November 20, 2008

Ecuador is again threatening to suspend payments on foreign debt deemed “illegitimate” pending the release later this week of a long-awaited report by the country’s government appointed debt audit commission.

Since 2007, top officials have regularly threatened to withhold payment of foreign debt the commission declared “illegitimate.”

The commission is due to report back to the government after it has finished analyzing all the debt issued to Ecuador between 1970 and June 2006.

President Rafael Correa called the results of a preliminary report he received from the commission “truly horrifying.”

Pending final release of the report, Ecuador will use a 30-day grace period on a $30.6 million bond payment which was due Nov. 15 to analyze its legal options.

“If there’s a sufficient basis to say we can’t pay this illegitimate debt, that’s what we’ll do,” Correa said in a statement posted to the government’s website. “That the bonds fall and the country risk rises doesn’t hold the least interest for us. Here we’ll act for the country and the common good.”

See related story: “Ecuador’s Correa Says He’ll Seek Legal Basis for Debt Default”