Ecuador secures US$900mn China loan
Ecuador's President Lenín Moreno said he had secured a US$900mn loan from China.
Interest on the loan is a historically low 6.5%, Moreno said in a statement, adding that the facility does not involve committing future petroleum output.
The six-year loan will be provided by China Develoment Bank and has a two-year grace period.
Moreno made the announcement from China, where he has been meeting senior officials (pictured).
Ecuador also signed a deal with China Eximbank for a 20-year US$69.3mn loan at 2% interest to help fund reconstruction work following 2016's major earthquake. A non-repayable sum of almost US$30mn for military cooperation was also announced and officials may advance talks over two possible credit lines for around US$3.500bn, the statement said.
Finance minister Richard Martínez said the government was now on track to cover deficits until 2021.
The loan announcements come as Moody's changed the outlook on the government's 'B3' debt rating to negative from stable.
Moody's said: "The decision to change the outlook to negative reflects the risk that Ecuador's government liquidity position may remain constrained ahead of debt repayments in the coming years given the challenging market conditions it faces."
Government debt metrics have deteriorated over the past five years. The country borrowed heavily from China under Moreno's predecessor and former ally, the leftist Rafael Correa. Since taking office, Moreno has taken a more market-friendly approach.
Moody's noted that increased access to so-called official financing from multilaterals would ease the Ecuadorian government's funding pressures, but warned that "in the absence of more forceful policies that effectively address macroeconomic imbalances that built up over the past decade, a large official lending program would not be sufficient on its own to materially reduce the tight liquidity conditions."
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