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Ecuador has finalized the delivery of $15.5 billion of bonds to its creditors following a debt restructure plan, the finance ministry said on Monday, August 31.
The plan agreed earlier this month meant the South American country’s debt was slashed by more than $1.5 billion with a reduction in interest rates too.
“Under the Ecuadoran restructure, approximately 98.5% of the remaining amount was exchanged for 3 new bonds totaling $15.5634 billion,” the ministry said in a statement.
The total amount restructured was worth $17.4 billion. Ecuador managed to reduce its interest rate from 9.2% to 5.3% while negotiating an increase in its grace period, from 2 to 5 years, and an extension to the repayment program from 6 to 12.5 years.
The bondholders that have signed on to the deal will receive a 4th bond corresponding to the interest accumulated between March and August, worth more than $1 billion.
The deal “allows us to maintain access to international finance and focus on reactivating the economy, generating employment, and social protection,” said Finance Minister Richard Martinez.
Ecuador announced last week a preliminary agreement with the International Monetary Fund (IMF) to increase a support plan for structural reform from $4.2 billion to $6.5 billion.
The IMF predicts the country’s gross domestic product (GDP) will fall by 11% in 2020, largely due to the coronavirus pandemic.
Ecuador has been hard hit by the pandemic, as well as a fall in the price of oil, its main export.
The country’s debt stands at almost $59 billion, worth 60% of GDP. – Rappler.com
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