QUITO: Ecuador will use a 30-day grace period on some bonds to delay making around $200 million in interest payments due this week, and will devote those funds toward containing the coronavirus outbreak, Finance Minister Richard Martinez said on Monday.
The cash-strapped Andean nation will nonetheless make a $325 million principal payment on its 2020 bond due on Tuesday, Martinez told reporters. Ecuador's economy depends on oil exports, and a plunge in crude prices in recent weeks threatens to slash government revenues.
"This decision means we will begin dialogue with commercial, bilateral and multilateral creditors to reach a good, sensible arrangement," Martinez said, adding that he had been in touch with the U.S. Treasury and the Chinese government as well as the International Monetary Fund (IMF) and private creditors.
China has given Ecuador billions of dollars in financing in the past decade, much of which the Andean nation pays back with crude oil shipments. Martinez said the goal of the country's talks with China was to reduce "financial pressure" this year and ensure access to new sources of financing.
Ecuador has been among the hardest-hit countries in Latin America by the coronavirus, with 981 cases and 18 deaths as of Monday. President Lenin Moreno has come under increasing pressure in recent days to suspend debt payments in order to devote more resources to the health system.
Martinez said the government had also reached a deal with the IMF for $500 million in financing, which he said would arrive in April. Ecuador will also receive another $500 million jointly from the World Bank, Inter-American Development Bank, and Latin American lender CAF.
IMF Managing Director Kristalina Georgieva provided no numbers, but said IMF staff would work with Ecuador to quickly address its request for coronavirus-related funding through the Fund's Rapid Financing Instrument, and set up a new funding arrangement to bolster Ecuador's economy.
"Our objective is to provide immediate support to help Ecuador address the effects of a mounting global health crisis, while continuing to support the authorities' unwavering commitment to implement much-needed economic and structural reforms aimed at fostering strong, sustainable and inclusive growth," she said in a statement. - Reuters
