Ecuador and China have signed agreements to cooperate on a variety of issues, including immigration, education and the development of renewable energy.
The most significant agreement, however, is China’s offer of a $7.5 billion line of credit that Ecuador can tap over a 30-year period. The two countries agreed on an annual interest rate of 2%.
“The Chinese bank (Eximbank) is interested in continuing its financial assistance to Ecuador,” President Rafael Correa said when the credit line was announced. “I believe this agreement serves as an example for Latin America and for the rest of the world of how countries can cooperate for mutual benefit,” he said.
The credit line comes at a critical time for Ecuador, with oil prices slumping by more than 50% and the U.S. dollar, which the country uses as its official currency, surging against other currencies.
Correa, the first Ecuadorian president to visit China in an official capacity, said that the investments made from Chinese loans will be allocated towards projects that will contribute to economic growth of the country, including new highways, public transport systems and the eight hydro-electric plants currently under construction.
Chinese state-controlled and trade-focused Eximbank, which offered the new loans, has been one of Ecuador’s top financiers, investing heavily in the oil and hydro-electricity sectors. It will also provide funding for a new oil refinery under construction near Manta.
The loan offer comes after Monday’s announcement that Ecuador will trim its 2015 budget by 4 per cent to deal with revenue shortfalls.
In addition to financial assistance, Ecuador and China also agreed to allow each others tourists to enter the two countries without a visa, and to exchange university students and faculty.