Ecuador’s president announced Thursday that the country has secured an agreement with the US International Development Finance Corporation (DFC) for a $3.5 billion loan.
The historic agreement was an effort initiated by Lenin Moreno, who is looking to replace the expensive oil-related debt the country holds with Asia and boost the economy, which has been hit by the COVID-19 pandemic.
Through his Twitter account, President Moreno celebrated the agreement, for which the term is set for eight years with an annual interest rate of 2.48%.
“We are on a good path! Ecuador signed an agreement with the DFC for the delivery of 3.5 billion USD, which will serve to prepay expensive debt and reactivate the country’s economy,” he said.
So far, Asia and especially China have been a major financier of Ecuador’s energy industry and the South American country has purchase and sale contracts with Asian energy companies. As partial payment, Ecuador sends crude oil to its Asian suppliers.
The agreement between Ecuador and the DFC will alleviate the country’s longstanding debt with Asia, freeing the oil that was meant to be used as payment. There has been no comment regarding how much of the $3.5 billion would be used for paying the Asian debt.
Ecuador’s public debt about $60 billion, according to the Ministry of Finance in 2020, with $5.4 billion of the total owed to China alone.
According to Finance Minister Mauricio Pozo, the agreement is looking to boost the economy and monetize high-impact telecommunications, energy and electric assets.
One of the minister's projects is the publicly dubbed “Diamond Project” by the National Corporation of Telecommunications (CNT), which consists of the sale of communications towers. The funds provided by the DFC would be tied to the monetization of this type asset.
Pozos is currently in the US, where he is looking to secure financial aid for Ecuador’s private sector. Alongside him, Health Minister Juan Carlos Zevallos and Chancellor Luis Gallegos traveled to the US to secure more COVID-19 vaccines.
Ecuador currently has 226,002 confirmed COVID-19 infections and 14,246 deaths, according to data from US-based Johns Hopkins University.