(Bloomberg) -- Ecuador's warm relations with two of its biggest creditors are likely to lead to a bigger disbursement from the International Monetary Fund this quarter and easier repayment terms on its debt with China, Finance Minister Simon Cueva said.
Ecuador may get “a bit more” than the $700 million originally expected from the IMF this quarter, Cueva said. By the end of the year, the nation will have finished implementing the reforms it agreed under its $6.4 billion IMF deal, and will explore a possible new program with the fund, he added.
“We're also already beginning to discuss what's next with the Fund, what happens at the end of the year,” Cueva said Thursday, in an interview in his office in Quito.
Further afield, on a trip to Beijing this month, President Guillermo Lasso obtained Chinese President Xi Jinping's support for a renegotiation of close to $4.6 billion in debt ahead of a scheduled $350 million payment next month, the minister said.
Ecuador's bonds have been among the best performers in emerging markets since Lasso was elected last April, as his government slashed the fiscal deficit to 3.5% of gross domestic product last year, from 7.8% in 2020.
The government is targeting a deficit of 2% of GDP this year, Cueva said. Public finances are also benefiting from higher prices for oil, the nation's biggest export, as well as from an increase in income tax on higher earners.
The government currently has enough liquidity that it isn't under pressure to issue bonds, according to Cueva.
Read More: Galapagos Islands Expands Marine Life Protections to Curb Overfishing
The Xi-Lasso summit represented a breakthrough following months of preliminary talks. Xi's support for the restructuring is along the lines proposed by Ecuador, which centers on extending maturities.
During the 2007-2017 presidency of President Rafael Correa, the country borrowed heavily from China, with some loans stipulating repayment in oil. Ecuador wants to change these contracts to repay in cash, due to the recent run-up in global oil prices.
©2022 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
