Ecuador announced last week that it needs to borrow more than $1.1 billion from international lenders as the country tries to fix its deficit.
The Financial Times reported that one of the loans includes $500 million from a repurchase agreement with U.S.-based Goldman Sachs. The country’s finance ministry said it would pay that loan back at 4.25 percent over three-month Libor to the bank, which is around three percentage points below the market rate for Ecuadorean debt.
In addition, the Inter-American Development Bank will lend Ecuador $237.6 million for social services and $250 million to enable the country to complete construction of a subway system in Quito, according to Reuters. That loan will be returned at 3.28 percent over 25 years. And there will be a $150 million loan from the Development Bank of Latin America to improve the country’s power sector, which will be repaid at 4.28 percent over 12 years.
The loans are an attempt to help Ecuador improve its economy, which has been hurt by a damaging earthquake and low oil prices. As a result, Ecuador has accumulated billions of dollars of debt to China due to loans-for-oil deals.
Ecuador isn't the only South American country looking towards oil to help its economy. Late last year, Venezuelan President Nicolas Maduro vowed to back the national cryptocurrency, Petro, with the country’s natural resource reserves.
Maduro showed a document on national television “formalizing the provision of the certified Ayacucho oil field No.1 in the Orinoco Petroleum Belt for the support of El Petro cryptocurrency.” The President went on to say that the field’s reserves amount to five billion barrels of oil.
“Every single Petro will be backed by a barrel of oil,” Maduro said, promising to provide cryptocurrency mining throughout Venezuela. “We will set up a special team of cryptocurrency specialists so they will be engaged in mining in all states and municipalities of our country.”