Ecuador reaches deal with creditors over $17.4bn debt

Ecuador reached an agreement with 53 percent of its creditors to renegotiate $17.4 billion of debt, the government said on Monday as it presented its restructure offer.

“Over the last week, the Ecuadorian proposal secured new support and was accepted by other creditors. The terms are, for now, supported by 53 percent of bondholders,” said the economy ministry in a statement.

The government came to an agreement in principle with creditors at the beginning of July allowing it to “reduce the debt by $1.5 billion,” President Lenin Moreno said on Twitter.

The South American country revealed on Monday the new debt of $15.9 billion would be repaid in three instalments: $3.8 billion in 2030, $8.6 billion in 2035 and $3.5 billion in 2040.

Ecuador, which has $65 billion in public debt, is expecting its GDP to shrink by four percent — worth around $110 billion — in 2020 due to the effects of the coronavirus pandemic and a plunge in the price of oil, the country’s main export.

The International Monetary Fund said it supports Ecuador’s search for a deal with creditors in order to make its debt “sustainable.”