Ecuador’s new president Alfredo Palacio has claimed he will not back down on the issue of the use of oil revenues and Bank bond payouts. According to the World Bank’s 2003 structural adjustment loan to Ecuador, the country is required to pay bondholders 70 per cent of the revenue received from any rise in the price of the country’s oil. A further 20 per cent of any windfall must be set aside for “contingencies”. The document specifies that Ecuador may keep only 10 per cent of new oil revenue for expenditures on social services. Palacio’s stance differs from that of his predecessor Lucio Gutierrez, who had promised to break away from the ‘voluntary’ austerity plan imposed by the World Bank before he won the election in 2002, but reneged on his commitments within a month of taking office. Palacio has made it clear that handing over 90 per cent of his nation’s new oil wealth is unacceptable.
handing over 90 per cent of his nation's new wealth is unacceptable