The people of Ecuador are rising up to refound their country as a pluri-national homeland for all. This inspiring movement, with Ecuador's indigenous peoples at its heart, is part of the revolution spreading across the Americas, laying the groundwork for a new, fairer, world. Ecuador Rising aims to bring news and analysis of events unfolding in Ecuador to english speakers.

Thursday, February 01, 2007

Ecuador debt service cut in Correa's 2007 budget proposal

IHT, January 31, 2007

QUITO: Leftist President Rafael Correa on Wednesday announced a 2007 budget proposal that includes a 28 percent reduction in foreign debt service.

The US$9.8 million (€7.6 million) budget was to be submitted Wednesday to Ecuador's opposition-led Congress.

"We'll decide whether or not to pay these obligations based on fiscal necessities because our commitment is going to be to pay salaries on time, allot resources to education and health," Correa said during a press conference in the port city of Guayaquil.

Investors are waiting to see if Ecuador makes its programmed payment on Global Bonds 2030, due Feb. 15.

The president said a contingency fund that had been set aside for foreign debt payment under previous administrations would be designated instead for "national emergency."

Education and health "are in crisis, and we're going to make as many emergency declarations as necessary to attend to these sectors rapidly," he said.

On Wednesday, about 100 demonstrators from a public school held a protest calling for a referendum on an assembly to rewrite the country's constitution that stopped traffic near Parliament. They were held back by police, and the protest ended without any major incoveniences.

On Tuesday, Congress was forced to abandon its session after protesters in favor of the referendum forced their way into the building.

Correa took office in January promising to take steps to renegotiate the country's US$16.8 billion (€13 billion) foreign debt and direct resources to programs to help the poor.

The debt renegotiation talk has rattled Wall Street and Moody's Investor Service on Wednesday became the third debt-rating agency to downgrade Ecuador's debt since leftist Correa took office.

The amount in his budget proposal destined to debt service was cut to US$2.7 million (€2.1 million) from US$3.8 million (€2.9 million) in 2006.

Tuesday's congressional session was suspended when Correa supporters seeking a referendum on whether the country's constitution should be rewritten stormed the building.

The budget projected an increase in gross domestic product of 3.5 percent from 2006 and annual inflation of 2.6 percent.

It estimates a per barrel oil price of US$35 (€27).

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