Ecuador central bank doubles BIS credit line to $840m

Bloomberg

Ecuador’s central bank doubled its emergency credit line with the Bank for International Settlements to $840 million as a precautionary measure in case of a downturn, its governor said in an interview.
The credit line is part of efforts to strengthen the bank after previous administrations used its funds for government spending, Guillermo Avellan said. Those actions hurt the monetary authority’s autonomy and put “both the institution’s liquidity and capacity to meet obligations at risk,” he said.
Ecuador’s economy is getting a boost from a coronavirus vaccination drive that is expected to inoculate half of the country’s 17.5 million residents this month. That push will boost consumer spending and investment, likely propelling this year’s growth beyond the bank’s 2.8% estimate, Avellan said.
Still, the top near-term threat would be a hawkish shift by the US Federal Reserve.
“Under the current outlook, that’s even more dangerous than a reduction in the price of oil,” Ecuador’s top export, Avellan said.
Tighter monetary policy in the US would strengthen the dollar against rival exporters’ currencies as they vie for market share, making Ecuadorian goods more expensive, he said. Ecuador uses the dollar as its official currency.