Plot of Climate, Employment, and Social Vulnerability Indices by Province

• TABLE

• 1. Cross-Correlations of Climate, Employment, and Social Vulnerability Indices by Province

• REFERENCES