Ecuador May Get Financing from Venezuela, Ups Oil Estimate to 180MM

QUITO (Dow Jones Newswires), September 10, 2008

Ecuador's government has raised its oil output estimate for 2009 to 180 million barrels from a previous projection of 161 million barrels, Finance Minister Wilma Salgado said Tuesday.

"Yesterday, we received new data that take into account the renegotiation of the oil contracts that will make production rise," Salgado told reporters.

The minister said the financing needs included in the government's budget draft for 2009 will be covered with oil revenues "without any problem," but, if needed, the government may ask countries such as Venezuela for financing.

Salgado said Ecuador aspires to create a joint fund with oil revenues that both Ecuador and Venezuela could tap when needed, or if they face any possible financial crises.

She also said that if conditions in international markets and interest rates are favorable and Ecuador needs cash, then the country may sell bonds.

"We'll have to evaluate the cost-benefit relationship before making a decision," she said.

Last week, Ecuador's Finance Ministry proposed a 2009 budget of $15.04 billion, about half of which is destined for current spending. That budget has been sent to the Constituent Assembly.

Last week the finance minister said that spending included in the new constitution may boost the 2009 budget proposal to $17 billion.

On Tuesday she said that she is still analyzing spending and that the possible $2 billion increase could be spent over several years.

Salgado said the macroeconomic forecasts underpinning the budget proposal, such as projections for gross domestic product, should be changed. She didn't provide details.

She said that if the new constitution is approved later this month in a referendum, the finance ministry will then have to send the Assembly a new budget draft for 2009 that will include all the additional costs included in the new constitution. 

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