Ante la drop of oil revenue and tributaries of 2020, which raised the fiscal gap to USD 8 billion, the Treasury sought renegotiate the debt in bonds to have less short-term payment pressures.
According to the former Minister of Finance, Richard Martínez, this decision also helped to open more sources of financing for him Ecuador.
Until last July, bonds They amounted to USD 17,375 million and represented 32% of all the country’s debt.
The renegotiation It consisted of replacing the 10 previous bonds with three new papers. Ecuador had not exchanged debt since 2000.
He dialogue of the government with creditors began on June 2 and culminated on August 31 with the exchange of papers. For Finance, the process yielded four benefits.
First, it allowed reduce the capital of the debt at around USD 1.5 billion; second, the average interest rate was reduced from 9.3% to 5.2%.
The third benefit was that maturities they were extended for 10 more years.
The fourth was that, due to the change in schedule of Payments, the Treasury postponed the payment of USD 1,060 million of interest that was due this year.
Miguel Ricaurte, an economist at Banco Itaú, believes that if Ecuador fell moratorium, I could not have reached an agreement with the International Monetary Fund (IMF), which allowed it access to an amount of USD 6.5 billion until 2022.
“The agreement with the IMF depended on taking fiscal consolidation and debt reduction measures. With the renegotiation, the Government showed that it did not turn its back on its commitments, “he said.
Due to the lack of savings, the Treasury faced the crisis with debt, which raised the weight of obligations in the economy to 65% this year.
The means of the multilateral they were key. Of USD 10 879 million obtained in financing until December 29, 7 347 million came from these entities.
The entity that provided the most resources this year is the IMF, which disbursed USD 4 643 million between May and December of this year.
Other organisms such as World Bank, Inter-American Development Bank (BID) y Development Bank of Latin America (CAF) also provided more resources than last year.
The money was used for the care of vulnerable sectors, health and arrears.
With China, the Ministry of Finance had two strategies: to achieve relief in payments and new financing.
Regarding the first objective, it was achieved reschedule obligations for USD 891 million in 2020 and part of 2021. But the Government was unable to secure new loans. He financing of USD 1,400 million depended on the completion of an operation to sell crude oil, which did not take place.
Magdalena Barreiro, former Finance Minister, questioned whether this debt has been sought, due to the onerous conditions with which the Asian country granted loans to the previous administration. He challenge next’s government -he said- is to seek a greater balance in the fiscal accounts so that the weight of the debt is reduced, at least, from 2025.