Marcelo Giugale, the World Bank's Andean Department Director, officially launched a 2005-2007 $536 million loan program for Ecuador on Thursday.
In a press conference in Quito, Giugale and Economy Minister Magdalena Barreiro said that Ecuador could receive around $90 million in disbursements late in 2005, $180 million in 2006 and the remainder in 2007. The loans will be directed to 10 projects, especially in social areas. Around $100 million will be for fiscal necessities.
About 40 percent of the loan money would be available for Ecuador to use as it sees fit, on condition it enacts reforms to improve its fiscal position and improves the efficiency of its social spending. "The impression we have is that they are getting a good balance between economic discipline and social responsibility," Giugale said, apparently putting an end to a period of tense relations between Ecuador and the multilateral lender. But he criticized a bill, currently under debate in Congress, which would permit the central bank to limit bank lending rates, saying it would increase risk.
Ecuador's President Alfredo Palacio has boosted social spending and abolished a fund which had been reserved for debt payments since he took office. This has damaged Ecuador's image among foreign bond holders, making it more important the country is able to access other forms of credit such as World Bank money. The country defaulted on foreign debt in 1999 but its economy has since grown strongly.