31 May 2009
Ecuador's private banks will be required to repatriate $1.2 billion in assets they now hold abroad, President Rafael Correa said on Saturday, as low crude prices and a debt default sap cash from the country's flagging economy.
Private banks must now keep more than 45 percent of their assets in Ecuador to draw cash and boost "domestic liquidity" in the oil-dependent country, Correa said.
The central bank ordered the measure into effect late Friday and central bank President Carlos Vallejo planned to announce additional details on Monday.
"The party is over for certain bankers," Correa told his weekly radio show. "We're not going to let them keep taking our money."
Ecuador adopted the U.S. dollar as its currency amid a 2000 economic crisis, making it even easier for local banks to invest cash overseas without risking depreciation. They now have $4 billion invested abroad, Correa said _ a fact he called "economic stupidity."
Ecuador relies on oil exports for about 30 percent of its federal budget, but lower oil prices have slashed a key source of income, contributing to a $1.5 billion budget deficit this year. The country defaulted on $3.2 billion in bonds in December, about a third of its total foreign debt, likely cutting it off from world debt markets just as other fundraising options appear to be dwindling.
Economy Minister Diego Borja has previously asked banks to return funds kept abroad, especially in Panama. He also urged them to boost lending, which banks said has slowed because the global economic crisis dried up deposits.
Correa on Saturday dismissed the notion that Ecuador offers few viable investment opportunities, calling for the creation of a local stock exchange to "efficiently mobilize" resources. He said banks are obligated to find profitable projects within Ecuador and urged the central bank to set an example by investing the country's reserves at home.
"Ecuadorean money, at the service of Ecuadoreans," Correa said.
No comments:
Post a Comment