Identifier
Created
Classification
Origin
09QUITO256
2009-04-14 16:24:00
CONFIDENTIAL
Embassy Quito
Cable title:  

AMBASSADOR'S MEETING WITH FINANCE MINISTER VITERI

Tags:  EFIN ETRD ECON EC 
pdf how-to read a cable
VZCZCXYZ0018
RR RUEHWEB

DE RUEHQT #0256/01 1041624
ZNY CCCCC ZZH
R 141624Z APR 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0252
INFO RUEHBO/AMEMBASSY BOGOTA 8093
RUEHCV/AMEMBASSY CARACAS 3498
RUEHLP/AMEMBASSY LA PAZ APR LIMA 3149
RUEHGL/AMCONSUL GUAYAQUIL 4260
RUEATRS/DEPT OF TREASURY WASHDC
C O N F I D E N T I A L QUITO 000256 

SIPDIS

E.O. 12958: DECL 04/15/2019
TAGS: EFIN ETRD ECON EC
SUBJECT: AMBASSADOR'S MEETING WITH FINANCE MINISTER VITERI

REFTEL A: Quito 188
B: Quito 60

Classified by: Ambassador Heather Hodg...



id: 202261
date: 4/14/2009 16:24
refid: 09QUITO256
origin: Embassy Quito
classification: CONFIDENTIAL
destination: 09QUITO188|09QUITO60
header:
VZCZCXYZ0018
RR RUEHWEB

DE RUEHQT #0256/01 1041624
ZNY CCCCC ZZH
R 141624Z APR 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0252
INFO RUEHBO/AMEMBASSY BOGOTA 8093
RUEHCV/AMEMBASSY CARACAS 3498
RUEHLP/AMEMBASSY LA PAZ APR LIMA 3149
RUEHGL/AMCONSUL GUAYAQUIL 4260
RUEATRS/DEPT OF TREASURY WASHDC


----------------- header ends ----------------

C O N F I D E N T I A L QUITO 000256

SIPDIS

E.O. 12958: DECL 04/15/2019
TAGS: EFIN ETRD ECON EC
SUBJECT: AMBASSADOR'S MEETING WITH FINANCE MINISTER VITERI

REFTEL A: Quito 188
B: Quito 60

Classified by: Ambassador Heather Hodges, Reasons 1.4 (b) and (d).

C O N F I D E N T I A L QUITO 000256

SIPDIS

E.O. 12958: DECL 04/15/2019
TAGS: EFIN ETRD ECON EC
SUBJECT: AMBASSADOR'S MEETING WITH FINANCE MINISTER VITERI

REFTEL A: Quito 188
B: Quito 60

Classified by: Ambassador Heather Hodg...



id: 202261
date: 4/14/2009 16:24
refid: 09QUITO256
origin: Embassy Quito
classification: CONFIDENTIAL
destination: 09QUITO188|09QUITO60
header:
VZCZCXYZ0018
RR RUEHWEB

DE RUEHQT #0256/01 1041624
ZNY CCCCC ZZH
R 141624Z APR 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0252
INFO RUEHBO/AMEMBASSY BOGOTA 8093
RUEHCV/AMEMBASSY CARACAS 3498
RUEHLP/AMEMBASSY LA PAZ APR LIMA 3149
RUEHGL/AMCONSUL GUAYAQUIL 4260
RUEATRS/DEPT OF TREASURY WASHDC


-------------- header ends --------------

C O N F I D E N T I A L QUITO 000256

SIPDIS

E.O. 12958: DECL 04/15/2019
TAGS: EFIN ETRD ECON EC
SUBJECT: AMBASSADOR'S MEETING WITH FINANCE MINISTER VITERI

REFTEL A: Quito 188
B: Quito 60

Classified by: Ambassador Heather Hodges, Reasons 1.4 (b) and (d).


1. (C) Summary: The Ambassador made an introductory call on Finance
Minister Elsa Viteri on April 8. Viteri justified Ecuador's debt
default and planned restructuring, supported Ecuador's balance of
payment safeguard trade measures and mentioned the possibility of
further measures, and expressed optimism about the domestic economic
situation. She noted that Ecuador did not plan to leave the CAN over
Ecuador's trade measures dispute except as a last resort. End
Summary.


2. (C) On April 8, the Ambassador met with Finance Minister Elsa
Viteri, accompanied by DCM and Econoff. The tone of the meeting was
cordial. Viteri, who had been Vice Minister of Finance under former
Ministers Salgado and Ortiz, is considered close to President Rafael
Correa, with whom she studied economics at the Catholic University of
Guayaquil.

Debt Default and Restructuring
--------------


3. (C) Minister Viteri said that Ecuador's default on its commercial
debt was a "completely sovereign decision" (Ecuador defaulted on its
Global 2012 and 2030 commercial bond issuances in November 2008 and
March, respectively). She asserted that the debt on which the
government defaulted had been used for schemes that did not support
development, and therefore paying the debt was "not logical." She

stated that the GOE had its own development plan, and asked
rhetorically why Ecuador had to answer to people (debt holders) who
didn't know the country's situation.


4. (C) Viteri stressed the GOE's desire to be transparent in the
restructuring process, and the government plan to unveil its
restructuring proposal on April 20. She noted that the GOE wanted to
find a solution to resolve the debt situation to the satisfaction of
all (with the caveat "considering the economic crisis worldwide").
She complained of the difficulty Ecuador will have negotiating with
debt holders who she believes are mainly a number of funds, rather
than individuals.

Trade Measures and Balance of Payments Situation
-------------- ---


5. (C) When asked if Ecuador would lift its tariff surcharges (a
balance of payments safeguard - ref B) if oil prices recovered
sufficiently, Viteri responded that the two were distinct items. She
claimed that neighboring country currencies had devalued
significantly over the past year and caused Ecuador to be at an
extreme disadvantage since it lacks monetary policy. Viteri hinted
that Ecuador might implement additional measures, although she did
not specify what those might be. She said that Ecuador did not want
to harm anyone but just wanted to "take care of its problems."


6. (C) Note: The Andean Community (CAN) secretariat issued a
resolution on March 27 stating that while Ecuador can apply the
surcharges and quotas to its CAN partners because of the BOP crisis,
it could not apply MFN tariffs as well. President Correa said that
Ecuador was open to dialogue but that if the CAN exerted pressure on
Ecuador he would withdraw Ecuador from the CAN. End Note. Viteri
noted that the GOE was developing a response to the CAN that would
work for everyone, and said that leaving the CAN would be a last
resort.

Optimism on the Economy
--------------


7. (C) Viteri was optimistic about Ecuador's economic situation.
She said she was "very happy" with the development of the fiscal
sector, noting that the economic crisis in many other countries was
much worse than in Ecuador. She claimed that the Ecuadorian public
was tranquilo" (calm) because the people understood this. She was
glad that Ecuador's petroleum prices were rising. She believed
Ecuador would reach a growth rate that would be "better than the
Latin American average by the end of the year." She claimed that
Ecuador had "no problem" getting financing, in spite of the debt
default.

Comment:
--------------


8. (C) Viteri reflected the government's line on debt, balance of
payments, and the economy, invoking sovereignty and a
victim-mentality along with assertions that it wants to be a
responsible player, although on terms that it defines. It will be
interesting to see which of these tendencies prevail when the
government unveils its debt restructuring proposal and defends its
trade surcharges at the WTO. Viteri's assurances that the economy
and fiscal management were doing well went further than Minister
Borja (ref A),who also asserted that the economy was sound but
acknowledged that the government needed to make some adjustments.

HODGES

=======================CABLE ENDS============================