Bloomberg — The Ecuadorian Government will try to reach a new agreement with the International Monetary Fund (IMF) next year while seeking new financing after the fall of its bonds, which, according to President Guillermo Lasso, are “absurdly undervalued.”
“Next year, once this program is over, we will do another one,” said the president from the United States when referring to the agreement that is about to be concluded with the IMF.
The collapse of Ecuadorian bonds, which has been registered since June due to social protests, has caused a return to world credit markets is impracticable in the near future.
The yield on the country’s dollar debt due in 2040 has risen to 16.3%, up from less than 10% at the start of the year.
Although Ecuador’s borrowing costs are high“There are still options to borrow from multilateral lenders”, stated the president.
The country is close to completing an agreement with the IMF by the end of the year. Only one final disbursement of US$700 million remains.
Lasso warned that the details of a possible future program with the Fund have not yet been finalized.
GOLDMAN AND JP MORGAN
In meetings with Goldman and JP Morgan, Lasso explained why he thinks Ecuador’s bonds are undervalued. In his opinion, “The country is politically stable and has solid fundamentals.”
“Even in the political realm, this is a very solid government” and “has been able to win battles democratically”, the president noted while insisting that “There is no reason to worry about political stability.”
Ecuador also announced this week a renegotiation of the debt with China, which will allow save $1.4 billion in payments and that includes the extension of maturities.
The head of state pointed out that his government “It does not plan to turn to Chinese banks for debt in 2023.”
Among additional funding sources, Ecuador hopes to obtain funding from the US International Development Finance to help protect the Amazon.
Likewise, offers for the sale of Banco del Pacífico, a commercial bank that became state owned, are due next week. The idea is to sell it to a foreign bank in January.
“Ecuador is well positioned to weather a possible crisis in the world economy, since some key exports, such as shrimp, register record international demand,” the president added.
Read more on www.bloomberg.com
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