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Ecuador Finance Minister Juan Carlos Vega Credit: IDB Group

Ecuador’s finance minister Juan Carlos Vega said the government intends to capitalize on the success of last yearโ€™s debut debt swap for ocean conservation by implementing a second such operation as well as similar bond swaps tied to issues such as crime and insecurity. 

โ€œWe are looking at all alternatives with the experience we had with this debt  swap for conservation. It would be used in big areas where we have big necessities, and also compromised to green growth,โ€ Vega told LatinFinance on the fringes of the Inter-American Development Bank’s annual meeting in the Dominican Republic. 

Ecuador exchanged $1.63 billion of its international bonds last May for a $656 million blue loan, in what was the largest debt-for-nature transaction on record. 
 
โ€œWe will use the experience with the Galapagos bond to do other things in terms of financial innovation that will be an advantage for our country and for the sustainability of the finances of our country,โ€ the minister said. 

Vega declined to give an exact timeframe. Investor confidence has been badly shaken by recent unrest in Ecuador driven by drug-fueled organized crime, though the minister said the security situation has been improving.  

โ€œIt is hard to tell right now, but eventually we will have a debt swap like that in the right time,โ€ he said. โ€œEcuador is on the right track to go the international markets with more security,โ€ Vega said. 

Vega said that not all countries will be able to replicate the debt-for-nature swap formula. โ€œYou have to analyze opportunities [of debt cost reduction] on a case-by-case basis. It is not a model you can use all the time in every country, in every transaction,โ€ he said. 

Ecuador has been in preliminary talks with the International Monetary Fund and expects to start formal negotiations on a new funding agreement, the minister said. 

The government expects 2% economic growth this year and up to 6% annually in the coming years, he added. 

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