AMBASSADOR'S MEETING WITH MINISTER OF ECONOMY

C O N F I D E N T I A L QUITO 000290

SIPDIS

SIPDIS

PASS TREASURY FOR S. GOOCH

E.O. 12958: DECL: 02/02/2017
TAGS: EFIN EAID ECON EC
SUBJECT: AMBASSADOR'S MEETING WITH MINISTER OF ECONOMY
PATINO

REF: QUITO 169

Classified By: AMBASSADOR LINDA JEWELL. REASONS: 1.4 B AND D


1. (C) Summary. In a friendly, courteous meeting with the
Ambassador, Minister of Economy Patino said that he has a
close working relationship with President Correa,
congratulated himself on the ease with which he prepared his
first budget, allowed that he does not know what Ecuador will
do about debt but asserted some debt is illegitimate and will
not be paid, and spoke critically of the international
financial institutions. He also welcomed the opportunity to
work with the USG on microfinance and supporting small
business. End summary.


2. (C) The Ambassador met with Minister of Economy and
Finance Ricardo Patino on February 1. He opened the meeting
by saying that Ecuador needs change, and that "we are
transformers." When asked about the challenges of working
with a president who is also an economist and former Minister
of Economy, Patino replied the President's understanding of
the issues helps him. He also said that he and his president
share a common vision, in contrast to the rocky relationship
his predecessors had with former President Palacio (who went
through five Economy Ministers in under two years).

Budget
--------------


3. (C) Patino said that the budget he had just presented to
Congress reduced expenditure from the previous year. Doing
that was easy and just required common sense. The government
has clearly identified its priorities ) social programs and
supporting production ) and from there it was easy to open
space for priorities by reducing spending for other sectors.

Debt
--------------


4. (C) The Ambassador noted that everyone was anxious to
know what the Correa administration will do on debt. Patino
replied, with a laugh, "I don't know." He went on to say
that Ecuador cannot pay all of its debt, and that debt
servicing is equivalent to 45 percent of current income,
which is excessive. He added that some of Ecuador's debt is
illegitimate, and that the GOE is investigating its debt.
Patino spoke passionately about the burden that debt has
placed on Ecuador and how some lenders are still encouraging
Ecuador to borrow, but asserted that Ecuador needs to reduce
its reliance on debt and draw on its own resources.

International Financial Institutions
--------------


5. (C) As part of his discourse on Ecuador's debt, Patino
spoke critically of the international financial institutions
(IFIs). He said that the IFIs have a policy of forcing debt
on developing countries, which reduces the countries'
sovereignty. He said that Ecuador would pay off its debt to
the IMF, and continue to provide the IMF information "each
year," but criticized the Letters of Intent that Ecuador had
signed with the IMF. He said that many former Ministers of
Economy went on to work for the IFIs, but he was not a "good
student" and would not follow in their footsteps.

Cooperation on Microfinance and Production
--------------


6. (U) The Ambassador said that the U.S. is prepared to work
with the Government of Ecuador when our interests coincide,
and added USAID has projects that support microfinance and
small producers. She noted that current microfinance
programs have been successful and that it is important that
they remain sustainable. She also noted that most current
microfinance programs are focused on the urban areas, and the
rural areas remain a problem.


7. (U) Patino thanked the Ambassador for her offer of help,
and said that the government is developing a microfinance
program through the national development bank which will be
largely focused on rural areas. He acknowledged that there
are numerous NGO-supported microcredit programs, which he

welcomed but said need to be implemented more rationally,
otherwise they might become concentrated in a few provinces.
Patino was particularly interested when the Ambassador
mentioned USAID support to match up leather producers with
U.S. purchasers and asked for more information on the project.


8. (U Patino said that his Ministry has just established a
new Under Secretariat for Solidarity, headed by U/S Diego
Landaso, to oversee the Ministry's work on microcredit and
production support. USAID will follow up with Landaso and
share information on its microcredit and production projects.

Bio Notes
--------------


9. (SBU) Patino said that he often works from 7 am to 1 am,
and that on the day he met the Ambassador he had woken up at
3 am to address a backlog of work that had accumulated while
he focused on preparing the budget. He is from Guayaquil,
but his wife has joined him in Quito. His one daughter is
studying in Argentina. He said that he is always happy, and
that his mother is a saint. His father left his family, so
was not around "to set a bad example." He has four full
siblings, plus four more half siblings that his father had
with another woman.

Comment
--------------


10. (C) Patino, like all the Cabinet members the Ambassador
has met, greeted the Ambassador warmly and was looking to
establish a good rapport. He was relaxed throughout the
meeting, even when criticizing Ecuador's debt burden and
speaking poorly of the IFIs. He portrayed himself at ease in
his position and his relationship with Correa. Throughout
the 30-minute conversation he frequently commented on how
pleased and comfortable he is to be Minister of Economy. He
variously said that he is content, patient, and happy, and
that "fear" is not part of his dictionary.


11. (C) His comments during the meeting reaffirmed what is
already evident from his public statements: that he has
strong, negative views about Ecuador's debt burden and the
role of IFIs. However, in at least this one meeting, and in
contrast to his first meeting with investment bankers
(reftel),he gave the impression of a person who might bring
a degree of moderation to his dealings with the international
banking community. Patino also gave the impression of
someone who may react emotionally to challenging
developments. He has already given a number of mixed signals
on how the GOE will deal with its debt, and we suspect that
that uncertainty will continue.
JEWELL