IMF chief hails Ecuador deal with private creditors as a “milestone”

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The head of the International Monetary Fund (IMF), Kristalina Georgieva, praised as an “milestone” the agreement reached by Ecuador to restructure its debt with private creditors, and said she hopes to advance the talks of the new program with the Andean country.

“Congratulations to President Lenín Moreno and Ecuador for reaching the necessary majority to restructure their bonds with private creditors. Important milestone that will help pave the way for inclusive and sustainable growth. We hope to deepen the dialogue on a new program,” IMF Managing Director.

Moreno, who earlier celebrated the deal as “GREAT NEWS for Ecuador!”, Quickly replied with another tweet.

“Thank you dear Kristalina Georgieva. Indeed, it is a milestone and a momentous step that Ecuador has taken and that opens other doors for us in the international community, such as the new program with the IMF,” he wrote.

Moreno’s government announced Monday that its creditors had agreed to restructure some $ 17.4 billion of debt, in a process that will allow the country to reduce the payment of principal and interest amid an economic crisis deepened by the pandemic.

In a message to the nation posted on Twitter, Moreno welcomed the 97% support achieved and said that the renegotiation “will undoubtedly be a model of reference worldwide.”

But he acknowledged that Ecuador has “other challenges both in bilateral debt and in the search for new resources with multilateral organizations.”

Without giving details, Finance Minister Richard Martinez said for his part that the government is working on a renegotiation of its debt with the IMF.

In June, IMF spokesman Gerry Rice said the new comprehensive program being discussed by IMF technicians and the Moreno government would be a successor to the agreement under the Extended Fund Facility that the The IMF approved for Ecuador in March 2019 for 4.2 billion dollars over 36 months, of which about 1.4 billion have been disbursed so far.

According to the IMF, Ecuador, which has had a dollarized economy since 2000, will have a 6.3% contraction in GDP in 2020. Before the pandemic, the country expected to grow 0.7% this year.

Martínez pointed out that Ecuador’s debt is 58,768 million dollars (60% of GDP), below the 65,000 million dollars reported by the president previously.

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