Despite the supposed fiscal rectitude demanded by dollarization, Ecuador has once again spent itself into trouble.
WHEN GUSTAVO NOBOA took over the presidency from coup leader Lucio Gutierrez at the beginning of 2000, he proved an adept captain of the good ship Ecuador. Despite the ramshackle nature of his vessel, he oversaw a successful transition to dollarization, implemented large primary fiscal surpluses, finally got construction moving on a new heavy oil pipeline and was rewarded with the strongest economic growth in Latin America.
Over the past year, however, and especially the past six months, Noboa seems to have turned almost suicidal. He's embarked on a massive, irreversible and unaffordable spending spree just as his term as president comes to an end. When Gutierrez - this time democratically elected - takes the helm on January 15 he will find his ship steaming full speed ahead towards the iceberg of default, with no time to slow or turn around before the inevitable crash.
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"Ecuador's road, at least as Mr Noboa has traced it, ends in February 2003," says José Barrionuevo, director of emerging market strategy at Barclays Capital.