A good couple of months
Ecuador has had good news both domestically and from abroad in the last two months. On October 14, the government and CONAIE ended successfully—albeit with differing levels of satisfaction—the negotiation tables that were established after the violent riots of last June. With the mediation of the Catholic Church, a peace agreement was finally signed in a ceremony that brings hope for a more united and equitable country. Of course, sustainable success will depend on the completion—on the part of both sides—of the signed agreements, including a final and definite proposal for the focalization of subsidies. But the agreement is such an important result that Quito’s Archbishop, Alfredo Jose Espinosa, mandated all priests to talk about it in last Sunday’s Mass.
Also, last September, after long negotiations with Chinese creditors, Ecuador reached an agreement with the China Development Bank and Eximbank to restructure its outstanding $3.63b debt as of July 2022 with these two institutions. The negotiation will bring a relief in cashflow of $348m in 2022, $596m in 2023, and $314m in 2024, alleviating the tight payment capacity of the country in these years and enhancing the payment capacity for other obligations.
In addition, last week, a bipartisan group of US senators visited Ecuador and met President Guillermo Lasso to discuss topics of high interest for our country. The tone of the conversations was encouraging, and President Lasso emphasized the excellent bilateral relationship between our country and the US. While several topics were discussed, including sustainable COVID relief, environmental problems, and governability, the senators referred to two issues that are of the utmost importance for Ecuador: control of violence and organized crime, and bilateral trade relations.
Republican Senator Rob Portman referred to crime control, offering to submit a bill to the US Congress next month that would permit a strong cooperation plan to help Ecuador in its efforts to control organized crime and reduce the level of violence in the country. Rising crime is currently one of the top reasons for concern for Ecuadorians. Democratic Senator Tim Kane referred to our bilateral trade relationship and offered to work to reestablish the trade tariff preferences that were in effect until 2020. These could represent a benefit of $150 million per year for the fishing, tuna, and flower industries. Both topics fall within the United States-Ecuador Partnership Act of 2022, which is the first legislation presented in the US Congress to focus exclusively on US-Ecuador relations, under the leadership of Senator Bob Mendez (D-NJ) Chairman of the Senate Foreign Relations Committee.
Finally, the Central Bank received two lines of credit. The first one, for $1b was granted by the Federal Reserve to be used in case of liquidity problems. Such a back up for a dollarized economy is of the utmost importance. Also, the BIS doubled an existing credit line of $420 million to $840 million, for the same purpose. With these two lines, and a good situation from the private banking sector, dollarization can breathe more comfortably.
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