Ecuador says Congress vote prompts debt reform

QUITO, Feb 28 (Reuters) - Ecuador's economy minister said on Wednesday that Congress's vote this week to reduce debt service assignments in the budget plan had given the government more reason to push ahead with its debt restructuring plans.
Economy Minister Ricardo Patino, a leftist economist, also said a commission to audit the country's public debt would be named soon to determine "illegitimate debt" that the government says it will not pay.
President Rafael Correa, a political outsider elected last year, has rattled Wall Street by promising to overhaul the country's foreign debt, triggering concerns that Ecuador might default on its obligations.
"Congress has put at my disposal the option of a debt restructuring to reduce debt payments, and we will certainly consider it," Patino told reporters in Quito. "This is one more reason to talk about debt restructuring."
Congress's vote on Tuesday to divert $283.4 million earmarked for debt payments in the government's $9.8 billion budget plan this year worried investors who are already fretting over the government plans to reform bonds.
"This is an example of the contentious nature in which external debt is viewed in Ecuador, where there is a weak credit culture," said Lisa Schineller, of Standard and Poor's in New York.
"But I don't think that would impact the government's decision to move ahead with a restructuring if that is what they choose to do," she added.
Correa, a former economy minister and ally of U.S. foe Venezuelan President Hugo Chavez, has vowed to slash debt payments to spend more on the country's poor majority.
Even at a time when Ecuador is flush with oil cash from high oil prices, Correa has said some debt issued by past governments is hurting the country's development.
However, the 43-year-old economist has said debt restructuring could be delayed by his political plans to rewrite the Andean country's constitution.
The foreign debt of Ecuador, South America's fifth-largest oil producer, totaled $10.21 billion in December, according to government figures.