Source:
IFIs Latin American Monitor
Fri Jan 26 2007
During President Alfredo Palacios’ last days in office, Monsignor Luis Alberto Luna Tobar, president of the Special External Debt Audit Commission presented the commission’s final report at a press conference. In this report the Commission suggests the need to institutionalise the investigation, treatment and control of the external debt, thus considering it essential to call for a National Constituent Assembly.
During President Alfredo Palacios’ last days in office, Monsignor Luis Alberto Luna Tobar, president of the Special External Debt Audit Commission (CEIDEX, by its Spanish acronym), together with technical coordinator, Alfredo Castillo, presented the commission’s final report at a press conference.
The Commission was created under presidential decree in April 2006 with the ambitious aim to get to the bottom of what happened with the external debt in Ecuador in the last thirty years. To carry out this task, the Commission had the support of academics and social organisations which have long been demanding a debt audit and now see hope for a change in Correa’s administration regarding debt management and the relationship with financial institutions.
As it is shown by documents, the resounding growth of the current Ecuadorean external debt had its origin in the mid-1970s, at the height of the oil boom, when it rose from 241 million dollars in 1970 to 16.6 billion in July 2006.
On the other hand, the debt owed to International Financial Institutions (IFIs) grew from 574.3 million dollars (13 per cent of the external public debt) in 1981 to 4.1 billion dollars (39.9 per cent) in 2006. Among these institutions, the most important creditor is still the IDB, followed by the Andean Development Corporation (CAF) and the World Bank, with 26 per cent and 19 per cent, respectively. It is worth noticing the decline in World Bank participation and the increase in CAF loans throughout the years.
"However, the role of IMF and World Bank lending has been nefarious owing to the qualitative changes through their structural adjustment programmes, poverty reduction strategy and good governance. The liberalisation of the economy, economic and financial deregulation and modernisation programmes have dismantled state institutions, handing public policies over to the World Bank and depriving the production sector made up by small and middle-scale producers of all assistance, leaving them exposed to the fierce international competition, thus destroying the productive capacity and creation of jobs". CEIDEX, "The figures of the debt (1970-2005)" (in Spanish language)
The documents of the Commission are also reflecting the growing and worrysome relation between public debt (external and internal) service and total income allocated to the General State Budget; as well as the important and growing difference between the investment in health and education and the funds allocated to debt service.
On the other hand, according to the analysis carried out by the Commission, only a minimum percentage of debt was allocated to investment projects and most credits were used to cover unjustifiable cost efficiencies and increases. Public entities aimed at the control and surveillance of the state (Parliament, Comptrollership, Controller’s Office of Banks and Companies, and the Ministry of Economy and Finance) did not perform at the time any audit or investigation pursuant to a predetermined debt policy.
In view of this, the Commission suggests the need to institutionalise the investigation, treatment and control of the external debt, thus considering it essential to call for a National Constituent Assembly, as the only mechanism that could address the problems set forth and formulate the legal change required by a real rule of law.
In this sense, following the Commission’s final report, Economy Minister Ricardo Patiño will propose President Correa to renew the functions of said Commission so that it may continue its work.
Related Information:
* Special External Debt Audit Commission: Some tables and diagrams
* Rafael Correa’s rise to the presidency of Ecuador and his relationship with the IMF, by IFIs Latin American Monitor
* Rafael Correa: it is "change of epoch" rather than "an epoch of changes", by ALAI
* Ecuador’s public debt auditing, by Jubilee 2000 - Guayaquil Network
* The commission set to audit the external debt in Ecuador begins its work, by IFIs Latin American Monitor
* External debt in Ecuador: audit still pending, by IFIs Latin American Monitor
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