May 1, 2010
By Nathan Gill
May 1 (Bloomberg) -- Ecuador’s President Rafael Correa said he will seek to change the central bank’s accounting rules in a bid to free capital needed to invest in the country’s development.
The government is seeking to change accounting rules regulating how the bank reports its reserve funds, Correa said in his weekly televised address to the nation, broadcast today.
Ecuador, which has defaulted on $3.2 billion of international bonds since Correa took office in 2007, is trying to plug a budget deficit the Finance Ministry estimates will reach $4.2 billion this year. The president of the country’s private bank association, Cesar Robalino, said March 29 the government was using central bank reserves to finance spending.
Ecuador’s new constitution, approved in a 2008 referendum, stripped the central bank of its autonomy.
“Why does a central bank that doesn’t even have a national currency need $2 billion in capital,” asked Correa, a 47-year-old former economics professor. “We are freeing the funds for the benefit of the Ecuadorean people.”
He did not provide details about how much of the bank’s capital the government was seeking to tap. No one at the Finance Ministry or the Central bank was available to comment on how the government plans to use the funds.
The central bank held $4.3 billion in international reserves as of April 23, according to report published on the bank’s website.
Former Political Economy Minister Diego Borja was confirmed as central bank president April 5 after serving as interim chief since December.
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