China, Ecuador to renegotiate 'harmful' loan terms

China will renegotiate terms of its debt agreements with Ecuador to disconnect them from oil sales, Ecuadorian president Guillermo Lasso said today.

Following a trip to China where he met with President Xi Jinping, Lasso said in a broadcast interview Chinese loan agreements tied to oil supply contracts were "harmful" to Ecuadorian interests since they benefited intermediary companies.

Lasso said Chinese officials agreed to renegotiate the debt with Ecuador and the oil agreements. Ecuador wants to sever the $4.6bn debt from oil sales, cut its interest rates and reschedule looming maturities.

"Many Ecuadorian and foreign intermediaries take advantage of China and Ecuador in these agreements," Lasso said. "We are not selling oil directly to China, which was the intention of the contracts."

Since 2008 Ecuador has signed more than 15 oil-backed loans with China, a legacy of former president Rafael Correa's 2007-17 administration. Under the terms of the interest-bearing loans, China pays for the crude in advance and Ecuador services the loans with crude exports. Neither PetroEcuador nor the Ecuadorian government has revealed how much crude is exported under these agreements.

Lasso said Ecuador will not ask for more loans from China in 2022 and that he will disclose all the confidential information about the debt and oil supply contracts, which were kept secret during Correa's administration.

By Alberto Araujo