(CNN Spanish) - The government of Ecuador announced that the debt restructuring to ease economic commitments, open doors to international financing and the reactivation of the country that has been hit hard by the coronavirus pandemic, was supported with the majority of support. The agreement comes after weeks of negotiations with groups holding Ecuadorian foreign debt bonds.
President Lenín Moreno indicated nationally that this renegotiation of the debt allows defending the dollarization system that governs Ecuador and promoting economic recovery.
“No one believes or lends to someone who does not fulfill his obligations. We sit at the negotiating table showing our good faith and showing the reality of the country, "Moreno told Ecuadorians on Monday night.
The Ministry of Economy indicated through a statement that the restructuring will promote "a more sustainable, more affordable and coherent debt" with the reality of the country that, in a dollarized economy, requires new external capital flows.
Debt renegotiation includes:
- Reduction of US $ 1,540 million in debt capital.
- Relief in the flow for more than US $ 10 billion in the next 5 years.
- Decrease in the average interest rate from 9.2% to 5.3%.
- Doubling the payment term from 6 years on average to 12 years.
- Extension of the grace period.
- Deferral of unpaid and accrued interest.
The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, congratulated President Moreno for "achieving the majority necessary to restructure the bonds with private creditors."
"It is a momentous milestone that will help pave the way for inclusive and sustainable growth," said Georgieva. The IMF director added that the organization hopes to continue the dialogue to agree on a new program for the country.
Several economists and financial analysts have spoken in favor of the debt renegotiation agreement and have described it as good news for Ecuador. However, they consider that there is still much to do to reactivate the economy, how to generate a new agreement with the IMF, reduce the size of the State, among other measures.
Debt