Ecuador, home to South America’s third-largest oil reserves, will finance its 2013 budget deficit with a $2 billion loan from China, Finance Minister Patricio Rivera said today.
The government will use the loan to help cover financing needs of $6 billion next year, Rivera said today in a joint news conference with President Rafael Correa in Quito.
Correa has relied on windfall oil profits and loans from China to help finance spending since Ecuador’s $3.2 billion bond default in 2008 and 2009 locked the nation out of global credit markets. As oil prices rose this year to an average $95.69 per barrel, about $16 more than forecast in Ecuador’s 2012 budget, the country scrapped a planned bond sale and put a previously announced $1.7 billion credit line from China on hold.
“We already had an agreement with the People’s Republic of China for a payment that we haven’t had to use this year,” Rivera said at the presidential palace in Quito. “Originally, it was $1.7 billion. They raised it a little in the negotiation process and now it’s $2 billion.”
Ecuador will use loans tied to specific public works projects from regional multilateral lenders to cover the majority of its 2013 financing needs, Rivera said, without providing more details.