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Ecuador Political News

Deep Restructuring Is No Guarantee of Ecuador Debt Sustainability- Fitch Ratings

Debt restructuring is a necessary but insufficient condition to help Ecuador overcome liquidity and debt sustainability challenges, Fitch Ratings says in a new report. In addition to a deep restructuring, sustainability will require stronger growth and a fiscal adjustment that are likely to prove challenging regardless of the outcome of 2021’s elections.

Bondholders approved Ecuador’s request for a four-month deferral of interest payments in April to allow time for a comprehensive restructuring, leading Fitch to downgrade its sovereign rating to ‘RD’. Ecuador’s request came amid a severe liquidity crunch and economic crisis caused by the coronavirus pandemic and oil price shock. Yet this development only exacerbated existing problems after years of low growth, a social backlash against policy adjustments, and failure to keep the country’s IMF programme on track.

Ecuador’s debt/GDP and interest/revenues metrics are moderate compared with other low-rated sovereigns, but solvency is weak given the country’s low debt tolerance. This reflects its unique vulnerability as an oil-dependent, dollarised economy heavily reliant on external credit. External interest payments are already high (10% of current external receipts in 2019) and international reserves are low. Servicing external debt during a liquidity shock and pandemic had become politically untenable and put macroeconomic stability at risk.

To read the full article on Fitch ratings, click here.



#Factsmatter: An international arbitration panel found ‘no cogent evidence’ supporting #Ecuador’s claim that #Texaco failed to comply with terms of remediation in #Amazon.
The @WSJ sums this case up nicely, “[Steven Donziger] and his team fabricated evidence, promised $500,000 to an #Ecuadorean judge to rule in their favor, ghostwrote much of the final verdict and took other actions that ‘perverted’ the course of #justice. Mr. Donziger disputes the…
Shameless. Disbarred and convicted of criminal contempt of court for bribing an Ecuadorian judge in an attempted extortion scheme, @SDonziger is nonetheless accepting invitations to speak at #climate rallies. Read more about this adjudicated racketeer:
Sworn testimony: While Texaco met its environmental obligations in the Amazon, #Ecuador’s national oil company did “absolutely nothing” to address its own remediation in the area. #FactsMatter:
DENIED: @SCOTUS rejects hearing case of Steven Donziger, who bribed Ecuadorian judge in failed effort to bilk Chevron for billions of dollars.

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