© Reuters. Ecuadorian presidential candidate Daniel Noboa and his wife Lavinia Valbonesi, attend a presidential election night gathering, in Santa Elena, Ecuador October 15, 2023. REUTERS/Santiago Arcos

By Alexandra Valencia

QUITO (Reuters) -Business heir Daniel Noboa will face significant challenges as he seeks to revive Ecuador’s battered economy and tackle rising crime during a truncated 17-month presidential term, after winning the country’s top job on Sunday.

The 35-year-old Noboa vowed in his victory speech to rebuild the South American country, whose economy has struggled since the COVID-19 pandemic, motivating many thousands of Ecuadoreans to migrate.

Noboa’s victory eliminated some immediate market risks that could have arisen if his rival, leftist Luisa Gonzalez, a protege of former President Rafael Correa, had been elected instead, Wall Street analysts said.

Ecuadorean bonds rallied on the vote as Noboa’s business background provided a boost for investors that had seen the country’s dollar debt fall some 17% this year.

   “Overall, investors are likely to be reassured by the election results as Mr. Noboa was seen by market participants as a more pro-business candidate compared to his more state-centric rival,” wrote Goldman Sachs analysts in a Monday note.

   “The risks of policies becoming more populist remain as the focus of the incoming administration will quickly turn to the next general election on February 2025,” the note added.

“We do not anticipate the Noboa administration will be in the position to carry out deep structural reforms.”

   Noboa is set to take office in December and complete the current administration’s term through May 2025.

JPMorgan said in a separate note that any fiscal consolidation during Noboa’s coming term is unlikely, especially if the El Nino weather phenomenon causes significant economic pressures, but an outright debt restructuring is unlikely.

Noboa has pledged to attract foreign investors and create jobs for young people, but has also said he will balance meeting foreign debt obligations with the needs of the population.

Ecuador has repeatedly turned to multilateral funding since the pandemic.

Doubts remain about whether Noboa will follow an orthodox path on the economy, JPMorgan added, because he has said he could dip into $1.5 billion in international reserves if needed.

Noboa’s campaign has said he will announce his cabinet picks next week, likely signaling his economic strategy.

QUICK WINS

Noboa has said he will tackle sharply rising crime with a new intelligence unit, tactical weapons for security forces, prison ships to house the country’s most dangerous convicts and a beefed-up presence at ports and airports, hot spots for drug smuggling.

Increased violence, which the outgoing government blames on drug gangs, reached a crescendo during the campaign with the murder of anti-corruption candidate Fernando Villavicencio, who was shot to death in August as he left a Quito campaign event.

Noboa will need to ensure some quick security wins during his first 90 days in office to appease social and political pressures, JPMorgan added.

Noboa won 52% of the vote to Gonzalez’s 48%, with nearly all ballot boxes counted.

Noboa’s victory fulfills a long-held family ambition – he grew up accompanying his banana baron father Alvaro during the latter’s multiple failed attempts to become president.

Noboa resigned from the family firm to run for the national legislature in 2021, where he served until outgoing President Guillermo Lasso dissolved the chamber and called the election to avoid impeachment on charges he disregarded warnings of embezzlement at a state company. He has denied the charges.

He will be delighted to see Noboa at the presidential palace on Tuesday, Lasso said on social media late on Sunday, adding work on the transition must begin right away.

Noboa’s campaign has said he will spend Monday with advisers and future lawmakers belonging to his National Democratic Action party, before seeing Lasso on Tuesday.

Noboa, Ecuador’s youngest president in recent history, would be able to run again in the regularly scheduled 2025 contest.

Noboa made a special point to woo young people, with some supporters touting his victory as a fresh start for the country’s politics.