Ecuador Launches Historic Debt Audit Commission

By Other News Sources on September 25, 2007 • ( Leave a comment )

Patricia Adams, Odious Debts Online
September 25, 2007

The Ecuadorian Ministry of Economy and Finance announced on July 23 that it was launching the world’s first debt audit commission [PDF] .

The 13-member commission – “Comision para la Auditoria Integral de la Deuda Publica” (CAIC) – includes experts in the fields of debt, economics, and law coupled with representatives of the Ministry of Economy and Finance, the Procurador, the Auditor General, and Civic Corruption Authority. International advisors to the audit commission include Alejandro Olmos of Argentina, Oscar Ugarteche, Peruvian economist, Eurodad’s Gail Hurley, Jurgen Kaiser of Erlassjahr.de, Maria Lucia Fatorelli of Brazil and Eric Toussaint from Belgium.

The commission has one year to investigate individual credit agreements – including bilateral loan contracts and Paris Club agreements, bond issuances and multilateral loans – to provide detailed analyses of these credits based on legal, economic and social and environmental impact considerations. Ricardo Patiño, former Economy and Finance Minister and key backer of this initiative said “this will not be a simple financial audit of the debt … but will consider all relevant legal, political and economic factors which have led to the accumulation of illegitimate debt in this country. The audit commission must also consider social and environmental damages to local populations caused by debt. Debts which are found to be illegitimate must not be paid. Debts which are legitimate must be reimbursed.”

Background:

Of Ecuador’s US$10.6bn external debt burden, just over US$2.1bn is owed to bilateral creditors. Key bilateral creditors include Spain (US$396.8mn), Italy (US$340.4mn), Japan (US$300.3mn), Brazil (US$275.2mn), France (US$179.2mn), Denmark (US$15.8mn), UK (US$99.8mn).

Only US$1.27bn of a total of US$2.1bn in bilateral debt involves original loan contracts however. US$882.4mn stems from several successive Paris Club renegotiations, commonly referred to as Paris Club V, VI, VII and VIII. The terms and conditions of the renegotiations will also be subject to close scrutiny by Ecuador’s debt audit commissioners in order to publicly disclose the details of what remain to date very opaque and poorly understood decisions. Original loan contracts will also be investigated starting with investigations into a number of Spanish, Italian and Belgian loan agreements.

The commission will meet once every quarter and will provide regular progress reports to the Ministry of Economy and Finance, and the Ecuadorian public.