MercoPress. South Atlantic News Agency

Argentine foreign debt negotiating team invited to Ecuador

Ecuadorian new authorities are in contact with the team that successfully negotiated the restructuring of Argentina's foreign debt with the purpose of undertaking a similar process and significantly reduce the “burden” of the country's financial commitments.

The restructuring of Ecuador's foreign debt was one of the priorities announced by President Rafael Correa when he took office Monday and is an issue which has many investors nervous fearing the populist leader might declare a moratorium to force better debt payment conditions. Ecuadorian Economy Minister Ricardo Patiño, and closely linked to the school of economists who propose a moratorium on foreign debt payments, said there's no timetable to begin talks with creditors and any move in that direction will be announced "at the appropriate moment". However Patiño admitted that "the coming week the commission which negotiated the Argentine foreign debt will be arriving in Quito to talk and let us know about international debt legislation". President Correa during his campaign trail said he didn't discard a restructuring of the country's debt following the "Argentine style". After months of exhausting and on occasions acrimonious negotiations Argentina managed to renegotiate the defaulted debt of over 100 billion US dollars with significant capital cuts, longer maturing periods and with different interest rates to those originally agreed, a strategy which Correa has applauded and praised publicly. Patiño so far has been evasive about the negotiation process to follow or the self imposed targets regarding the management of the country's foreign debt which currently stands at 10.3 billion US dollars. In recent interviews the minister pointed out that "it's not only a matter of extending maturing dates and reducing interest rates, we want to lower the overall lump sum", which we plan to address in accordance with all creditors, including multilateral organizations and sovereign bond holders. In the last two decades Ecuador benefited from two capital condonations by private creditors totaling 3 billion US dollars, in 1995 and 2000, the last of which was preceded by a unilateral moratorium. International agencies and supportive countries have been reluctant to include Ecuador in debt reduction plans given the fact it is an oil exporting country and far more developed than others which have benefited, such as Bolivia. From Washington International Monetary Fund Managing Director Rodrigo Rato said he was looking forward to having good relations with President Correa and recommended that the Ecuadorian Central Bank retains its autonomy. "We hope to have good relations but I think it's no time to speculate", said Rato who nevertheless praised Correa for his publicly announced intention of canceling the country's debt with IMF. Correa has also proposed that an international mediation tribunal should counter balance IMF's powers since "economic stability" in a country is not based on the inflation index but in "the creation of jobs and reducing poverty". De Rato however has stated that the independence of central banks has "shown to be positive" through history, such are the cases of Colombia, Mexico and Brazil, although admitting that "inflation is not necessarily a good indictor of progress". "My personal and institutional recommendation, on the basis of experiences of countless countries, is that the independence of central banks is a significant element and evidence of good governance", emphasized IMF chief Rato.