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(Bloomberg) — President Daniel Noboa replaced Finance Minister Juan Carlos Vega, architect of Ecuador’s latest deal with the International Monetary Fund, further unnerving investors.
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Luis Alberto Jaramillo, previously the minister of trade and production, succeeded Vega after recently sealing a free-trade agreement with Canada.
It’s the latest and most significant cabinet change Noboa has made since Sunday’s first-round vote in the presidential election resulted in a dead heat necessitating a run-off in April. His socialist challenger, Luisa Gonzalez of the Citizen Revolution party, did far better than expected against the 37-year-old heir to a banana empire, prompting a sharp selloff in Ecuador’s dollar bonds.
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Losses picked up again Thursday on news of the ministerial swap. The debt dropped 2.7 cents and was the worst performer in emerging markets.
Vega had convinced Noboa to raise the value-added tax as an austerity message to markets and the IMF, leading to a $4.4 billion four-year financing deal.
The agreement anchors about $14 billion in lending from multilateral banks that staved of a fiscal crisis that saw the new government under Noboa for weeks unable to make salary payments to civil servants.
“We now have an Ecuador with sustainable public finances,” Vega said in a farewell statement posted on X. “I’m sure that under your leadership Ecuador will continue on the road of progress,” he added, thanking Noboa for the chance to serve the nation.
The reforms also contributed to a bond rally that handed investors 100% returns ahead of Sunday’s election, which some polls suggested Noboa could win without a runoff.
The increased risk of the socialists returning to power spooked the market as their historical leader and Gonzalez’s mentor, Rafael Correa, defaulted on $3.2 billion in debt in 2008 despite having the means to serve it.
Jaramillo, the new finance minister, has maintained a low profile in office. According to his profile on LinkedIn, he was previously commercial director of cardboard maker Industria Cartonera SA, a company that is part of the Noboa family conglomerate.
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