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Ecuador may seek

US government loan

QUITO: Ecuador's new government is considering asking the United States government for between 2.5 billion and 3.0 billion of emergency funding to help shore up the country's troubled economy, the speaker of Congress, Juan Jose Pons said on Friday.

"We have to ask for a direct loan that would allow us to ease the economic and social situation in Ecuador," Pons told reporters, adding that he had already presented his plan to President Gustavo Noboa, who had "received it well." The initiative would be presented to the US government by Noboa and his ministers of finance and foreign relations.

"It is an emergency solution, which is urgently needed," Pons said, citing previous official US involvement in helping the Mexican and Brazilian economies to "overcome their problems."

The emergency funding would "strengthen currency reserves, revive the public sector and be available to finance the unfreezing of bank deposits," the speaker told reporters.

Deposits were partially frozen by the Mahuad government as part of his emergency measures early in 1999 aimed at avoiding a run on the sucre as it began its downward slide.

In Washington, US Secretary of State Madeleine Albright declined to comment on Pons' statement, saying only that "we have been obviously very concerned about the events in Ecuador," and adding that Washington was "staying in close touch" with the Ecuadoran government.

She reiterated Washington's stance towards the government which came to power as a result of a civilian-military coup last month. "We want constitutional methods to be followed," said Albright, "and we hope very much that the new government will be able to deal with some of the economic issues."

Ecuador's inflation reached 61 percent last year as the national currency sucre lost 197 percent of its value against the dollar, and gross domestic product shrank by seven percent.

The economic crisis fuelled popular unrest which resulted in the ouster last month of Ecuadoran elected President Jamil Mahuad.

However, the new government headed by former Vice President Noboa has said it is determined to forge ahead with dollarisation, replacing the sucre with the US dollar.

The dollarisation programme was announced by Mahuad shortly before the coup, and Ecuadoran officials said at the time they had enough hard currency reserves to replace sucres held by the population with dollars, at the rate of 25,000 sucres to the dollar.ÑAFP