Bondholders will find out on April 20 how the Ecuadorean government plans to deal with the default on its 2012 and 2030 global bonds.
President Rafael Correa announced yesterday that the government would present bondholders with a comprehensive plan for a buyback of the debt.
The president’s remarks, during his weekly radio programme, contradicted comments by finance minister Maria Viteri, who said at the IDB meeting in Medellin that a plan would be announced in April, but that no specific date had been set.
Viteri said the government had warned her not to release any information, including the date, until bondholders were provided with information on the deal. She said only that “Ecuador would present a viable and serious proposal to bondholders”.
There are many questions about the government’s ability to cut a deal acceptable to bondholders. One problem is its cash flow: international reserves have fallen to $3.4 billion from $6.5 billion, according to the most recent analysis from Barclays.
Both Correa and Viteria were more forthcoming about other issues, and especially on claims that the government wants to ditch the US dollar, adopted in 2000 as the Ecuadorean currency.
Correa said lawmakers should consider jail time for people who spread malicious rumours aimed at destabilizing the economy – such as the possibility of dedollarization – because this was akin to treason.
Viteri scoffed at rumours that the government not only had decided on a new currency, but also had a name for it, condor. “There are no condors, just those in the sky,” she said.
Pedro Delgado, a central bank official, said there is plenty of evidence of Ecuador’s commitment to dollarization, even though it has been painful as a result of the economic crisis.
The administration early this year announced new import tariffs on nearly 700 products. The decision, which has been attacked by neighbouring trade partners Colombia and Peru, was upheld on 27 March by the Andean Community, the 40-year old regional bloc that also includes Bolivia.
Viteri said the criticisms are unfair. She said that no one was asking about the negative impact that devaluation of the Colombian currency has had on the Ecuadorian economy.