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“Illegitimate” debt
12/4/2008
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Government-appointed commission points to illegally negotiated debt.

"We will not only seek to punish the guilty; we will also seek to not pay the illegitimate debt, the corrupt debt, the illegal debt,” President Rafael Correa said on Nov. 20 after a government-commissioned audit of Ecuador´s debt from 1976-2006 found irregularities in the negotiations.

Of Ecuador´s US$10.6 billion-external debt – 20.7 percent of the gross domestic product – that the country accumulated until last September, $3.8 billion are 2012, 2015 and 2030 Global Bonds. They were issued to replace Brady Bonds in the country.

The special debt auditing commission appointed by Correa´s government last year found “serious” evidence that the debt was negotiated and issued illegally in some cases, involving former ministers and investment banks.

Correa, who has repeatedly said that he would prioritize social spending over debt service, said that the country´s debt issues were meant to benefit the interests of transnational companies and the finance sector, and “visibly affected the nation’s interests.”

The decision to renegotiate some of the debt was applauded by the Andean Indigenous Organizations´ Coordinator, or CAOI, an umbrella organization of native peoples´ groups.

“They are not debts issued by the people but against the people,” it said in a joint statement on Nov. 28. “Much (of the debt was) to finance large infrastructure projects that invade indigenous territories, kill biodiversity and provoke forced displacements, which are prohibited by international treaties.”

Correa said the debt payments should be the responsibility of those who issued the debt “with blackmail, with treason.”

Finance Minister Elsa María Viteri said in a statement that if the reports of illegalities are proved, Ecuador will not pay certain parts of its debt.

“We are not going to make any payment to debt that is considered illegal and illegitimate,” she said.

CAOI called on social and native peoples´ organizations from around Latin America to reject “aggressions against Ecuador by powerful countries, multilateral financial institutions … and the Ecuadorian oligarchies in response to the sovereign decision of our brother country.”
—Latinamerica Press.


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