The country’s major challenge is to reduce poverty which increased toward the end of the 20^th century due to the economy’s stagnation. Between 1996 and 1998, Ecuador’s GDP remained constant bordering approximately 19 billion dollars, but in 1999 it dropped to 13.7 billion. It is estimated that in the year 2003 it will reach 27.1 billion, equivalent to an average per capita product of $ 2,139 per year.

In January 2000, the country adopted the US dollar as its national currency and its use was fully implemented by September 2001. This process has provided more stability to the economy although it has not fully set in yet. In the year 2002 the GDP growth rate was 3.4%, one of the highest in Latin America. For the year 2003, however, expectations have diminished and the growth rate is not expected to exceed 2%.

The current macroeconomic program, including an agreement with the International Monetary Fund, also expects to reduce inflation to 6.9% in 2003, from 9.4% by the end of 2002. The country’s current balance is expected to be negative, with a 551 million-dollar deficit. This trend is expected to continue in 2004.

During the last two decades, succeeding governments have attempted to implement tax reforms in order to improve public finance management, and to initiate privatization processes to modernize utility services. The results, however, have been meager. Banking, telephone and power service modernization processes are underway. These processes entail capital openings and/or private management. The country’s main export product is oil. Its production has steadily declined in the last ten years, dropping to a current production rate of 210,000 barrels per day. The current government has announced it intends to open major state oil fields to private capital.

In terms of the financial system, the worst crisis in recent history took place in 1999. More than ten banks went under. Four years later, after an intensive rehabilitation process, the financial system is convalescing as it attempts to align itself with the Basle Rules and Regulations, which apply to world banking.