Ecuador gets debt reprieve from China
August 7, 2020 |
Andean nation puts off $417 mln in loan payments for a year
Ecuador's Finance Ministry said late Wednesday that it reached an agreement with China Development Bank (CDB) to postpone $417 million in loan payments for a year.
The country was originally scheduled to pay $167 million through the end of 2020 and $250 million from January to July 2021. Under the new agreement, Ecuador will pay the $417 million in 11 quarterly payments of close to $38 million each from the last quarter of 2021 until the second quarter of 2024, the ministry said in a press release.
The interest rate remains at 7.16%, as in the original credit line from April 2016, the ministry added.
When taking into account payments to be made in the last quarter of 2021, the relief in debt service between July 2020 and December 2021 will net $356 million, the ministry said.
"It will always be relative for someone to say that this is little or a lot, but for us, it is good news," Finance Minister Richard Martínez said in a press conference on Wednesday night. "It's an important step in getting the relief that we need. Plus, this is something you must view holistically, for, on the one hand, we are seeking relief and, on the other, new financing, so there must be an equilibrium."
The agreement with CDB includes restructuring the terms for using oil shipments from Petroecuador that were meant to help repay the loan. The pending shipments of 108 million barrels of oil will be postponed, according to the new payment schedule. This will give Petroecuador the possibility of selling the oil elsewhere.
Ecuador reached this agreement with China Development Bank just two days after getting creditor approval for the restructuring of $17.4 billion worth of foreign-law bonds.