Sept. 29 (Bloomberg) -- Ecuadorean President Rafael Correa wants new laws to regulate the financial system and mining concessions after voters approved a new constitution that tightens his grip over the energy, telecommunications and banking industries.

The government is planning a new financial security law along with an ``urgent'' law governing drilling and development of mineral deposits, Correa told reporters today in Quito.

``We want to set up a joint fund so that we never have to suffer a banking crisis again,'' Correa said. Several bank failures starting in 1998 cost Ecuador 21 percent of its gross domestic product that year.

Voters approved the new charter yesterday by a bigger-than- expected majority of close to 64 percent, with 88 percent of votes counted by the Supreme Electoral Court. The new constitution, Ecuador's 20th, calls for numerous new laws and staff changes in government over the next 12 months.

``This was a clear political victory for President Correa over the traditional political establishment'' and will ``further consolidate his already tight grip on power,'' Alberto Ramos, an economist at Goldman Sachs Group Inc. in New York, said by e- mail. The result will help reduce social conflict that has made the country one of the most unstable in Latin America, he added.

Correa won the presidency in late 2006 by promising a new constitution to help alleviate poverty and put an end to the country's cycle of collapsing governments.

`Newly Structured'

The charter gives Correa control of the central bank, allowing him to set interest rates, and reserves the right for the government to manage ``strategic sectors'' through state- owned companies.

Scrapping central bank independence will allow for a coordination of monetary, financial, and commercial policy, Correa said today.

The constitution also enables Correa to extend his time in office by allowing a second consecutive four-year term.

The new constitution focuses on redistributing wealth rather than growth, largely under the direction and control of the government, said Gabriela Calderón, a Cato Institute researcher in Guayaquil.

``We now have an executive that holds all the institutions of the newly structured state within its pocket,'' she said in an e-mailed statement.

Positions

Correa, a 45-year-old economist and ally of Venezuela's President Hugo Chavez, says the constitution will more fairly distribute oil revenue to the 40 percent of the population that lives in poverty, and smooth the workings of government by allowing him to dissolve the legislature once per term.

The charter requires immediate new elections if a president is impeached or the legislature is dissolved and allows voters to revoke an elected official's mandate.

Correa says the changes will help prevent political chaos in a country where street protests forced all three elected presidents since 1996 to resign.

The president has denounced free trade and globalization, along the same lines as Chavez and Bolivia's Evo Morales. He speaks the indigenous Quichua language, and draws much of his support from the country's poor.

`Policy Mix'

The charter guarantees all citizens access to water and universal health care, pensions and free state-run education through university. Correa said today that it will take five to 10 years for those services to be expanded.

Economists said the increased spending required by those broadened rights may force Ecuador to abandon the dollar as its currency if prices for crude oil, its biggest export, fall. Ecuador produces about 500,000 barrels a day, which accounts for 61 percent of the country's exports.

``The heterodox state-centered policy mix could over time produce weak economic results and social progress and end up disappointing voters,'' said Goldman Sachs' Ramos.

Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, had the slowest economic growth in the Western Hemisphere last year, at 2.52 percent, even as oil prices rose to a record. Meanwhile, annual inflation accelerated to 10 percent in August, driven by higher food prices.

The president has already expanded his control of the economy. He secured financial concessions from America Movil SA, which holds the biggest share of Ecuador's mobile phone market.

Correa forced foreign oil companies to give the government a bigger share of oil revenue by imposing a 99 percent windfall tax, which was later reduced to 70 percent.

He revoked more than 1,500 mining concessions and halted most mine operations in April, pending the reorganization of the industry through the new law.

To contact the reporter on this story: Stephan Kueffner in Quito at skueffner@bloomberg.net

Last Updated: September 29, 2008 14:56 EDT