Arauz is a protege of former President Rafael Correa, who shut the U.S. military’s base in the country and forged an alliance with then-Venezuelan leader Hugo Chavez.

Politics IMF Deal and U.S. Alliance at Stake in Ecuador’s Tight Election By Stephan Kueffner 11. April 2021, 12:00 MESZ Voters face stark choice as socialist faces career banker Plan to redistribute central bank reserves may end IMF deal Guillermo Lasso and Andres Arauz Guillermo Lasso and Andres Arauz Photographers: Vicho Gaibor and Johis Alarcon/Bloomberg LISTEN TO ARTICLE 2:13 SHARE THIS ARTICLE Share Tweet Post Email In this article CL1 WTI Crude 59.32USD/bbl.-0.28-0.47% Ecuadoreans are voting for president in an election that will determine whether the country remains a U.S. ally with an IMF program, or revives its friendship with Venezuela and Cuba. The two contenders in the runoff vote offer starkly different policies to confront the economic crisis. Socialist economist Andres Arauz, 36, has pledged to pay a million poor families $1,000 each, with money taken out of the central bank’s reserves. Career banker Guillermo Lasso, 65, says he’ll attract foreign investors and create jobs via policies that help the private sector. Arauz is a protege of former President Rafael Correa, who shut the U.S. military’s base in the country and forged an alliance with then-Venezuelan leader Hugo Chavez. Polls are open from 7 a.m. to 5 p.m. local time, and results are expected later in the evening. Face masks are mandatory, and voters must bring their own pens to prevent Covid-19 infections. The country of 17 million people has been struggling since oil prices crashed in 2014, and was already in recession when the pandemic hit. Last year the economy contracted 7.8%, its worst performance since at least the 1970s. Read More: Why Ecuador’s Runoff Vote Matters for the Bond Market: QuickTake In the first-round vote on February 7, Arauz came first with 32.7%, while Lasso got 19.7%. Recent polls showed Lasso having closed that gap, after receiving the endorsement of the majority of the candidates who were eliminated in the first round. Whoever wins will face a fragmented, potentially hostile legislature and voters who are hostile to austerity measures. Bonds in 'wait-and-see' mode ahead of second presidential vote Central bank reform is a key part of Ecuador’s $6.5 billion funding agreement with the International Monetary Fund. Arauz’s pledge to distribute central bank reserves to families would probably mean the end of that deal, said Siobhan Morden, a managing director for Amherst Pierpont. Of the total, $2.5 billion remains to be disbursed. Ecuador’s recently restructured dollar bonds have rallied from an early-March low to trade at 45.5 cents on the U.S. dollar, as investors bet that Lasso’s chances of victory were improving