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Latin America Investment News on Viva Tropical

Ecuador Borrows $515 Million to Keep Its Economy Afloat

Article Summary:

Falling oil prices, a dollarized economy and lack of savings during the years of strong growth has left little wiggle room in Ecuador’s economy, ultimately forcing the country to borrow $515 million from the Latin American Reserve Fund to cover its deficit estimated at USD $4.23 billion.

Original Article Text From El Comercio via Google Translate :

The FLAR USD 515 million are falling oil prices

Ecuador has obtained a loan of USD 515 million Latin American Reserve Fund (FLAR) , to finance public spending amid falling oil prices. The approved loan is 13% of international reserves to which Ecuador is entitled to borrow from the FLAR to solve their balance of payments problems.

According to Bloomberg , this order is explained by the low oil price, which has affected the public sector financing. “It is worrying that taking large amounts of funds as those received from the oil, these loans have to look outside,” said economist Luis Luna to Bloomberg.

The agency also cited the firm Capital Economics, based in London, saying that Ecuador would seek the help of China to finance the deficit estimated at USD 4.23 billion . “The dollarized economy and lack of savings during the years of strong growth in Ecuador left with little or no room in a scenario of falling prices,” says Capital Funds according to Bloomberg.

“The loan granted by FLAR is a 3-year period, including 1 year of grace, with an interest rate three-month Libor (contribution to date 0.46%) plus a margin ranging between 3.6% and 4%, the same as it will define the date of signing the relevant contract. ” The FLAR consists of: Bolivia, Colombia, Costa Rica, Ecuador, Peru, Uruguay and Venezuela.

Link to Original Article:

From El Comercio

Latin America Investment News on Viva Tropical