LatinNews Daily - 1 June 2020

In brief: Ecuador secures Chinese financing through oil contract

* Ecuador’s economy minister Richard Martínez has announced that the government has reached a deal to receive US$2.4bn from two Chinese state banks – the China Development Bank (CDB) and the Industrial and Commercial Bank of China (ICBC) – as advance payments in a long-term oil export contract. Martínez has previously emphasised the significance of Chinese credit in producing a resolution to Ecuador’s fiscal crisis, but the terms of this agreement have drawn criticism from those who claim that such long-term deals undervalue the price of Ecuador’s oil. Martínez insisted that unlike previous agreements, this has been verified by the comptroller’s office, and will be managed as a commercial contract by state-owned oil company Petroecuador, rather than as government debt. The payments from China will nonetheless go directly to the economy ministry – starting with a US$1.2bn payment in June, followed by a further US$1bn in July, and US$200m in October. Martínez also reported that the government is preparing a presentation to bondholders, the first stage in the process of renegotiating over US$17bn in existing debt obligations.

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