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Wednesday, November 28, 2007

Ecuador Congress cuts debt service in 2008 budget

QUITO, Nov 27 (Reuters) - Ecuador's Congress on Monday approved the government's $10.36 billion budget plan for next year, but reallocated $327 million earmarked for public debt payments to public spending, said congressional aides.

Fifty-two of the 80 lawmakers present voted late Monday night to slash the debt assignation and earmark the reallocated funds for courts and social projects.

The government of left-wing President Rafael Correa had earmarked $2.01 billion to service its public debt in 2008. In Wall Street's analysts eyes, that sum is sufficient to service the country's debt.

Correa, a former economy minister, has worried investors with pledges to restructure the country's foreign debt.

However, Correa recently said the government will use market-friendly mechanisms to overhaul the country's $10.3 billion external debt such as swapping more expensive debt for cheaper paper.

Congress also approved reducing financing requirements by $634 million in 2008 due to higher oil revenues stemming from a a windfall tax hike on foreign oil firms and an increase in the referential price of Ecuadorean oil to $45 per barrel from $35 a barrel.

Ecuador is South America's fifth largest oil producer.

The budget for 2008 was higher than that approved by Congress for 2007, which was $9.8 billion.

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