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(Bloomberg) — A socialist economist who rejects fiscal austerity demanded by the IMF won the first round of Ecuador’s presidential election, and may face an indigenous anti-mining candidate in a runoff after an unexpectedly close fight for second place.

© Bloomberg Andres Arauz, presidential candidate for the Democratic Center (CD) party, center, departs after casting a ballot at a polling station during the first round of presidential elections in Quito, Ecuador, on Sunday, Feb. 7, 2021. Polls are open in Ecuador in an election that will decide whether the country turns its back on the U.S. and restores an alliance with socialist regimes in Cuba and Venezuela.

Andres Arauz, the candidate most feared by bond investors, led with 32.2% of votes, with 79% of ballots counted, the electoral authority said early on Monday.

Yaku Perez, from the indigenous party Pachakutik, was in second place with 20%, after a surprisingly weak performance by the conservative banker Guillermo Lasso, who had 19.3%.

Why Ecuador’s Sunday Vote Matters for the Bond Market

Polls had mostly predicted that Lasso would comfortably make it to the second round. The prospect of a runoff between two leftist candidates is likely to trigger a selloff in the nation’s dollar bonds on Monday, said Siobhan Morden, head of Latin America fixed income strategy at Amherst Pierpont in New York.

As of 12:10 a.m. in Quito, Lasso hadn’t conceded, and he could still get enough votes to make the second round.

Perez opposes mining projects and wants to renegotiate Ecuador’s debt, while Lasso backed the International Monetary Fund deal and wants the country to have warm relations with Washington. Both candidates expressed confidence that they’d made it to the second round.

Investors will “unwind” the optimism they felt over the possibility of Lasso prevailing in the second round, Morden said, in reply to written questions. Although Perez appears to be moderate, his “anti-mining platform would be detrimental for growth,” she said.

Once the final vote has been tallied, either Perez or Lasso will face Arauz in the second round, scheduled for April 11.

Acrimonious Relationship

The campaign for control of Ecuador, an oil exporter and world-leading producer of bananas, shrimp, and the balsa wood crucial for wind-turbine rotors, has become a battleground of international interests.

Arauz, 36, is a protege of exiled former leader Rafael Correa, who allied the country with the socialist governments of Venezuela and Cuba and who often had an acrimonious relationship with Washington.

Arauz has pledged to provide $1,000 to 1 million needy families and says he’ll avoid austerity measures of the kind Ecuador agreed to as part of an agreement with the IMF last year.

Ecuador Presidential Candidate Perez Calls for Debt Talks

Lasso, 65, says he’d boost the monthly minimum wage to $500, from $400. Perez, 51, has called for negotiations with creditors to extend maturities and lighten the burden of debt payments as the nation recovers from the economic slump. In 2017, he changed his first name from Carlos to Yaku, which means water in the indigenous Quichua language, to signal his concern for the environment.

(Updates vote count from second paragraph.)

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