QUITO, (Reuters) – Business heir Daniel Noboa will face significant challenges as he seeks to revive Ecuador’s battered economy and tackle rising crime during a truncated 17-month presidential term, after winning the country’s top job on Sunday.
The 35-year-old Noboa vowed in his victory speech to rebuild the South American country, whose economy has struggled since the COVID-19 pandemic, motivating many thousands of Ecuadoreans to migrate.
Noboa’s victory eliminated some immediate market risks that could have arisen if his rival, leftist Luisa Gonzalez, a protege of former President Rafael Correa, had been elected instead, Wall Street analysts said.
Ecuadorean bonds rallied on the vote as Noboa’s business background provided a boost for investors that had seen the country’s dollar debt fall some 17% this year.
“Overall, investors are likely to be reassured by the election results as Mr. Noboa was seen by market participants as a more pro-business candidate compared to his more state-centric rival,” wrote Goldman Sachs analysts in a Monday note.
“The risks of policies becoming more populist remain as the focus of the incoming administration will quickly turn to the next general election on February 2025,” the note added.
“We do not anticipate the Noboa administration will be in the position to carry out deep structural reforms.”
Noboa is set to take office in December and complete the current administration’s term through May 2025.
JPMorgan said in a separate note that any fiscal consolidation during Noboa’s coming term is unlikely, especially if the El Nino weather phenomenon causes significant economic pressures, but an outright debt restructuring is unlikely.
Noboa has pledged to attract foreign investors and create jobs for young people, but has also said he will balance meeting foreign debt obligations with the needs of the population.
Ecuador has repeatedly turned to multilateral funding since the pandemic.
Doubts remain about whether Noboa will follow an orthodox path on the economy, JPMorgan added, because he has said he could dip into $1.5 billion in international reserves if needed.
Noboa’s campaign has said he will announce his cabinet picks next week, likely signaling his economic strategy.
