On Monday, the Ecuador government reported that it has agreed to restructure its debt with Chinese banks. This is to provide relief worth some USD 1.4 billion until 2025. In February, Ecuador’s President Guillermo Lasso announced that he was looking to restructure the country’s debt and improve the ongoing conditions of long-term oil sales contracts with Beijing.

It is to be noted that China has become Ecuador’s main financial partner in the last decade.
China Development Bank and the Export-Import Bank of China concluded an agreement for loans worth USD 1.4 billion and USD 1.8 billion, extending the loans’ maturity and decreasing amortisation. Besides this, Ecuador also managed to reduce certain interest rates and suspend amortisations with China Eximbank for a six-month grace period. The loans were largely agreed upon during the government of former President Rafael Correa.

The pacts also involve freeing up certain amounts of exports to Chinese oil company CNPC, allowing the South American country to sell an unspecified quantity of oil at market prices. Notably, state-owned energy company Petroecuador arrived at an agreement with Petrochina last week on a number of crude oil deliveries. China is the world’s second-largest economy and the biggest bilateral lender worldwide. However, it discloses little about lending conditions or how it renegotiates with distressed borrowers.