Ecuador Pushes Central Bank Bill to Meet IMF Conditionalities

Ecuador's President Lenin Moreno on Thursday sent to Congress a new version of the "Defense of Dollarization" bill, a proposal which lawmakers have already rejected as unconstitutional on two previous occasions.

RELATED:

Ecuador: Arauz Leads The Polls Ahead of Runoff Vote on April 11

This bill would be one of the policy conditions the International Monetary Fund (IMF) imposed on Ecuador to grant it a US$6.5 billion loan.

Economy Minister Mauricio Pozo hopes that the bill's third version will dispel the "concerns" that the Legislative Administration Council (CAL) expressed regarding the true purpose of the norm and its unconstitutionality.

Arguing that the new regulation only seeks to guarantee the independence of the Central Bank, he stressed that the CAL should qualify the bill and refer it to a legislative committee for analysis.

This bill has been harshly criticized by several specialists who doubt that the regulation seeks to guarantee the Central Bank's political, financial, and administrative independence.

On the contrary, the Moreno administration would seek to guarantee that private banks could control the direction of the Central Bank for periods of 6 years. This would prevent the next President from influencing variables such as interest rates, international reserves, or the fees charged by private banks to their clients.

This "privatization of the Central Bank" is frowned upon by millions of citizens who remember that neoliberal governments allowed financial liberalization during the 1990s.

At that time, a deep economic crisis caused the massive migration of millions of Ecuadorians and the bankruptcy of thousands of productive enterprises.

The Moreno administration insists on the approval of this law just days before the April 11 presidential elections, in which the Socialist candidate Andres Arauz is the favorite to defeat Guillermo Lasso, a banker who vows that he had nothing to do with the IMF-backed financial liberalization.