(Reuters) – The government said in a statement on Monday that Ecuador has reached an agreement to restructure its debt with Chinese banks, and provide debt relief by about $1.4 billion through 2025.
Ecuadorean President Guillermo Laso announced in February that he was looking to restructure the country’s debt and improve the terms of long-term oil sales contracts with Beijing.
China has become Ecuador’s main financial partner in the past decade.
Agreements were reached with the China Development Bank and the Export-Import Bank of China (Eximbank) for loans of $1.4 billion and $1.8 billion, respectively, to extend the maturity of the loans and reduce amortization.
“As a result of these agreements, maturities have been extended to 2027 for China Development Bank and 2032 for Eximbank, allowing for cash flow relief to support government priorities,” the president’s press team said in the statement.
The government said Ecuador was also able to lower some applicable interest rates and suspend all amortizations with China Eximbank for a six-month grace period.
The loans were agreed upon during the government of former President Rafael Correa, while many of them were linked to long-term oil sales contracts with Chinese companies.
The statement said the agreements also include freeing up certain quantities of exports to CNPC under oil-backed contracts, allowing Ecuador to sell an unspecified amount of oil at market prices.
State-owned energy company Petroecuador reached an agreement with Petrochina last week over a number of deliveries.
Since taking office last May, Laso has turned to multilateral organizations for funding to revitalize Ecuador’s economy, which has been hit by the coronavirus pandemic, and renegotiated a $6.5 billion credit agreement with the International Monetary Fund, which expires this year.
The Wall Street Journal first reported on Monday that Lasso announced a deal with China to restructure $4.4 billion in debt.