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INTERNATIONAL RESERVES REGISTERED THEIR HIGHEST LEVEL SINCE THE START OF DOLLARIZATION

Wednesday, 25 January 2023 11:50

International Reserves (IR) stood at USD 9.35 billions  on January 20, 2023, reaching their highest level since the start of dollarization. This high level of International Reserves allows 100% coverage of liabilities of the first and second balance sheet systems of the Central Bank of Ecuador, and 32% of the third balance sheet system. This means the Central Bank of Ecuador is able to cover with liquid assets all total deposits held by public and private financial institutions at the Central Bank.

During the most critic moment of the COVID-19 pandemic, International Reserves recorded levels below USD 2 billion, covering only 75% of deposits of the the first system at that time.

grafico1-23022023.png *As of January 20, 2023

Source: Central Bank of Ecuador

 
 
 
 
 
 
 
 
Similarly, the net value of external  transfers made by the private sector (households and companies) in 2022 was lower than pre-pandemic levels, with the exception of 2015 and 2016 when safeguards were implemented, which made raw materials and imported goods more expensive for the productive sector and Ecuadorian families.  In 2022, the net value of external  transfers made by households and companies stood at USD -1.29 billions.
 
 
 
 
 
 
 
 
 

grafico2-23022023.png

Source: Central Bank of Ecuador

 
 
 
 
 
 
 
 
In 2022, for the first time since 2014, the difference between deposits and withdrawals of cash from the vaults of the Central Bank of Ecuador by institutions of the national financial system had a positive flow of USD 0,23 Billion. This reflects a lower demand of cash at the national level. This behavior is also consistent with the increase in the number of operations through digital means of payments, which multiplied by 7 between 2019 and 2022.
 
 
 
 
 
 
 
 

grafico3-23022023.png

Source: Central Bank of Ecuador

 
 
 
 
 
 
 
 
With respect to public sector flows, as a result of lower external financing needs, the Government of Ecuador required significantly lower disbursements than in the years prior to the pandemic. Therefore, the Government received USD 4.55 billions from international creditors in 2022.
 
 
 
 
 
 
 
 
 
 

grafico4-23022023.png

Source: Central Bank of Ecuador

 
 
 
 
 
 
 
 
In addition, it is important to note that external debt service, which includes principal and interest amortization, decreased significantly after the sovereign debt was  restructured in 2020, as well as, the renegotiation of the debt with the People's Republic of China in 2022. Then, the external debt service stood at USD 3.59 billion in 2022, significantly lower than the amount paid between 2017 and 2019.
 
 
 
 
 
 
 
 
 

grafico5-23022023.png

Source: Central Bank of Ecuador

 

Flow behavior in the public and private sectors allowed reaching a historical level of International Reserves, which fostered the confidence of private financial entities and the recovery of credit by 17%[1] on a national scale in 2022.

The Central Bank of Ecuador considers that the current level of International Reserves consolidates dollarization, guarantees foreign operations of the public and private sectors, strengthens the confidence of depositors, financial institutions and investors and promotes credit in our country.

[1] Growth in gross portfolio corresponds to banks, mutualists and credit unions  in segments 1 and 2.