The Great Debate UK

from Felix Salmon:

How Ecuador sold itself to China

When a country is a serial defaulter, two things happen: it regularly writes down the value of its own debts, and it can't borrow money anywhere else. The result looks something like this:

image002.png

The implication of this chart is that Ecuador is finally, perforce, living within its means -- something you have to do, if you have no ability to borrow.

Except there's something the chart doesn't show: China.

Ecuador's government on Monday signed a loan for $2 billion with the China Development Bank Corp., Ecuador's Finance Ministry said, as China deepens its financial ties with the South American nation...

Currently, China's loans to Ecuador exceed $6 billion, including $1.7 billion to finance 85% of Coca-Codo Sinclair, a hydropower plant to be built by China's Sinohydro Corp. in Ecuador, which will supply about 75% of the country's energy needs.

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