The World Bank has said it will lend Ecuador $161.5 million to strengthen the country’s weak banking system and its management of state funds. The World Bank will issue a second loan of $10 million to raise the standards of the country’s banks. Both loans are payable over 17 years with a 5-year grace period. However, the country’s drawn out economic collapse and foreign debt crisis show little sign of ending.
The US Federal Reserve will release $200 million in collateral on defaulted Brady bonds to pay creditors interest. Bondholders will receive seven cents to the dollar. They are now agitating for accelerated payment of principal as well. At $13 billion, Ecuador has the largest per-capita debt in Latin America and last year defaulted on Eurobonds and Brady bonds, themselves repackaged defaulted debt from Latin America’s debt crises of the 1980s.