Gutierrez seels loan, warns IMF demands may cause unrest

Fred Feldman ffeldman at bellatlantic.net
Fri Nov 29 08:27:33 MST 2002


INTERVIEW-Ecuador's new leader seeks IMF loan, fears unrest
Reuters, 11.26.02, 1:37 PM ET
By Isabel Proano

TENA, Ecuador (Reuters) - Now that Lucio Gutierrez has won
Ecuador's presidency, the former coup leader worries how he
will secure a vital loan from the International Monetary
Fund without stoking social unrest like the protests which
led him to lead his own men onto the streets in 2000.

The 45-year-old retired army colonel, who aided a 2000
native Indian uprising that toppled President Jamil Mahuad,
won the presidency on Sunday backed by indigenous groups,
unions, and many of the 60 percent of Ecuadoreans who live
in poverty.

After cruising to victory on promises that he would not only
fight corruption but also provide cheap housing and free
health care, Gutierrez now worries the IMF will demand tough
measures, such as fuel price hikes or spending cuts, to
ensure the government generates a primary surplus to help
pay off its $14 billion public debt.

"I'm worried how I'll be able to reach a satisfactory
agreement for Ecuador with the International Monetary Fund
which doesn't spark a social explosion," Gutierrez, still
hoarse from campaigning, told Reuters late Monday in Tena,
his muggy hometown in the Amazon jungle where he traveled to
visit family, 72 miles (115 km) southeast of Quito.

Mahuad had passed unpopular austerity measures to try and
put Ecuador's finances in order during a severe crisis that
also led it to default on foreign debt in 1999. The Indians
were also enraged by rampant inflation, a banking collapse
and a plan, since enacted, to adopt the U.S. dollar as
currency.

Ecuador needs an IMF loan program to access other
multilateral credits needed to help pay about $750 million
in external debt principal next year, analysts say. In the
past, IMF-required fuel price hikes have stoked upheaval,
and Gutierrez has ruled out trying that again.

The current government of President Gustavo Noboa, who hands
over power to Gutierrez on Jan. 15, failed to obtain an IMF
loan this year after it increased state sector wages and as
the uncertainty of the nearing elections prevented the
signing of an agreement. A corruption scandal that rocked
the Finance Ministry also got in the way of negotiations.

Gutierrez says he will send a team combined of officials
from the current and next administrations to immediately
start talks with the Fund.

Gutierrez, who spent six months in jail after the coup and
later retired from the army, is backed by leftists and poor
Indians drawn by his vows to crack down on widespread
corruption with harsh penalties and trim bureaucracy by
cutting the number of lawmakers in Congress.

But the inexperienced politician has also tried hard to
reassure business leaders with vows to pay the public debt,
keep fiscal accounts in order and uphold the U.S. dollar,
which Gutierrez had once thought to abandon.

With scarce support in Congress, Gutierrez now wonders how
he will be able to push through his anti-corruption
proposals. He says he could opt for a referendum, but would
prefer to have lawmakers' stamp of approval.

"It is a big responsibility. I'm thinking about all the
proposals I've made and they're spinning around in my head,
how to make them reality, how to convince Congress," he
said, sitting with his father, a 77-year-old retired
salesman who peddled goods on jungle rivers to raise his six
children.

Gutierrez said on Tuesday that he has received calls from
U.S. President George W. Bush, Chilean President Ricardo
Lagos and Peruvian President Alejandro Toledo, as well as
invitations to visit the three nations.

Copyright 2002, Reuters News Service


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