Odious Debts

Correa prepares to arbitrate Ecuador’s odious debts

Patricia Adams
Probe International
June 12, 2009

Ecuadorian president Rafael Correa said his government is considering arbitrating a resolution to his country’s odious debts with multilateral lenders and other governments.

“These debts were imposed by force,” he said Correa said last night in Quito “We have rebelled against the system that established odious, unfair, illegal, immoral debts.”

Ecuador has just now completing a buyback of 91 percent of its defaulted bonds due 2012 and 2030 and will pay 35 cents on the dollar.

As with the defaulted bonds, criminal acts were committed by previous governments that borrowed from institutions such as the World Bank, he said.

Last year, a long awaited audit commission reported that much of Ecuador’s debt was illegal because of irregularities and conflicts of interest among government officials and lenders.

The debts in question are thought to amount to some $6 billion. Correa is expected to demand arbitration rather than to quit paying on the loans and gave assurances that he’ll continue to service the debts while the talking begins. Ecuador would be willing to negotiate with lenders in the event of a dispute his Finance Minister Maria Elsa Viteri told Bloomberg last night.

Correa’s threats are not considered idle. Last year, Ecuador filed for arbitration in a dispute over a $250 million loan backed by a Brazilian state development bank.

Categories: Odious Debts

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