The National Government, through the Ministry of Economy and Finance and the Central Bank of Ecuador (BCE), marked a milestone this Wednesday, June 30, 2021, by signing the contract for the sale of shares that the Central Bank of Ecuador maintains of three public banks. This agreement reaffirms the commitment of both institutions to strengthen dollarization and to protect the funds of Ecuadorian depositors. The signed contract established two specific agreements. On the one hand, the Central Bank of Ecuador transferred to the Ministry of Economy and Finance (MEF) the shares of Corporación Financiera Nacional B.P., BanEcuador B.P. and the Corporación Nacional de Finanzas Populares y Solidarias (Conafips), which were received on May 18, 2017, as payment for the State's debt with the BCE. On the other hand, a schedule was established by which the MEF commits to make payments to the BCE for the value of said shares.
According to the Organic Law Reforming the Organic Monetary and Financial Code for the Defense of Dollarization, the value of the shares that the BCE transferred to the MEF was USD 2.3776 billion, corresponding to the proportional net worth of the shares of said entities, as of May 31, 2021. According to the payment schedule agreed between both institutions, a fourteen-year term has been established for capital payments, with a five-year grace period. In this way, the debt will be settled by 2035, the year in which the BCE must fully cover the four balance sheet systems, as established in the Law. It is important to point out that these resources are added to the USD 6.181 billion in payments that the MEF and the public banks will make to the ECB until the year 2035.
The highest authorities of each institution participated in the signing of the sale contract: Guillermo Avellán Solines, General Manager of the Central Bank of Ecuador, and Simón Cueva Armijos, Minister of Economy and Finance.
With the signing of this document and the establishment of the payment schedule from the MEF to the BCE, the Fifth Transitory Provision of the Organic Law Reforming the Organic Monetary and Financial Code for the Defense of Dollarization is effectively complied, which established that the sale should take place until June 30, 2021.
This agreement will improve the BCE's balance sheet, restore greater liquidity, and protect dollarization.