Ecuador Country Risk Rating

Ecuador maintains its overall country risk of medium-high despite ongoing regional and geopolitical uncertainty. Sworn in for a full four-year term in May 2025, President Daniel Noboa has set his country on a more positive course. Political stability has improved somewhat, though fragility persists due to his party’s reliance on coalition support. Political violence and political interference both remain medium-high, following Ecuador recording the highest rate of homicide in the entirety of Latin America. President Nobao’s militarized response to crime, as well as plans for maximum security prisons, has received some backlash but seems to be having a positive effect in reducing the country’s homicide rate. In March 2026, homicides had fallen approximately 28%, following the implementation of a localized curfew in key drug trafficking corridors and the arrest of several major criminal figures. In terms of regional relations, the Andean Community Trade Bloc had ordered both Ecuador and Colombia to remove any measures restricting trade between the two countries, after each country raised tariffs against the other. The Ecuadorian President had raised tariffs upon Colombia as he believed the neighboring nation was not doing enough to combat drug trafficking along its shared border, which Colombia President Petro responded by formalizing tariffs and suspending electricity exports. This event follows the joint U.S. and Ecuadorian operations to combat the ongoing drug trafficking crisis. Legal & regulatory risk is assessed at high.

According to the IMF, Ecuador’s economy has faced significant headwinds, but projections indicate a period of reasonable stabilization, with GDP growth expected to grow by 2.5% in 2026 and 2027. Ecuador, whose economy is predominantly driven by petroleum exports and agricultural commodities, is now seeking to expand its opportunity in its unexploited mineral reserves. In February 2026, a reform was passed that includes modifications to environmental permitting processes to enable potential investment into Ecuador’s mining industry. In the light of such changes, a USD 1.7 bln mining deal was signed with China’s CMOC Group, while Canadian mining company Ludin Gold is aiming to invest USD 100 mln to prolong the life of its Fruta del Norte mine in Ecuador. Inflation has been hit by higher fuel and food prices linked to the conflict in the Middle East, contributing to the IMF’s forecast of 2.9% for 2026. However, Ecuador’s dollarized economy has largely helped contain broader price pressures. Therefore, the risk of doing business remains high, while the government’s inability to provide stimulus has maintained its medium rating. Government debt to GDP is expected to improve, but remains elevated, while the government continues to show its commitment to the IMF-backed reforms allowing Ecuador to return to the capital markets, however, liquidity risks persist. Sovereign non-payment risk and exchange transfer risk both are assessed at a medium rating.