Correa Re-Elected as Ecuador President and Promises to Spend Amidst Record Deficit

Rafael Correa has been re-elected as the President of Ecuador as he pledged to boost spending on poor people of the country. The budget deficit of Ecuador has been the worst in recent years and amidst such a situation, Correa has secured 57% of the total votes in the preliminary voting held. Correa’s re-election means that he will serve another 4 years as the President of the country. The results were announced by the National Electoral Council. 40% of the total ballots have been counted so far and the nearest rival of Correa has been able to secure only 24% of the same. In the next few days, the final results will come out; however, Correa’s re-election has been confirmed.

Actually, since 1968, Correa became the first President to get re-elected. According to analysts, in his new term, Correa will have really few options for stimulating the growth in this Latin American country because of the stagnant oil prices which limit funds for boosting the outlays on the popular social welfare programs. Incidentally, in 2008, Correa called the foreign bondholders the true monsters and is a self-described socialist revolutionary as well. In that year, he actually defaulted $3.2 billion of debt. Correa, under the current circumstances, is expected to return to the overseas credit markets for taking advantage of a record rally in high-yield debt in an attempt to sustain the economic expansion of the country.

According to the analyst of Politik, Carlos Andreas Baca, there are no simple solutions available for attracting more investments for Ecuador at this time. He added that most of the foreign investors will not be ready to invest in Ecuador keeping the past role of Correa in mind.

The Ecuador Government probably has plans of returning to the international credit markets. The officials of the Finance Ministry and the Biess, the lending arm of the country’s state run pension funds have already started negotiation with JPMorgan and Citigroup Inc. for selling debts in the international debts. Efrain Vieira, the Chief Executive Officer of Biess has confirmed the news and he also stated that the company is looking for a yield of 6.5%. According to the banks, it can actually get yield of around 7.5%. Standard & Poor has rated Ecuador as B and it is 5 levels below the investment grade.