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IMF sees progress in talks on Ecuador loan

WASHINGTON: The International Monetary Fund has made "substantial progress" in talks about a loan for Ecuador and aims to resolve the remaining problems early next year, spokesman Francisco Baker said on Thursday.

Baker, who said further discussions were due in January, had no details on the likely length of an IMF loan to Ecuador or on the size of such a credit, which aims to help Ecuador recover from an economic slump.

The Ecuadorean Economy Ministry said on Wednesday that it planned talks with the IMF in February on a three-year loan rather than for the shorter-term credit that had been up for discussion.

"Substantial progress has been made toward an economic programme for Ecuador for 2000 which could be supported by an IMF credit," Baker said. "We hope that the few remaining issues will be addressed early next year."

The talks between Ecuador and the IMF have already dragged on for months, and both sides repeatedly said that a deal was close or that progress was being made.

Sticking points included new tax laws -- now introduced -- as well as progress on restructuring the financial sector and in agreeing to rescheduling terms with creditors. Budget issues were also contentious, and the IMF wanted Ecuador to approve a budget for 2000 before it approved the loan.

Ecuador in October wrote itself into the world's financial history books as the first country to default on eurobonds. It has also defaulted on Brady bonds, which were set up in response to a previous debt crisis.

Ecuador's $14.5 billion economy is expected to show a contraction of at least 6 percent this year, although the Finance Ministry is forecasting a turnaround -- and growth of 2.5 percent -- in 2000.-Reuters