June 1, 2001
Ecuador made history in 1999 as the first country to default on Brady bonds and on a sovereign Eurobond. Now it is heading toward another milestone: becoming the first major emerging market country to lose all foreign interbank trade lines.
As Ecuador's banking system slid into crisis in 1999, it left a number of foreign banks with about $100 million in outstanding trade lines to insolvent Ecuadorian banks. So far, about one-third of that has been paid back. Now, disagreement over the other two-thirds has brought Ecuador to the brink of losing its trade lines.
Finance Minister Jorge
Gallardo says foreign ba
The country could soon lose its remaining trade lines if talks with international bankers break down. The banks are down to their last card in a bitter game of poker.