[ad_1]
(Bloomberg) — Ecuador’s dollar bonds were among the biggest gainers in emerging markets on Wednesday as traders welcomed President Daniel Noboa’s move to use his line-item authority to raise the value-added tax, which could fund the country’s budget deficit. There was a sign of determination to deal with it.
The country’s bonds due in 2030 rose 1.1 cents to 55.6 cents on the dollar, the highest level in a year, according to nominal pricing data compiled by Bloomberg. Notes due 2035 rose 0.9 cents to 43.9 cents on the dollar, also a one-year high.
In a line-item veto of the tax package passed by the Assembly on Tuesday, he established a permanent VAT band of 13% to 15%, depending on fiscal needs and the balance of payments. Noboa, who has an approval rating of 80%, is seeking the increase to help ease the government’s financial strain and deal with the rising costs of the crackdown against drug cartels following a series of violent incidents.
The legislature would have to muster a super-majority to override the increase. Investors hailed Noboa’s persistence as a sign of his commitment to addressing the country’s fiscal deficit.
“The worst-case scenario of the government’s tax bill being blocked in the Assembly has been averted,” Alejandro Arreza, an economist at Barclays in New York, wrote in a note on Wednesday. “Could pave the way for possible approval of the tax bill.” The government has to reach an agreement with the International Monetary Fund.”
Here’s what Wall Street analysts are saying:
More from Areza:
Siobhan Morden, managing director of Latin America at Santander in New York, said fixed income:
Ricardo Penfold, managing director of Seaport Global in New York:
Lucila Barbito, an economist at JPMorgan Chase & Co. in Buenos Aires:
–With assistance from Stephen Kueffner.
More stories like this are available on Bloomberg.com
©2024 Bloomberg LP
Here’s a detailed 3-minute summary of everything Finance Minister Nirmala Sitharaman said in her budget speech: Click to download!
Catch all business news, market news, breaking news events and latest news updates on Live Mint. Check out all the latest action on Budget 2024 here. Download Mint News app to get daily market updates.
more less
Published: 08 February 2024, 12:37 am IST
[ad_2]
