A leading Ecuador presidential candidate pledged to honor national debt that was acquired legitimately, while investigating some controversial oil-for-loans deals made with China.
(Bloomberg) — A leading Ecuador presidential candidate pledged to honor national debt that was acquired legitimately, while investigating some controversial oil-for-loans deals made with China.
Yaku Perez, an environmentalist and campaigner for the rights of Indigenous groups, also criticized oil and mining companies, echoing comments made Thursday by Fernando Villavicencio, one of his likely rivals in the upcoming vote.
Perez said the nation’s debt levels are “a tragedy” and that he would seek to renegotiate some of the agreements made with China, under which Ecuador is obliged to hand over a large share of its exportable oil after it received bilateral loans.
“Legitimate external debt must be paid,” Perez said Friday, in an interview in Quito with Bloomberg and the Financial Times. “It’s going to be very tough.”
Ecuador has about $46 billion in overseas debt, according to the finance ministry, of which about $16 billion is in bonds. A year of political instability has sent yields on the nation’s dollar bonds to more than 20%, indicating a high level of distress. Its debt-to-GDP ratio currently stands at about 50%.
Ecuador’s presidential race kicked off this week when President Guillermo Lasso triggered an election by dissolving congress to forestall impeachment proceedings against him.
Read More: Ecuador Presidential Hopeful Pledges to Renegotiate Oil Deals
No polls have yet been published, but Perez and Villavicencio are among the most prominent presidential hopefuls. They are also likely to face a socialist candidate from the movement of former President Rafael Correa. The vote is tentatively set for Aug. 20.
Mining Moratorium
Perez, who changed his first name from Carlos to Yaku, which means “water” the Quichua Indigenous language, said the country needs a “moratorium” on mining activity. But he said he would respect existing oil and mining contracts provided the companies fulfill their environmental obligations, a similar position to the one adopted by Colombian leader Gustavo Petro.
“If we weigh the income that mining brings and its environmental costs, the scales incline toward not doing mining,” Perez said. “With that in mind, mining activities can’t be shut down where they’re already operating.”
He suggested agro-industry and tourism as sectors that could replace revenue from extractive industries. Ecuador also needs more debt-for-nature swaps of the kind the country successfully carried out earlier this month, he said.
In the deal structured by Credit Suisse Group AG, Ecuador swapped bonds for loans with preferential terms to provide funds to protect the Galapagos Islands, home to species including giant tortoises, unique birds and hammerhead sharks.
Read More: Ecuador to Save $1 Billion From Record Debt-Nature Swap
Perez said he is working on building a coalition that includes several traditional parties such as the Democratic Left and possibly his former party, Pachakutik. Perez narrowly missed making it to the runoff in the 2021 presidential election.
The 54-year-old former leader of Andean Indigenous organization ECUARUNARI said he is worried about Ecuador being caught in the middle of the tension between the US, the nation’s biggest trading partner, and China, its biggest bilateral creditor.
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