Ecuador instigates debt audit
The commission was launched in July and will investigate the debts of Ecuador with regard to both legal and financial issues (such as any irregularities in the loan contracts, and whether interest on the loans was set at a fair level) as well as the social and environmental impacts of the projects that the loans financed. The Commission has one year to collect information and will next meet in Quito from 7-12 October to take stock of findings.
Long years of instability and mismanagement by former regimes, along with irresponsible lending by international creditors, have left Ecuador with debts of $10.6 billion. Ecuador’s President, Rafael Correa, was elected in November 2006 and one of his election pledges committed the new Government to reduce the country's external debt service burden.
President Correa and former Economy and Finance Minister, Ricardo Patiño, launched the debt audit commission ceremony in Quito, the capital of Ecuador, on 23 July 2007. The Commission is composed of national and international experts in the fields of debt, economics, law, and social and environmental issues, alongside with representatives of the Ministry of Economy and Finance and other government departments.
The Commission has one year to investigate individual loan agreements – which will include bilateral loan contracts and Paris Club agreements, bonds and multilateral loans – and to provide detailed analyses of these loans. Ricardo Patiño, who is key backer of this initiative, emphasised that,
"This will not be a simple financial audit of the debt, but will consider all relevant legal, political and economic factors which have led to the accumulation of illegitimate debt in this country. The audit commission must also consider social and environmental damages to local populations caused by debt. Debts which are found to be illegitimate must not be paid. Debts which are legitimate must be reimbursed."
The commission has been divided into four "sub-commissions," to look at bilateral debt; multilateral debt; bonds and commercial debt; and domestic debt. Jubilee Debt Campaign is working with the European network on debt and development, Eurodad, who have been given responsibility for analysing bilateral debt. They have begun to collect information from the Government of Ecuador and from creditor governments. Of Ecuador’s $10.6 billion external debt burden, just over $2.1billion is owed to bilateral creditors. Key bilateral creditors include Spain, Italy, Japan, Brazil, France, Denmark, and the UK which is owed just under $100 million.