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IMF wants future oil revenues in Ecuador to service debt
rather that health sector
July 2002
The IMF will only approve a $240 million loan to Ecuador on condition that 100% of revenue from an oil pipeline carrying crude oil from the Amazon to the Pacific coast is used for servicing debt. However, on May 22nd last the Ecuadoran Congress approved a law that assigns 70 % of future oil revenues from the pipeline to paying off the debt with 20% going to an oil fund and 10% to the health and education sectors.
The Minister of Economy and Finance for Ecuador, Carlos Julio Emanuel confirmed that the allotment of 10% of the revenues to social spending is the main obstacle to Ecuador securing approval of the loan. He reports that the IMF claim that the percentage reserved for health and education has been 'pre-assigned' before it even exists, however the same could be said for the 70% assigned to debt. The Minister said that President Gustavo Noboa would try to fulfil the IMF requisite although he did not explain how.
The controversial 600 km pipeline which is to begin operating next year will run from Ecuador's Amazon jungle region to the Pacific coast in the northwestern province of Esmeraldas. It is being built by the OCP limited consortium, made up a number of oil companies from Canada, the US, Italy, Spain and Argentina
The law approved last week applies only to the funds derived from exports of crude carried by this pipeline. The revenues from the rest of Ecuador's oil exports which is the countries main source of foreign exchange, will continue to be used as stipulated by the national budget, which allots 40% to debt servicing.
Ecuadors debt amounts to $16 billion equivalent to 95% of the countries Gross Domestic Product. Of that total 52% is owed to private banks, 30% to multilateral lending institutions (eg IMF/WB) and 18% to rich country governments.
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