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Friday, 7 February, 2003, 18:53 GMT
Ecuador set for fresh IMF funds
Lucio Gutierrez
Gutierrez relies on the support of the poor
Ecuador is set to get a new loan from the International Monetary Fund (IMF) after the Fund formerly approved the country's economic plan.

Ecuador's finance minister Mauricio Pozo has said the loan would be for $200m (123m) but could also lead to another $300m in loans from other bodies.

The IMF has agreed a letter of intent - which sets out the planned economic policies - but the loan still has to be approved by the Fund's decision-making body.

The IMF said this would meet to consider the loan next month.

Reforms

Ecuador's previous government broke off talks with the IMF shortly before the November 2002 election, saying the loan conditions being demanded were too harsh.

The IMF began talks on a standby loan with the newly-elected leftist government of President Lucio Gutierrez soon after his victory.

The reform package includes changes to the civil service and tax system to cut public spending and boost revenue.

Ecuador's government has also committed itself to changes to the banking system and steps to improve the efficiency of state-owned firms, the IMF has said.

"Important policy measures have already been taken by President (Lucio) Gutierrez's government in support of their economic programme, for which they are seeking international support," the IMF said in a statement.

Tough choices

Mr Gutierrez, a left-leaning, retired army colonel, was elected with the backing of trade unions, indigenous groups, and many of the 60% of Ecuadoreans who live in poverty.

His campaign criticised the IMF's demands and he promised that he would not agree to policies which would harm Ecuadoreans.

He pledged to fight corruption and to provide cheap housing and free health care, though must also generate a budget surplus to pay off $14bn of public debt.

See also:

27 Nov 02 | Business
25 Nov 02 | Americas
13 Sep 02 | Business
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