12 February 2009

Ecuador Says IDB to Loan $500 Million for Budget Gap

By Nathan Gill
Feb. 12 (Bloomberg) -- Ecuador’s Economic Policy Minister Diego Borja said the Inter-American Development Bank agreed to loan the country about $500 million to help finance a projected budget deficit.

Borja said he and Finance Minister Maria Elsa Viteri met last week in Washington with IDB President Luis Alberto Moreno to request a $500 million loan to help cover this year’s $1.5 billion projected budget deficit. He spoke to reporters today in his office in Quito.

Ecuador has also requested about $500 million from the Caracas-based Andean Finance Corporation and $480 million from the Latin American Reserve Fund, Borja said. The money would fund investment projects designed to minimize unemployment and prop up economic growth, he said.

“With the amounts we are requesting from these three organizations, the 2009 fiscal budget’s needs will be covered,” Borja said. “The road to get these resources is open.”

In addition to the loans, Ecuador’s state-run Social Security Institute, known as the IESS, has bought approximately $1.2 billion in state bonds this year, the minister said today. Ecuador’s Banking Superintendency in January changed the institute’s rules to allow it to invest up to 75 percent of its funds in government securities, Guayaquil-based newspaper El Universo reported on Jan. 21.

The IDB may release to Ecuador the first part of the funds during the first quarter of this year, though the timing and amounts have yet to be determined, the minister said.