The mission of the Government in China achieved its goal: to subscribe a credit for900 million dollars with the Asian giant. Yesterday morning the President of the Republic, Lenin Moreno, reported through Twitter the completion of the loan.
The transaction was completed with the Development Bank of China (CDB), with aninterest rate of 6.5%, “the lowest in history,” according to theGovernment, six years plus two years of grace.
The operation was signed “without the need to commit oil to the future”.
In addition, the Government also completed two other operations: a credit of 69.3million dollars with Eximbank at a rate of 2% for “reconstruction”and another of almost 30 million “non-reimbursable cooperation” formilitary security issues.
In total, with the new loan, the debt with China amounts to 7,438 million dollars,according to information up to October of the Ministry of Economy and Finance(MEF).
For the minister of said portfolio, Richard Martinez, the rate of this last operation is 3.42 points below the current conditions of the international market for Ecuador, which is 10.02%, to six years. “We are on track tocover the deficits until 2021 with responsibility, transparency and quality standards,” he said, according to the official statement.
And there is more. With the visit to the Asian giant new expectations were opened in credit for about 3.500 million dollars, in investment banking.
The credits obtained yesterday were worked on since August of this year, when government officials traveled to Beijing to pave the way and reach agreements.
In September of this year, Ecuador paid in advance and voluntarily a credit to China acquired at high interest rates in the previous government. It was a prepayment of 266.6 million dollars to the CBD.
What will be the fate of the credit? The Ministry of Economy and Finance clarified yesterday that it will not be for the payment of salaries and tenths to workers in the public sector, amounting to 1,290 million dollars, according to the entity.
For the economic analyst Carlos Julio Emanuel, the money obtained will go towards the payment of debt that the Government must make in this month. “It is not an adequate policy,” the specialist added.
Gustavo Arteta, senior economist for Latin America at Pharo, a US investment fund, saysthat the credit helps the cash flow of the fiscal fund and that is positive.
However,the 3.5 billion dollars in credit possibilities would not close the gap that the Government requires in financing for 2019, Arteta said. “It does notrelieve the need to seek resources from other sides”.
In 2019, the Government will need to contract debt for 8,166 million dollars, according to proforma 2019. Of that amount, more than 4,600 million are still being negotiated, according to the MEF.
China is the main financial partner of Ecuador in the last decade with loans,investment of strategic projects and anticipated sales of crude oil tied to credits.
The country, part of the Silk Roads
Ecuador yesterday became a Latin American stop over the New Silk Routes that China plans all over the planet, the commercial and infrastructure initiative of Chinese President Xi Jinping, which seeks a global expansion “with a friendly face”. The head of the department dedicated to Latin America atthe Ministry of Foreign Affairs of China, Zhao Bentang, stressed that this accession would promote cooperation “for mutual benefit” in the areasof “the construction of infrastructure, productive capacity, agriculture,information technology, new energies and environmental protection “. (I)