Ecuador announces default on “illegitimate” debt

Calling continued payments “immoral” and “illegitimate,” Ecuador’s President Rafael Correa followed through on pledges to default on the country’s foreign debt Dec. 12, announcing his government will not make a $31 million payment due in two days on the 2012 Global Bonds series. This is Ecuador’s second debt default in a decade. Ecuador’s external debt totals $3.8 billion. The default comes after a national audit commission identified numerous irregularities in Ecuador’s debt and recommended suspension of payments. Oil accounting for 60% of Ecuador’s exports, and the recent slide in prices—from $147 a barrel to $45—has hit the country’s finances hard. Win Thin, senior currency analyst at Brown Brothers Harriman, called the announcement “disappointing and a bit surprising.” (EFE, MarketWatch, Dec. 12)

See our last posts on Ecuador, the econocataclysm and the struggle for global oil.

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