Ecuador announces new agreement with the IMF, after obtaining 97.85% consent to renegotiate the debt

Finance Minister, Richard Martinez, announced that he will work with the International Monetary Fund (IMF) to launch a new agreement. He said it is an important phase to culminate the voting process for debt renegotiation, which averaged 97.85% of bondholders.

Martínez explained that the country must sign a new agreement, after having an existing one that was renegotiated for this year, but it fell with the COVID-19 pandemic, so they had to withdraw the previous agreement.

«We must renegotiate another agreement that addresses the new reality of Ecuador,» said Minister Martinez.

In addition, he reported that this Monday, August 3, Ecuador got the majority of the vote to make the debt renegotiation proposal a reality.

The starting point, he said, was the payment of more than $ 325 million of the principal and interest of the 2020 bonds, in March of this year, despite the fact that, at the time, Martínez stated that the payment was only of the principal.

The renegotiation proposal

Reduce capital from $ 17,375 million to $ 15,835 million. He said that they are $ 1,540 million less than the capital of the external debt in bonds. In addition, interest is reduced by an average rate of 9.2% to 5.3%, while the average life of the bonds is doubled from 6.1 years to 12.7.

With this operation, he said, there will be a relief and cash flow to the country, which will release nearly $ 11,000 million until 2025 and more than $ 16,000 million until 2030.

Interest that has not been paid between March and August, which totals more than $ 1 billion, explained that it will be paid in 2026.

Debt Holders Voting

The minimum percentage of consent that should have nine of the 10 series of bonds was 66%, at the close of voting a consent of 98.15% was achieved. In the case of the 2024 bond, he said, 75% acceptance was needed and 95.42% was reached. The weighted average of the 10 series was 97.85%.

Bond voting results:

The next steps

Between August 3 and 7 they will open a space so that holders who did not manage to vote have the possibility of joining.

Between 7 and 12 this month there will be an administrative phase to prepare the exchange and formalize the agreements.

Until August 20, it is planned to carry out the formal exchange of the bonds and with that, the final closing of the operation.

The Minister of Finance announced that they will work with the International Monetary Fund (IMF) to put a new agreement into operation, which is a phase, he said, important to complete processes derived from this vote.

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