Ecuador defaults on foreign debt

I've got some sympathy when it comes to these types of debts.

Nigeria brokered a deal to pay-off their debt in 2005, but overall it seems they took some punishment from interest payments and fees making the debt so heavy in the first place.

"There is some pain on both sides, but it is also a good deal for both sides," said Todd Moss, a fellow at the Center for Global Development, a nonpartisan research institution in Washington that proposed elements of the deal.

But much of Nigeria's debts came not from foolish lending to despots but from interest and late fees that accrued because governments did not service the debts. This neglect accounts for about 80 percent of what the country now owes to the Paris Club, Mr. Moss said.

New York Times, October 21st, 2005.

I'm no expert in this area but am suspicious of all lenders anyway - debt is not good for me on an individual level.

It sometimes seems difficult to justify lending to poorer countries, with less than shining regimes in power, for perhaps questionable purposes anyway, when whole future generations have to service that debt burden instead, especially when it can grow to become much greater than the principal.

But the report also lambasted multilateral debt, saying that many IMF and World Bank loans were used to advance the interests of transnational corporations. Ecuador's military dictatorship (1974-1979) was the first government to lead the country into indebtedness.

He also said that it was perfectly reasonable to take a debt's legitimacy into account. "The United States itself has embraced the concept of illegitimate debt in encouraging countries to forgive the debt accrued in Iraq under Saddam Hussein."

In fact, the U.S. originated the concept of foreign debt after the Spanish-American war. The U.S. refused to pay Cuba's outstanding debt to Spain, arguing that it was created by agents of Spain in Spain's self-interest, a matter in which Cubans had no say.

Still here in the UK, for individuals, we've had to listen to how great and clever they are for their heavy mortgage debts being justified by beautiful and magnificent HPI. No sympathy for these individuals for when the crash really kicks in and property values go back to 1980 levels. Hahaha.

Hmmm.
In the case of international debts, the interest charged and conditions imposed by the world bank frequently led to poverty, corruption and eventually an economic collapse. Exactly what can the world bank do to ecuador, respossess the country?

His decision follows a government audit in November which recommended that Ecuador default on almost 40% of the $10bn foreign debt

The country's foreign debt amounts to about a fifth of its Gross Domestic Product, or GDP.

Oil is Ecuador's main source of income and accounts for 40% of the national budget.

So in effect, the debt was serviced in dollars which were accumulated through selling oil to other countries in dollars... and the country could only pay interest on these debts because they had domestic issues to pay for first. I guess the world bank could call for the UN to invade ecuador to get rid of this obviously evil narco terrorist and liberate the oil supplies into the hands of responsible international oil companies, then write off the debt like they did in iraq. Seems like a plan, let's roll out!

I did have a rant all typed out for you wintersunshine but instead :-
Argument on the internet is like participating in a headbanging contest, you may win but eventually you're just going to be brain damaged.

At a guess 70% on here wouldn't even know where Ecuador was

Was ??

What, have they moved it ?? :eek:

Might as well chuck away my Atlas then