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Ecuador announces early cancellation of credit with China bank
Posted On 28 Sep 2018
Ecuadornews:
Ecuador canceled its pending balance of 266.6 million dollars for a loan granted in 2011 by the Development Bank of China as part of a program to improve its external debt profile, the Ministry said on Thursday.
The Ecuadorian government is seeking to replace the debt contracted in burdensome conditions for the country with a cheaper one, which will allow it to reduce the bulky external debt and moderate the fiscal pressure in its dollarized economy.
“The voluntary prepayment corresponds to two tranches of the credit agreement, called Line II, which the country signed with the banking institution in June 2011,” the ministry said in a statement, saying that this operation “does not affect liquidity nor the reserves of the fiscal box of the country “.
“By paying the entire balance of Line II, the Ecuadorian State avoided canceling about 9.34 million dollars in interest,” the ministry added.
The total credit was for 2,000 million dollars and the financial conditions of the loan were determined according to the freely available tranche of about 1,400 million dollars at an interest rate of 7,159 percent and another 600 million dollars, disbursed in Chinese currency. , for investment projects at a rate of 6.253 percent.
“This operation allows the commercial contract to be decoupled from the credit contract, which opens the doors to improve access to international credit,” he said.
New external financing for Ecuador exceeds $ 1,100 million
The South American nation subscribed operations of anticipated sale of crude oil with two Chinese companies and one Thai during the government of ex-president Rafael Correa, who were mostly tied to the granting of loans for financing.
Ecuador, one of the smallest OPEC partners, has a debt balance with China for about 7,125 million dollars as of August 31, 2018. The total public debt of the country amounts to 48,818 million dollars, according to the Ministry of Economy and Finance.
Ecuador is currently holding dialogues with international organizations such as the World Bank and the Inter-American Development Bank, and has resumed contact with the International Monetary Fund. It also evaluates the capital market for a possible bond issue before the end of this year. (I)
