Fitch Report: Sustainability of Dollarization in Ecuador

NEW YORK--(Business Wire)--
Fitch Ratings has published a special report analyzing the factors that could
undermine dollarization in Ecuador, and the potential economic and ratings
implications for the sovereign in the event of abandoning the current exchange
rate regime.

In Fitch's view, Ecuador's economic structure, its recent history of political
instability and the Correa administration policy choices leave Ecuador
vulnerable to lower international oil prices and global economic crisis. As a
result, the expected deterioration in fiscal accounts and limited sources of
financing to compensate for the loss in export revenues and remittances have
raised concerns about the sustainability of dollarization in Ecuador

'A retreat from dollarization would be negative for Ecuador,' said Erich Arispe,
Director, Fitch Ratings. 'The high potential for macroeconomic, financial and
political instability would potentially outweigh any advantages of regaining an
exchange rate and monetary policy.'

Increased financing availability, a more conservative fiscal stance as well as a
coherent and sustainable adjustments to the overall policy framework could
assist in boosting the confidence of domestic economic actors, and hence, the
sustainability of dollarization.

In terms of creditworthiness, Ecuador's long-term Issuer Default Rating (IDR)
remains in 'RD' due to the government's suspension of payments on the Global
2012 and 2030 bonds in 2008. Fitch could potentially take Ecuador's ratings out
of default, if Ecuador achieves a high level of participation through its debt
buyback operation and re-establishes its commitment to service its remaining
debt obligations. Nevertheless, Fitch expects the credit ratings will still
remain at a low level given the country's ongoing economic and political
vulnerabilities, as well as the country's limited access to international
financial markets and sources of financial assistance.

The full report 'Dollarization in Ecuador: Regime Change?' is available on the
Fitch Ratings' web site at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Erich Arispe, 212-908-9165
Theresa Paiz Fredel, 212-908-0534
or
Media Relations:
Brian Bertsch, 212-908-0549
Email: brian.bertsch@fitchratings.com
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com

Copyright Business Wire 2009